In-Depth SWOT Analysis of Kirloskar Oil Engines – The Leading Manufacturer Of Diesel Engines & Generator Sets

Quick Stats on Kirloskar Oil Engines

Founder	Laxman Rao Kirloskar
Year Founded	1946
Origin	Pune, Maharashtra
No. of Employees	18,000
Company Type	Public
Market Cap	Rs 2,244 Crore (2022)
Annual Revenue	Rs 2694.44 Crore (2021)
Net Income/ Profit	Rs 1,792.67 Crore (2021)

Products of Kirloskar Oil Engines

KOEL has been in the engineering industry for more than a century and currently deals in these three major products:

• Power GEN
• Industrial Engines
• FireFighting
• Farm Mechanisation
• Water Solutions

Competitors of Kirloskar Oil Engines

KOEL is a brand that has Indian origin but is now popular globally. The top 4 competitors of Kirloskar Oil Engines are

• Triveni Turbine
• Greaves Cotton
• NESCO
• KSB Pumps

After understanding the core of the company, let us now proceed to the SWOT analysis of Kirloskar Oil Engines. 

SWOT Analysis of Kirloskar Oil Engines

SWOT analysis (or swot matrix) is a strategic planning technique used to help a person or organisation identify strengths, weaknesses, opportunities and threats related to business competition or project planning. 

To better understand the SWOT analysis of Kirloskar Oil Engines, refer to the infographic below:

So let us first start by looking at the strengths of Kirloskar Oil Engines from the SWOT analysis of Kirloskar Oil Engines

Strengths of Kirloskar Oil Engines

Strengths are interval positive attributes or capabilities a person has control over and makes full use of skills competencies knowledge.

• Wide Range of Products: In power generation, Kirloskar Oil Engines specialises in the manufacture of air-cooled and liquid-cooled diesel engines and gen-sets offering a wide range of power outputs. They also have a strong presence in industrial engines where they power earth moving construction, mining, fluid handling, material handling equipment and marine applications.
• Quality Standards: Kirloskar Oil Engines are a continually evolving company that’s been built over decades to meet future customers’ needs. Be it their engineering facilities or R&D. Kirloskar Oil Engines always try to improve consistently to meet the highest quality standards and fulfil their customers’ needs.
• Manufacturing Facilities: Kirloskar Oil Engines has a network all over India of operations that create and deliver high-quality products. They have four facilities with a workforce of more than 3100 employees. They have advanced manufacturing units in India at our Pune, Nashik, Rajkot and Kolhapur plants. 
• Research & Development: It is a strong, innovative and creative advanced team for research and development which is a pro point. They invest 2.5% of their annual turnover in the R&D of Kirloskar Oil Engines.
• Support From Collaborators: Kirloskar Oil Engines has been getting constant and huge support from collaborators that helps with modern technologies and transform them to suit Indian conditions. 
• Strong Base in Engineering: Since it has a strong base in engineering, it is stable in the market and industrial relationships. It is the largest engine and generator manufacturer with products like electric pumps, earthmoving, gensets etc.
• Multiple Sources of Income: Due to the innovative and unique mindset,  Kirloskar Oil Engines Limited has launched many products over the years. And due to this diversity comes a large customer base which in turn means several sources of income for the company.

Weaknesses of Kirloskar Oil Engines

Weaknesses are negative aspects and attributes which have little control over. These are the areas where the business needs to improve to remain competitive.

• Longer Delivery Cycles: Its products take more time to deliver than its international competitors which can be a huge con according to the customer base. 
• Less Marketing Manufacture: Kirloskar Oil Engines lacks marketing manufacture which leads to inadequate supply. 
• Increasing Net Debt: Kirloskar Oil Engines had ₹12.3b of debt, an increase of ₹8.32b, over the year 2021. However, the company does have a cash offsetting of ₹7.31b, leading to net debt of about ₹4.99b.
• Less Importance to Suppliers: Kirloskar Oil Engines Limited is primarily about innovation and new techniques which indicates that it gives much less importance to its suppliers. As and when a new technology comes, KOEL starts focusing on it forgetting about the older suppliers. Due to this the suppliers feel neglected and don’t know when their time would end in the organisation which is a big weakness of KOEL.

• Net Profit: Kirloskar Oil Engines’s net profit which is Rs 25.27 Crore is relatively low compared to its annual revenue of Rs 2694.44 Crore which is a standalone decline of 58.31%. Kirloskar Oil Engines should strictly look after its expenses and competitors’ business matrix.

Opportunities for Kirloskar Oil Engines

Opportunities are uncontrollable external events a person can potentially leverage. These are favourable external factors that could give an organisation a competitive advantage.

• Launch of New Products: Kirloskar Oil Engines should launch new products that ensure top-class performance and efficiency as recently the company announced a launch of ‘High-Efficiency Low Voltage Electric Motors’ that will power machines in all applications across industries.
• Ageing Plants: Since it has more old and required services and is in the market for a long time it has faster machinery and more market visibility compared to its competitors.
• Upcoming Huge Growth: India is going to see huge growth in the power generator market by the year-end of 2029 and it is beneficial for companies dealing in this sector like Cummins Power Generation, YANMAR CO, Kirloskar Oil Engines Ltd etc. The growth will open doors to increased revenues for these companies.
• Social Media: The number of internet users has substantially increased post covid, and thus Kirloskar Oil Engines can promote its products, interact with customers, and respond quickly to complaints through various social media sites like Facebook, Instagram, and Twitter etc.

If you have a business that you think can go online then you can also do the same. But hold on! Are you aware of the latest and quickest methods of promoting a business on social media sites? If your answer is yes, no-no, yes then you should check out our short term course in social media marketing that will help you to clear your yes, no-no, yes confusion. The course looks short but it will make you aware of every nook and corner used to promote your business on social media.

• Global Expansion: Kirloskar Oil Engines can make use of India’s market supremacy to expand to other regions of the world.
• Increasing Demand: People are opting for more stable structures and intensive use of earthmoving and construction products are taking place, even the government is spending heavily on infrastructure projects. Thus, this is the right time to fully tap these markets.

Threats to Kirloskar Oil Engines

These are the factors that have the potential to harm an organisation. Threats are uncontrollable external factors that might overcome or damage the strength and opportunities.

• Cheaper Product Availability: Many individuals look for a cheaper option for any product or service. Although the quality of the product is great the consumer is ready to compromise it if a cheaper option is available. If Kirloskar Oil Engines doesn’t go with value-based advertising they could lose the market share to cheap rip-offs.
• Competitors: Kirloskar Oil Engines faces a lot more competition in every way that is national as well as international level. 
• Increase in Small Contractors: The increase in small contractors can lead to price wars which can be a huge threat for Kirloskar Oil Engines.
• Evolving Technology: Technology is ever-changing, and if Kirloskar Oil Engines doesn’t manage to adapt to the new upcoming trends, then very soon it will be kicked out of the market by its competitors.
• Price Competition: When a business engages in price competition, its bottom line suffers. The threat to Kirloskar Oil Engines is just the same. Kirloskar Oil Engines is obliged to compete on price due to the enormous number of brands offered, which has a detrimental impact on its bottom line.

Well, we have come to an end with the SWOT analysis of Kirloskar Oil Engines. Let us conclude what we have seen.