KNR Constructions Limited received an order from the Commissioner of Income Tax Appeals deleting a ₹18.58 crore penalty for assessment year 2021-22. This development provides partial regulatory relief amidst ongoing disputes over larger penalties for previous years.

The order was issued by the Office of the Commissioner of Income Tax, Appeals, Hyderabad-12, on October 5, 2026. The deleted penalty was levied under Section 271AAD of the Income Tax Act, 1961. The company stated that the impact on its financial and operational activities is nil, noting it awaits consequential orders from the Assessing Officer.

Existing penalty exposure

This deletion contrasts with significant penalty orders received in September 2026 totaling approximately ₹71 crore for assessment years ranging from 2017-18 to 2020-21. These penalties were issued by the Assistant Commissioner of Income Tax, Central Circle 2(2) Hyderabad, following search-related assessments. The company disclosed this in a filing to stock exchanges on September 30, 2026, citing Regulation 30 of SEBI (LODR) Regulations, 2015.

The penalties for the earlier period were levied under Section 270A of the Income Tax Act, which pertains to misreporting or underreporting of income. The specific breakdown of those contested demands is as follows:

The largest portion of the earlier penalty liability, ₹56.40 crore, relates to AY 2019-20, accounting for nearly 80% of that total demand.

Company response and legal status

Regarding the older penalties, KNR Constructions stated that based on its internal assessment, the demands are legally unsound. The company confirmed it will file appeals before the appropriate forums within stipulated timelines. It noted that it would update stakeholders on the outcome of these proceedings as they progress.

The receipt of the new favorable order highlights the mixed regulatory risk profile for the infrastructure major. While the company maintains that the financial impact of the remaining ₹71 crore demand is contestable, investors will monitor the appeal process for any potential cash outflow implications should the initial legal challenges fail. The successful deletion of the AY 2021-22 penalty suggests the company's legal strategy may yield positive outcomes in other pending cases.

KNR Constructions Limited completed the sale of its 100% shareholding in subsidiary KNR Ramanattukara Infra Private Limited (KRIPL) to Indus Infra Trust for ₹549.14 crore. The transaction, finalized on October 5, 2026, marks the conclusion of the divestment process for the final special purpose vehicle (SPV) in the portfolio.

The company had invested ₹225.72 crore in KRIPL through equity and subordinated debt. With this transfer, KRIPL ceased to be a subsidiary of KNR Constructions effective October 5, 2026. This development follows earlier intimations regarding the sale of stakes in three other SPVs owned by the company, which were completed earlier in 2026.

Transaction background

KNR Constructions initially executed share purchase agreements with Indus Infra Trust on December 24, 2025. These agreements covered the proposed sale of 100% shareholding, including sub-debt, in four SPVs:

• KNR Palani Infra Private Limited (KPIPL)
• KNR Ramagiri Infra Private Limited (KRGIPPL)
• KNR Guruvayur Infra Private Limited (KGIPL)
• KNR Ramanattukara Infra Private Limited (KRIPL)

The company had previously extended the deadline for selling its stake in KRIPL to December 31, 2026, citing delays in complying with certain condition precedents. However, the transaction was concluded ahead of this revised timeline.

Completion status of other SPVs

The company had already completed the sale of its stake in three of the four SPVs prior to the KRIPL transaction. The transactions for KPIPL, KRGIPPL, and KGIPL were finalized following intimations dated May 30, June 11, and September 18, 2026, respectively. Only the KRIPL transaction remained pending until the recent completion.

Financial details of KRIPL transfer

Indus Infra Trust, a publicly listed infrastructure investment trust registered with SEBI, acquired the entire equity share capital of KRIPL. The buyer does not belong to the promoter group or group companies, and the transaction is not classified as a related party transaction.

What the Numbers Show

The sale of KRIPL resulted in a significant realization relative to the initial investment. KNR Constructions received ₹549.14 crore against an investment of ₹225.72 crore, indicating a substantial premium over the book value of the equity and subordinated debt. Additionally, KRIPL contributed 9.54% to the consolidated turnover and 8.65% to the consolidated net worth as of March 31, 2026, highlighting its material contribution to the group's financials prior to divestment.

Regulatory disclosure

This intimation was filed under Regulation 30 read with Part A of Schedule III of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015. The communication was signed by Haritha Varanasi, Company Secretary, on October 6, 2026.