Kaynes Technology has released a detailed clarification in response to observations highlighted in a report published by Kotak Institutional Equities on December 3, 2025. The company noted that it values independent market analysis and believes such research contributes meaningfully to transparent investor understanding. At the same time, it emphasised its responsibility to present factual information that allows stakeholders to assess the business with clarity and confidence.
The clarification covers six key areas raised in the report, ranging from goodwill recognition to borrowing costs and related-party disclosures. Kaynes Technology reiterated that its financial reporting practices follow Indian Accounting Standards and that corrective steps have already been taken wherever disclosure gaps were identified.
The first point addressed by the company relates to goodwill recognition and adjustments made during acquisitions. Kaynes explained that under Ind AS 103, intangible assets that were not previously recognised can be added as part of acquisition accounting. In this case, a significant portion of the acquisition consideration related to contract value at Iskraemeco, allowing customer contracts to be recognised as intangible assets and amortised over the contract period. The company clarified that these intangibles were offset against goodwill and are reviewed annually due to their unique nature.
The next observation concerned the rise in contingent liabilities to about ₹520 crore, representing roughly 18% of net worth. Kaynes attributed this increase to performance bank guarantees issued for Iskraemeco projects amounting to ₹96.8 crore, along with corporate guarantees extended to subsidiary companies totalling ₹132.5 crore. These guarantees became necessary due to additional funding requirements at Iskraemeco following its acquisition.
Kotak’s report also pointed out that purchases worth ₹1.8 billion from Kaynes Electronics Manufacturing in FY25 were not reflected in related-party disclosures. Kaynes acknowledged that while the transactions were correctly eliminated in consolidated financial statements, they were inadvertently omitted from standalone disclosures. The company confirmed that the oversight has been corrected and will be monitored more closely going forward.
A similar clarification was issued regarding year-end payables and receivables between Kaynes Technology and Kaynes Electronics Manufacturing. These transactions, too, were eliminated at the consolidated level but were mistakenly not included in standalone related-party disclosures. Kaynes stated that the disclosures have now been rectified and that both entities had already accounted for these entries in their financial statements.
The report also questioned the company’s borrowing cost, which appeared unusually high at 17.7% for FY25. Kaynes responded that the computation must include bill discounting to arrive at the true effective interest rate, which brings the cost down to about 10%. It also noted that using the same methodology would show an average borrowing cost of 25.3% for FY24, indicating improvement rather than deterioration.
At last, Kaynes addressed concerns around the capitalisation of ₹1.8 billion as additions to technical know-how, including designs and prototypes. The company clarified that ₹115 crore of this amount relates to intangible assets recognised from large customer contracts, ₹26 crore corresponds to development costs linked to the Iskraemeco acquisition, and another ₹39 crore stems from in-house R&D initiatives.
