Kaynes Technology India Limited held a comprehensive business update conference call on December 8, 2025, to address observations raised in a Kotak Institutional Equities report. The management team, led by Executive Vice Chairman Ramesh Kunhikannan and CFO Jairam Sampath, provided detailed clarifications on accounting practices and reaffirmed the company's strong business fundamentals.

Management Response to Key Observations

Iskraemeco Business Performance Clarification

The management corrected several factual inaccuracies in the Kotak report regarding Iskraemeco's performance. Contrary to the report's claim of 28% net margin in H2 FY25, the actual margin was only 9% with revenues of ₹327.00 million and PAT of ₹48.90 million.

The H1 FY25 loss was attributed to significantly lower revenue of ₹85.00 crores, unchanged fixed costs, provisions from due diligence including inventory write-offs, and broader corporate cleanup adjustments.

Goodwill and Intangible Assets Recognition

Kaynes provided detailed explanations of its acquisition accounting practices for Iskraemeco and Sensonic acquisitions in FY25:

The company recognized customer contracts worth ₹115.00 crores as intangible assets under technical know-how, representing design implementation knowledge, hosting, and communication packages for smart metering.

Intangible Assets Capitalization Breakdown

Kaynes clarified the ₹180.00 crores capitalized as technical know-how additions in FY25:

Working Capital and Financial Management

Receivables Management Strategy

The management outlined comprehensive measures to address working capital concerns:

• Smart Meter Receivables: ₹687.00 crores total, including current and non-current portions
• Discount Strategy: Approximately ₹240.00 crores to be discounted off books
• Collection Timeline: Target to maintain collection periods within 90 days
• Supply Chain Finance: Collaboration with foreign banks offering lower interest rates

Borrowing Cost Clarification

Addressing the 17.70% average borrowing cost observation, Kaynes clarified that including bill discounting, the actual interest cost works out to 10.00%, showing improvement from FY24's equivalent calculation of 25.30%.

Business Outlook and Growth Strategy

Revenue Projections and Segment Performance

For FY26, Kaynes projects strong growth across multiple verticals:

OSAT Initiative Progress

The company reported significant milestones in its semiconductor assembly and test operations:

• Client Acquisition: Three major clients - Alpha Omega Semiconductor, Infineon, and Larsen & Toubro
• Commercial Production: First shipments completed, making Kaynes the first in India to ship from this facility
• Funding Status: ₹10.30 billion requirement to be funded through QIP, internal accruals, and government subsidies
• Subsidy Management: Dedicated team established for efficient subsidy documentation and compliance

Governance and Compliance Improvements

Related Party Transaction Disclosure

The management acknowledged an inadvertent omission in related party transaction disclosures in standalone financial statements, which has been rectified. The company is implementing software solutions to ensure comprehensive contra entries for all related party transactions across subsidiaries.

Structural Enhancements

Ramesh Kunhikannan outlined planned improvements:

• Team Expansion: Additional personnel in taxation, finance, and manufacturing
• Leadership Enhancement: Bringing in more senior leadership
• Communication Model: Revisiting and improving stakeholder communication processes
• Internal Controls: Strengthening audit review processes and disclosure checks

Financial Position Update

As of the latest available data, Kaynes Technology's financial metrics show:

The management emphasized that despite the accounting disclosure oversight, there are no underlying governance concerns or business deterioration. The company remains focused on its long-term growth roadmap, with strong momentum in EMS business, OSAT initiatives, and high-end PCB programs positioning India meaningfully in the global semiconductor value chain.

Kotak, a prominent financial services firm, has identified multiple inconsistencies in disclosures across various entities within Kaynes Technology India Limited (Kaynes), an electronic manufacturing services (EMS) company. This observation has sparked concerns about the company's reporting practices and adherence to transparency standards.

Disclosure Discrepancies

The inconsistencies noted by Kotak span across different entities within the Kaynes group. While specific details of these discrepancies were not provided, such findings typically relate to variations in financial reporting, operational metrics, or corporate governance practices across different subsidiaries or affiliated companies.

Implications for Investors

These revelations could have significant implications for investors and stakeholders of Kaynes:

1. Transparency Issues: The inconsistencies raise questions about the overall transparency of Kaynes' corporate structure and financial reporting.
2. Investor Confidence: Such discrepancies may impact investor confidence, as consistent and accurate disclosures are crucial for making informed investment decisions.
3. Regulatory Scrutiny: The findings could potentially attract increased regulatory attention, possibly leading to further investigations or audits.

Financial Position of Kaynes

Despite the concerns raised by Kotak, it's important to consider Kaynes' recent financial performance. Based on the latest available consolidated balance sheet data:

The company has shown significant growth in total assets and equity over the past year, indicating overall financial expansion. However, the sharp increase in current liabilities (128.48%) is noteworthy and may warrant further investigation.

Looking Ahead

As the situation unfolds, investors and market watchers will likely keep a close eye on:

1. Kaynes' response to these allegations
2. Any potential clarifications or restatements of financial disclosures
3. Possible regulatory actions or investigations
4. The impact on Kaynes' stock price and market perception

It's crucial for investors to approach this situation with caution and seek additional information as it becomes available. The coming days may bring more clarity on the extent and nature of the inconsistencies identified by Kotak, and their potential impact on Kaynes' financial standing and market position.