Kirloskar Electric Company Limited's Hubballi sale is stalled

Kirloskar Electric Company Limited’s proposed Rs 95.12 crore sale of 31 acres and 24 guntas at Gokul Road, Hubballi remained unresolved on November 6, 2026, because the required industrial-to-residential land-use change was still before the Karnataka High Court following a state appeal and Kirloskar Electric’s contempt petition.

What is delaying Kirloskar Electric’s Hubballi land sale?

Kirloskar Electric’s October 3, 2022 agreement to sell covers 31 acres and 24 guntas of property at Gokul Road, Hubballi for Rs 95.12 crore. The agreement requires the company to obtain permission from the relevant authorities to change the land use before the proposed transaction can proceed on its stated terms.

The process initially required documents from the Survey department, including a PT sheet and 11E sketch, after the Hubli Dharwad Urban Development Authority, or HUDA, requested them. Kirloskar Electric said it approached the Karnataka High Court’s Dharwad Bench after delays by the authorities; the PT sheet was subsequently arranged and the file was placed with HUDA for the land-use procedure.

HUDA recommended the company’s application on August 3, 2024 to the Commissioner for Urban Development and the Urban and Rural Planning Commission. However, the Principal Secretary of the Urban Development Department declined to issue a land-use-change order, citing an alleged violation of the Urban Land Ceiling Act, 1976.

What did the Karnataka High Court order on the land-use change?

The Karnataka High Court allowed Kirloskar Electric’s writ petition on February 25, 2026 and directed the Principal Secretary, Urban Development Department to issue the necessary land-use-change order within four weeks of receiving a copy of the ruling. The direction related to converting the Gokul Road property from industrial to residential use.

Kirloskar Electric submitted a representation for execution of that order on March 9, 2026. It said that the required order had still not been issued more than three months after the High Court ruling, leading it to file a contempt petition before the Dharwad Bench on June 2, 2026.

The Urban Development Department separately filed a writ appeal on April 7, 2026 before the Divisional Bench of the Karnataka High Court at Dharwad against the February 25 order. The company disclosed that the matter remained pending before the High Court as of its November 6, 2026 results announcement.

Why does the Rs 95.12 crore sale matter to Kirloskar Electric?

Kirloskar Electric said it was at an advanced stage of monetising the Hubballi immovable property, which it expects to improve working capital and performance in forthcoming periods. The company also said consolidated group net worth, after excluding the revaluation reserve, was eroded at September 30, 2026, although there was no term loan outstanding at that date.

The statutory auditors said their assessment of the going-concern basis relied on management representations and the restructuring plan, including monetisation of non-core assets and projected turnover growth. The auditors stated that the basis depends on Kirloskar Electric adhering to that plan and achieving the projected turnover, while noting accumulated losses and certain overdue payments to creditors.

Standalone current borrowings rose to Rs 113.83 crore at September 30, 2026 from Rs 100.33 crore at March 31, 2026. Cash and cash equivalents increased to Rs 42.05 crore from Rs 19.17 crore, while inventories increased to Rs 66.35 crore and trade receivables declined to Rs 63.95 crore over the same six-month period.

How did Kirloskar Electric’s operating performance change?

Kirloskar Electric reported standalone revenue from operations of Rs 164.44 crore for the quarter ended September 30, 2026, compared with Rs 142.11 crore in the corresponding 2025 quarter. Rotating machines revenue rose to Rs 84.29 crore from Rs 68.23 crore, while power generation and distribution revenue was Rs 67.11 crore compared with Rs 67.07 crore.

Standalone profit before tax was Rs 6 crore in the September 2026 quarter, compared with Rs 4.53 crore a year earlier. In the six months ended September 30, 2026, however, profit before tax was Rs 5 lakh, compared with Rs 4.98 crore in the prior-year six-month period.

The six-month cash-flow comparison showed an operating cash outflow of Rs 16.14 crore for the period ended September 30, 2026, against an inflow of Rs 7.11 crore a year earlier. The company reported a Rs 32.61 crore decrease in trade payables and other current liabilities and a Rs 12.64 crore inventory increase, partly offset by a Rs 17.91 crore inflow from receivables.

What funding has Kirloskar Electric received alongside the proposed sale?

Kirloskar Electric allotted 34,68,007 equity shares to Kirloskar Power Equipments Limited, a promoter-group company, through a preferential issue approved by the board on July 16, 2026 and shareholders on August 13, 2026. The shares were issued at Rs 115.34 each, raising Rs 40 crore, and the paid-up equity share capital rose to Rs 69.88 crore from Rs 66.41 crore.

Of the Rs 40 crore raised, Rs 5 crore had been used by September 30, 2026 for stated working-capital purposes, including repayment or prepayment of working-capital borrowings. The remaining Rs 35 crore was held in a separate scheduled-bank account, according to the disclosure.

Kirloskar Electric has completed a separate, smaller Gokul Road transaction involving 1.06 acres for Rs 3 crore. It entered that agreement on March 20, 2024 and handed possession to the purchaser on December 26, 2025 after receiving the full consideration, while granting an irrevocable power of attorney for approvals and execution of the sale deed.

Conclusion

Kirloskar Electric’s proposed Rs 95.12 crore Hubballi sale remains contingent on a land-use decision despite the February 25, 2026 High Court direction. The unresolved appeal by the Urban Development Department and the company’s June 2, 2026 contempt petition leave the timing of the proposed monetisation undisclosed.

The next disclosed development to watch is the outcome of the pending High Court proceedings and whether an order enabling the industrial-to-residential conversion is issued. Investors can also track use of the Rs 35 crore preferential-issue balance, as management has identified working capital, non-core asset monetisation and projected turnover as components of its restructuring plan.