Kaynes Technology India Limited has issued a detailed response to observations made in a Kotak Institutional Equities report dated December 3, 2025. The company's clarifications shed light on several financial and accounting practices, providing transparency to investors and addressing concerns raised in the report.

Key Clarifications

Goodwill Recognition and Intangible Assets

Kaynes explained that unrecognized Intangible Assets can be recognized as part of acquisition accounting, as per Ind AS 103-Business Combinations. The company disclosed that Customer Contracts were recognized as Intangible Assets and amortized over the contract term, particularly for the Iskraemeco acquisition.

Contingent Liabilities

The company addressed the increase in Contingent Liabilities to Rs. 520.00 Cr, which represents 18% of the Net worth. The major additions were attributed to:

These guarantees were necessitated by funding requirements at Iskraemeco subsequent to the acquisition.

Related-Party Transactions

Kaynes acknowledged inadvertent non-disclosure of certain related-party transactions in standalone financial statements, including:

• Purchases of Rs. 1.80 bn from Kaynes Electronics Manufacturing in FY2025
• Year-end payables of Rs. 3.20 bn to Kaynes Technology and Rs. 1.80 bn to Kaynes Electronics Manufacturing
• Receivables of Rs. 1.90 bn from Kaynes Technology

The company clarified that these transactions were eliminated in the consolidated financial statements as per Indian Accounting Standards and have been rectified for future compliance.

Borrowing Costs

Addressing the observation of a 17.70% average borrowing cost in FY2025, Kaynes clarified that when including bill discounting, the actual interest cost works out to 10%. The company noted that a similar calculation for FY2024 would have resulted in a 25.30% cost, indicating an improvement year-over-year.

Capitalized Intangible Assets

Kaynes provided a breakdown of the Rs. 1.80 Bn (6.5% of revenue) capitalized as additions in Technical Know-How:

Financial Position

As of March 2025, Kaynes Technology's consolidated balance sheet shows:

The significant increase in current liabilities and total assets suggests rapid expansion, potentially related to the acquisitions and projects mentioned in the clarifications.

Kaynes Technology's response demonstrates a commitment to transparency and compliance with accounting standards. The company's clarifications provide context to the financial figures and accounting practices questioned in the Kotak report. Investors and analysts may find this additional information valuable in assessing the company's financial position and growth strategy.

As the company continues to grow and engage in complex transactions, maintaining clear communication and robust financial reporting will be crucial for stakeholder confidence.

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.