NEW DELHI: Kaynes Technology India Limited on Friday issued a detailed clarification to the stock exchanges, addressing specific concerns raised in a report published by Kotak Institutional Equities dated December 3, 2025. The electronic manufacturing services (EMS) company provided point-by-point responses, acknowledging some administrative errors while defending its core accounting practices, particularly those related to its recent acquisition of Iskraemeco. The company, however, admits to inadvertently not disclosing some related party transactions in the financial statements.
The clarification comes as Kaynes Technology's stock experienced pressure in the market following the brokerage report. The share price of the company on Friday fell by 7 percent to Rs 4,600 (at 12;25 IST). It lost over 15 percent in the last five trading sessions. It is currently trading at 42 percent below its 52-week high of Rs 7,822 a share.
Kaynes Technology's response directly addressed the key observations outlined in the Kotak report:
Goodwill and intangible assets
The report questioned the goodwill recognition/reserve adjustments following acquisitions.
Kaynes clarified that under Ind AS 103 (Business Combinations), previously unrecognised intangible assets can be recognised as part of acquisition accounting. Since a major part of the consideration for the Iskraemeco acquisition was for a major contract, Customer Contracts were recognised as an intangible asset and amortised over the contract term. The intangible assets recognised were netted off with the goodwill. Goodwill and other intangible assets are evaluated annually.
Contingent liabilities surge
The brokerage noted that contingent liabilities increased to Rs 520 crore, or 18 percent of the Networth.
To this the management has responded saying major additions to contingent liabilities during the year were attributed to the post-acquisition funding needs of Iskraemeco. These included a Performance Bank Guarantee for Iskraemeco Projects of Rs 96.8 crore and a corporate guarantee issued to subsidiary companies totaling Rs 132.5 crore (Kaynes Electronics Rs 122.5 crore + Iskraemeco Rs 70 crore).
Non-Disclosure of related party transactions (RPTs)
The Kotak report highlighted non-disclosure of significant transactions in the standalone financial statements, including purchases of Rs 1.8 Bn from Kaynes Electronics Manufacturing in FY2025; year-end payables of Rs 320 crore to Kaynes Technology and Rs 180 crore to Kaynes Electronics Manufacturing, and receivables of Rs 190 crore from Kaynes Technology.
In its response, the company acknowledged that these related party transactions were inadvertently not disclosed in the standalone financial statements. It clarified that these transactions were eliminated in the consolidated financial statements as per Indian Accounting Standards. The management confirmed that this has since been rectified and noted for future compliance.
Average borrowing cost
An observation was made regarding a high average borrowing cost of 17.7% in FY 2025.
To this, Kaynes stated that when Bill discounting is included in the calculation, the average interest cost works out to 10%. The company also noted that using the same methodology, the average borrowing cost for FY 2024 would have been 25.3%, against the reported 17.7% for FY 2025.
Capitalised technical know-how
The report noted that Kaynes capitalised Rs 180 crore as additions in Technical Know How, including designs and prototypes in FY 2025.
The company specified that this amount included Rs 115 crore for Large Customer contracts, Rs 26 crore for development cost related to the Iskraemeco acquisition, and Rs 39 crore for Intangible assets generated as part of Inhouse R&D activities.
Kaynes Technology reaffirmed its respect for independent market analysis and stressed its responsibility to provide clear, factual information for the investor community. The full clarification has been made available on the company's website.
