Mahindra & Mahindra’s farm equipment arm is in talks with several Chinese companies and looking at alliances in China, South America and South East Asia, reports CNBC-TV18.

Sources say that M&M is likely to acquire a second tractor company in China and is in the last stages of agreement.

It is talking with two or three companies, including 100-year-old tractor maker Yenchang Jinma Tractor Company. The Chinese company produces tractors and engines in the range of 20-110 horsepower. The acquisition is to be announced in two months' time.

In December 2004, M&M had acquired 80% stake in Chinese company Jiangling Tractor, or JTC, to form Mahindra China Tractors. Mahindra China Tractors has a 12,000 unit capacity and  M&M invested USD 8 million in it.

It makes 15-40 horsepower tractors. Sources say, M&M now wants companies that produce tractors with up to 110 horsepower.

Sources say that M&M's farm equipment arm is also looking at South America and South East Asia. It is alleged that M&M is in advanced stage of talks with companies in Brazil, Uruguay, Ecuador, Argentina, Chile, Thailand, Malaysia and Indonesia.

M&M will enter these countries by the next six months to a year. It will manufacture 20-80 horsepower trucks in these countries.

The M&M management said that they are interested in augmenting their presence in China. They are talking to several companies for an alliance in the tractor business. They did not give the time-frame for the alliance.