Taking a step toward its goal of becoming the largest tractor maker in the world, Mahindra & Mahindra is acquiring 43.5% of Punjab Tractor at a price of 360 rupees ($8.13) per share.

India’s largest tractor maker agreed to pay 9.51 billion rupees ($215.64 million) to acquire the controlling stake in the fourth largest in the market from the U.K. private equity group Actis and the Burman family, who control the Dabur Group.

“Some of the Punjab Tractor models have clear opportunities in overseas markets in which Mahindra & Mahindra operates,” said Anjanikumar Choudhari, president of the farm equipment unit at Mahindra & Mahindra.

The acquisition will increase Mahindra & Mahindra’s market share in India to 40% from the present 30%. Tafe is the second-largest player in the market, with a market share of 23%.

Choudhari said in a statement that Punjab Tractor’s strength in North India would be a valuable addition to the company.

The Indian tractor market is the second largest in the world after the U.S. and has been growing at about 20% a year. About 360,000 tractors were produced in India last year.

Indian farms tend to be small and fragmented, so Indian farmers use less powerful tractors than their American and European counterparts.

Foreign tractor majors New Holland and Deere & Co. have set up operations in the country to tap the booming market.

Mahindra & Mahindra paid a fair price for Punjab Tractor, taking into account the enormous synergies they stand to gain from the deal, said Umesh Karne, a senior research analyst at the brokerage Emkay Shares. Mahindra & Mahindra will be able to ramp up output and can use some Punjab Tractor centers for increased exports, he said.

Mahindra beat out Ashok Leyland and Tata Motors to acquire the stake.

Punjab was once the second-largest player in the market but lost ground due to management issues and a loss of focus on its core tractor business.

The company has since recovered some lost ground, and the acquisition is likely to improve Punjab Tractor’s balance sheet and help it optimize production, according to Karne.

The tractor market is expected to continue to exand on the back of agricultural demand and an increase in the government's farm loan program by 18% in this year’s budget, he said.

Kotak Investment Banking advised Mahindra & Mahindra on the transaction, while Citigroup advised the sellers. The deal is subject to regulatory approval.

Shares of Punjab Tractor rose 1% Friday on the Bombay Stock Exchange to 307.05 rupees ($6.96), slightly below the price paid by Mahindra & Mahindra. Shares of Mahindra closed at 225 rupees ($5.10), up 0.1%.

Mahindra & Mahindra, one of the world’s top five tractor makers, is a unit of the $4 billion Mahindra Group. The company is the leading manufacturer of multi-utility vehicles in India.

Last month, it announced an alliance with Renault and Nissan to jointly invest $90.35 million to build a car factory in Chennai in the south Indian state of Tamil Nadu.