Kaynes Tech management addresses analyst concerns on financial inconsistencies

Disclaimer This is an AI-assisted live blog with updates from multiple sources Disclaimer

Stock market today

Following a significant drop in its stock price, prompted by an analyst report flagging inconsistencies, the management of Kaynes Technology has moved to address investor concerns. In an interview with CNBC TV18, Ramesh Kunhikannan, Exec Vice Chairman, Kaynes Tech, clarified the company's position on the alleged inconsistencies and outlined steps to improve financial reporting and performance.

The concerns, highlighted in a note, pointed to discrepancies in disclosures between Kaynes Technology and its subsidiaries, particularly regarding inter-company transactions, payables, and receivables. Responding to these allegations, Kunhikannan stated, "If you see in the balance sheet and P&L, there is no mistake at all. It is only in the standalone we have missed, which we clearly clarified." He acknowledged a reporting omission in the standalone accounts of one subsidiary but assured that the consolidated financials remain accurate and that corrective action will be taken.

Specifically addressing a reported ₹45-46 crore receivable due from the parent company to its smart metering subsidiary, Iskraemeco, for over a year, Kunhikannan explained that this was an "aged receivable" that existed at the time of the subsidiary's acquisition. He committed to resolving the issue, stating, "By this financial year end, we should be able to close it."

In response to questions about the company's internal controls, Kunhikannan mentioned that while several controls are already in place, the company will review and strengthen its policies across all subsidiaries. He also confirmed that the company has been communicating with stakeholders, has filed a clarification with the stock exchanges, and is planning a group call to address all concerns comprehensively.

Beyond the accounting clarifications, the discussion also touched upon the company's operational financial health, particularly its elongated working capital cycle and negative cash flows. Kunhikannan acknowledged that electronic manufacturing is a capital-intensive business but laid out a clear target. "We are working and by the financial year end, we will bring it to sub 90 days cash cycle," he said. He further projected that the company will achieve positive operating cash flow by March of the current financial year, signaling an improvement in its financial metrics.