Kaynes Technology India Limited, a key player in electronic manufacturing services, plans to change its statutory auditor after acknowledging "inadvertent non-disclosure" of certain related-party transactions in its standalone financial statements. The company also clarified its accounting practices for goodwill and receivables following a critical report by Kotak Institutional Equities. The revelations, which surfaced in early December 2025, led to a significant drop in the company's stock price, with shares falling more than 30% in a week.^{[1][2][3][4][5]} ### Accounting Concerns Surface A report from Kotak Institutional Equities, dated December 3, 2025, flagged several inconsistencies in Kaynes Technology's financial disclosures. The brokerage highlighted issues across various entities within the Kaynes group, raising concerns about the company's reporting practices and transparency standards.^[6][1][2][7] These concerns included the accounting for goodwill, a surge in contingent liabilities, and undisclosed related-party transactions.^[1][7][8] Kaynes Technology admitted to not properly disclosing some related-party transactions in its standalone financial statements. These included purchases of Rs 1.8 billion from Kaynes Electronics Manufacturing in fiscal year 2025, year-end payables of Rs 3.2 billion to Kaynes Technology and Rs 1.8 billion to Kaynes Electronics Manufacturing, and receivables of Rs 1.9 billion from Kaynes Technology.^{[6][2][7][9][10][4]} The company stated that these transactions were correctly eliminated in its consolidated financial statements as per Indian Accounting Standards and have since been rectified for future compliance.^{[6][9][3][10]} The Kotak report also questioned Kaynes' accounting for goodwill and intangible assets, particularly after its acquisition of Iskraemeco.^[1][7][9][8] Kaynes clarified that it recognized customer contracts as intangible assets, amortizing them over the contract term, in line with Ind AS 103 (Business Combinations).^{[6][9][3][10]} The company further explained that these intangible assets were netted off with goodwill, and both are evaluated annually.^{[9][3][8][10]} Another point of contention was the significant increase in contingent liabilities, which rose to Rs 520 crore in fiscal year 2025, representing 18% of its net worth.^{[6][1][9][8][10][4]} This was up from Rs 270 crore, or 11% of net worth, in the previous fiscal year.^[8] Kaynes attributed this increase primarily to performance bank guarantees for Iskraemeco projects and corporate guarantees issued to its subsidiary companies.^[8][10] Concerns were also raised about Kaynes' borrowing costs, which Kotak calculated at an average of 17.7% in FY25.^[1][7][10] Kaynes clarified that when including bill discounting, the actual interest cost was closer to 10%.^[6][7][10] The company also addressed the capitalization of Rs 180 crore under technical know-how, designs, and prototypes, explaining it included Rs 115 crore for customer contracts, Rs 26 crore for Iskraemeco acquisition development costs, and Rs 39 crore from in-house research and development.^[7][9][10] ### Investor Confidence Hit The concerns raised by Kotak Institutional Equities and other brokerages led to a sharp decline in Kaynes Technology's stock. The shares plunged 8% on December 5, 2025, and fell 14% over two days.^[1][9][11] The stock continued its downward trend, losing about 22.80% in five days and as much as 26% over three consecutive sessions to December 8, 2025.^[12][4] Overall, Kaynes Technology's shares dropped more than 30% in the last 30 days and were down over 40% from their October 2025 peak.^[1][2][3][5] Despite the negative market reaction, Kaynes Technology's management held an investor call to address the observations.^[2][4] The company insisted that the disclosure issues were an "articulation lapse" or "communication gap" rather than a lapse of intent or conduct.^[2][10] Management asserted there were no governance issues and that the underlying financials were accurate, especially at the consolidated level.^[12][2][5] They also stated that many conclusions in the reports were "factually incorrect."^[12] The company expects its receivables to normalize by the year-end, assuring investors that the collection cycle will not exceed 90 days, supported by appropriate financing.^[2] This addresses concerns about rising debtors, which had been highlighted by some analysts.^[8] ### What Happens Next In light of the reporting lapse and the intense scrutiny, Kaynes Technology is set to change its auditor. The Bombay Stock Exchange (BSE) sought clarification from the company on December 8, 2025, regarding news reports about this auditor change.^[13] K P Rao & Co currently serves as the statutory auditor and had issued an unmodified opinion on the company's financial results for the year ended March 31, 2025.^[14][15] Kaynes Technology has stated its commitment to correcting disclosure lapses and ensuring future compliance. The company reaffirmed its respect for independent market analysis and emphasized its responsibility to provide clear, factual information to the investor community.^[9][10] While the company maintains the integrity of its consolidated financial statements, the planned auditor change signals a move to enhance transparency and address investor concerns.

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