Kirloskar Oil Engines Wins Partial Relief in GST Case, Demand Cut to ₹4.35 Lakh

Kirloskar Oil Engines Limited (KOEL), a prominent player in the manufacturing sector, has received significant relief in its GST misclassification case. The company initially faced a Show Cause Notice for alleged misclassification in outward supply due to incorrect Harmonized System of Nomenclature (HSN) codes under GST regulations, but has now received a partially favorable adjudication order.

Initial GST Notice Details

The original notice dated September 19, 2025, from the Office of Deputy Commissioner of State Tax, Pune, Maharashtra, outlined substantial demands:

Original Demand:	Amount (₹)
Penalty:	76,47,755
Interest:	3,20,37,279
Tax Demand:	4,05,52,111
Total:	8,02,37,145

Favorable Adjudication Order

On December 12, 2025, Kirloskar Oil Engines received an Adjudication Order under Section 73(9) of the Maharashtra Goods & Services Tax Act, 2017, which was passed partially in favor of the company. The order resulted in a significant reduction of the tax demand, interest, and penalty:

Revised Demand:	Original Amount (₹)	Reduced Amount (₹)	Reduction
Penalty:	76,47,755	40,321	99.47%
Interest:	3,20,37,279	1,79,243	99.44%
Tax:	4,05,52,111	2,15,706	99.47%
Total:	8,02,37,145	4,35,270	99.46%

Regulatory Compliance and Impact

The company has disclosed this development to BSE Limited and the National Stock Exchange of India Ltd. in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. KOEL maintains that it does not foresee any material impact on its financial, operational, or other activities following this favorable outcome.

Case Background

The original case pertained to miss-classification in outward supply due to HSN (Harmonized System of Nomenclature) code issues under the provisions of the Central Goods and Services Tax Act, 2017, Maharashtra Goods and Services Tax Act, 2017, and Integrated Goods and Services Tax Act, 2017.

Business Outlook

With the substantial reduction in GST liability from over ₹8 crore to approximately ₹4.35 lakh, representing a 99.46% decrease, Kirloskar Oil Engines has successfully navigated this regulatory challenge. The favorable adjudication order demonstrates the company's ability to effectively address compliance issues while maintaining its operational focus.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-2.67%	-1.39%	+11.82%	+48.67%	+24.52%	+1,000.70%

Kirloskar Oil Engines Limited, a prominent player in the engine manufacturing sector, has reported a robust financial performance for the quarter ended June 30, 2023. The company's standalone net profit soared by 60% year-over-year, while its revenue from operations witnessed a significant increase of 33%.

Financial Highlights

Standalone Performance

Metric	Q1 FY2024	Q1 FY2023
Net Profit	₹103.24	₹64.58
Revenue from Operations	₹1,264.70	₹953.01

Consolidated Performance

Metric	Q1 FY2024	Q1 FY2023
Net Profit	₹125.53	₹82.06
Revenue	₹1,543.37	₹1,191.41

The company's financial results demonstrate strong growth across both standalone and consolidated operations. The substantial increase in net profit and revenue indicates improved operational efficiency and market demand for Kirloskar Oil Engines' products and services.

Operational Segments

Kirloskar Oil Engines operates through three key segments:

Business to Business (B2B)
Business to Customer (B2C)
Financial Services

This diversified approach allows the company to cater to various market needs and maintain a robust business model.

Corporate Actions

During the quarter, Kirloskar Oil Engines undertook several significant corporate actions:

Investment in Subsidiary: The company invested ₹36.05 crores in the rights issue of its wholly-owned subsidiary, Arka Financial Holdings Private Limited. This move is likely aimed at strengthening the financial services segment of the business.
Employee Stock Option Plan: Kirloskar Oil Engines allotted 93,657 equity shares under its employee stock option plan, potentially boosting employee engagement and aligning staff interests with company performance.

Board Changes

An important change in the company's board composition is on the horizon. Mr. Sunil Shah Singh, an Independent Director, will conclude his term on September 12, 2023. This transition in the board structure may bring new perspectives to the company's governance.

Conclusion

Kirloskar Oil Engines Limited's impressive financial results for Q1 FY2024 reflect the company's strong market position and effective business strategies. The significant growth in both revenue and profit, coupled with strategic investments and corporate actions, positions the company well for continued success in the engine manufacturing and related sectors.

Investors and stakeholders will likely be watching closely to see if this positive momentum continues in the coming quarters, especially given the evolving board dynamics and the company's investments in its subsidiaries.