Kirloskar Group charts growth path across biz; bets on industrial revival

India's oldest engineering conglomerate is ramping up expansion across engines, steel, compressors, real estate and finance, even as family disputes linger

The 137-year-old Kirloskar Group, one of India’s oldest engineering conglomerates, is embarking on a massive expansion across its four listed businesses — from engines and pig iron to compressors, real estate and finance — as it targets multi-billion-dollar revenue growth over the next five years. 

Kirloskar Oil Engines Ltd. (KOEL), led by Managing Director Gauri Kirloskar, has announced plans to triple its revenues to $2 billion by FY30, building on a transformation strategy that has already doubled growth in the last three years. 

“Three years ago, we launched our 2X3Y strategy to double revenue in three years,” said Gauri. “We’ve achieved 15–18 per cent annual growth since then, up from just 3 per cent before 2022. The next leg is to reach $2 billion in five years, driven by both power generation and industrial engines.” 

KOEL, which also runs Arka, its non-banking finance arm, is preparing to raise capital and eventually list the subsidiary. “We are looking at raising funds in the next six months and may list the NBFC around FY29–FY30,” Gauri said. “The business has gone through a management change and strategic repositioning. It’s a medium-term play, not immediate.” 

The expansion comes as the company rides a surge in demand from data centres, manufacturing and infrastructure sectors that need reliable power. “Power generation is doing very well today. Demand is strong and we see a 5–10-year trajectory where it will stay that way,” said Rahul Kirloskar, chairman of Kirloskar Pneumatic in an interview. 

Despite the family’s ongoing legal dispute, Rahul insisted the ongoing shareholder dispute won’t affect operations. “The dispute is only at the holding level, it has no impact on the businesses,” he said. 

The Kirloskar brothers are embroiled in 40 legal disputes and past mediation has failed to get a breakthrough. Atul and Rahul are sparring with their brother Sanjay over non-compete clauses and buying back shares in each other’s companies. Sanjay Kirloskar currently controls Kirloskar Brothers, a listed entity. 

Meanwhile, Kirloskar Ferrous Industries Ltd. (KFIL), which operates in pig iron, castings and steel tubes, is investing ₹3,500 crore over the next three to four years to expand capacity and improve efficiency. 

“Most of this will come from internal accruals, with only ₹500–₹1,000 crore as debt,” said Rahul, who is also the executive chairman of Kirloskar Ferrous. “We are building a new alloy steel plant and modernising the facilities we acquired through ISMT. We are also investing in renewable power to cut costs.” 

Rahul said the group’s goal is to turn more of its pig iron into value-added steel. “We make about 700,000 tons of pig iron. Our plan is to convert most of that into alloy steel rather than selling it as raw material,” he said. KFIL, already India’s largest producer of castings at 150,000 tons annually, aims to reach $2 billion in sales by FY30, mirroring KOEL’s target. 

The group’s Kirloskar Pneumatic Co. Ltd. (KPCL) — a leader in industrial compressors and refrigeration — will also scale up sharply. “Kirloskar Pneumatic currently clocks ₹2,000 crore in sales. We expect that to grow to ₹5,000 crore in five years,” said Rahul. “It’s one of the most profitable in the group, with 19 per cent pre-tax margins. The focus now is shifting from project-based to product-led growth.” 

The diversification doesn’t end there. The holding company, Kirloskar Industries Ltd, is expanding its real estate arm, while the NBFC arm under KOEL is scaling up financial services. “We started both real estate and financial services recently. Our first real estate project in Pune succeeded, so we’re building a second — 1.5 million square feet of commercial space due by 2027–28,” Gauri said. 

The Pune real estate project, funded by ₹1,500 crore in bank loans, marks the group’s return to property development. “We own about 100 acres across Pune and plan to develop it over the next decade,” Rahul added. 

Across the group, funding will mostly come from internal resources. “All our manufacturing companies are self-sufficient,” Rahul said. “KOEL has ₹600 crore in cash, Kirloskar Pneumatic ₹400 crore. Only Ferrous and real estate will need some external funding.”

 

Looking ahead, both see the Indian growth story as the key driver of expansion. “If India grows at 7 per cent, we must grow at 18–19 per cent,” Rahul said. “Most of our companies were India-focused, but now we’re expanding exports and finding niches where we can compete with China. We’re confident of 20 per cent compounded growth across the group over the next few years.” 

Yet, the group’s leaders admit that their biggest challenge isn’t capital — it’s talent acquisition. “Our growth is limited by talent, not money,” Gauri said. “We can attract people easily, but finding leaders who align with our values and culture is hard. I spend a lot of time on talent acquisition.” 

Rahul agreed, “Good people are either hard to find or too expensive. That’s true across Indian industry today.” 

On the macro environment, Rahul said India’s policy direction was positive, but regulatory overreach remains a concern. “At the macro level, India is on the right path,” he said. “But on the micro side, ease of doing business requires more attention.” 

Even so, the Kirloskars remain bullish. “We’re in sectors that aren’t going anywhere — power generation, compression, defence, cold storage, gas,” he said. “All these sectors are essential to India’s growth story. The next five years will be transformational for us.”