The stock had taken a huge beating in a meltdown in small-cap and mid-cap stocks since mid-May 2006. From a high of Rs 321.80 on 2 May 2006, it has tumbled to Rs 169.65 by 21 July.

Kirloskar Oil Engines (KOEL) reported a 59.6% growth in Q1 June 2006 net profit to Rs 23.47 crore (Rs 14.70 crore). Net sales rose 34.4% to Rs 426.97 crore (Rs 317.55 crore). The results were announced on Saturday (22 July).

Kirloskar Oil is enhancing its capacity and undertaking a modernisation of its plants in anticipation of orders from the booming infrastructure and auto sectors.

KOEL is one of the leading manufacturers of 5 HP-11,000 HP diesel engines in India.

Its business is divided into two segments—engine and non-engine. Engines contribute almost 80% to the company's revenues and find uses in powering agricultural machinery, construction and material handling machinery, marine and equipment for the armed forces.

Within the engine segment, the medium engine category brings in a major chunk of the revenues (68%) followed by small engines (22%) and large engines (10%).

The company is a leading player in the 20 HP-300 HP medium engines category. These are used in agriculture (tractors and pumpsets), power generation and industrial applications like mining, material handling, construction, earth moving, industrial equipment and telecom.

At present, the 500 HP-800 HP engines are procured from Daewoo, Korea but KOEL plans to produce these models from FY 2008 (year ending 31 March 2008) to make them cost-competitive.

KOEL exports engines, pumpsets and generating sets mainly to Africa, the Middle East, and the Asian region. The company's export strategy is to secure OEM contracts in the developed markets, especially Europe and US for tractor and construction equipment engines.