India Ratings and Research (Ind-Ra) believes that EMC's ('IND A-'/Stable) Rs 1,000 million investment in McNally Bharat Engineering Company (MBECL) for acquiring a 19.77% stake will not affect its credit profile. The investment has been funded by way of a fresh loan.

EMC's investment in MBECL will take the total holding of the EMC group to 29.64% post issuance of new shares. The promoters of EMC had already invested Rs 500 million in MBECL through a group company MKN Investment for acquiring a 12.55% stake in March 2015.

 The acquisition triggered an open offer for acquiring additional 26% in the company based on Securities and Exchange Board in India's takeover norm, for which funding has been tied up.

EMC and Williamson Magor Group, the current promoters of MBECL, had planned to participate in a joint open offer. Post completion of the open offer, EMC group is likely to be the largest shareholder.

EMC has confirmed to Ind-Ra that it has an understanding with the lenders and promoters of MBECL that there will be no further financial assistance from EMC. EMC has also not extended any financial guarantee or undertaking to MBECL's lenders. EMC will be the co-promoter of MBECL and jointly control the management.