Kaynes Technology has issued a clarification regarding a report published by Kotak Institutional Equities on December 3, 2025. The company addressed key observations related to goodwill recognition, contingent liabilities, related-party transactions, borrowing costs, and capitalized technical know-how, providing detailed explanations and rectifications where necessary. The information aims to offer a clear understanding of these aspects to investors.
Response to Observations
Kaynes Technology has addressed concerns raised in a report by Kotak Institutional Equities, focusing on several key financial and accounting aspects.
Goodwill and Intangible Assets
The company clarified the recognition of previously unrecognised intangible assets as part of acquisition accounting, specifically under Ind AS 103. Customer contracts from the Iskraemeco acquisition were recognized as intangible assets and are being amortized. The goodwill was netted off with intangible assets. The company evaluates Goodwill and Intangible Assets annually.
Contingent Liabilities
Major additions to contingent liabilities include a Performance Bank Guarantee for Iskraemeco Projects (Rs.96.8 Cr) and corporate guarantees issued to subsidiary companies (Rs. 132.5 Cr).
Related Party Transactions
The company acknowledged that certain related-party transactions with Kaynes Electronics Manufacturing were not initially reflected in standalone financial statements but were eliminated in the consolidated statements. This has since been rectified. Specifically, purchases of Rs 1.8 bn from Kaynes Electronics Manufacturing in FY2025.
Year-End Payables and Receivables
Year-end payables of Rs 3.2 bn to Kaynes Technology and Rs1.8 bn to Kaynes Electronics Manufacturing, and receivables of Rs1.9 bn from Kaynes Technology, although eliminated in consolidated statements, were not reflected in standalone statements. This has since been rectified.
Borrowing Costs
The clarification addresses the average borrowing cost in FY 2025, stating that after considering bill discounting, the interest cost works out to 10%, lower than the initially reported 17.7%. Similar observation would result in an average borrowing cost of 25.3% for FY 2024.
Capitalized Technical Know-How
Kaynes explained that Rs. 1.8 Bn was capitalized as additions in Technical Know-How, including designs and prototypes in FY 2025. This includes Rs. 115 Cr on account of Large Customer contracts, Rs. 26 Cr development cost (related to Iskrameco acquisition) and Intangible assets generated as part of Inhouse R&D activities Rs. 39 Cr.
Source: BSE