Kaynes Technology India Ltd. is working with bankers, investors and strategic partners on different models that include spinning off part of the company into a special purpose vehicle, Managing Director Muthukumar Narayanaswamy told NDTV Profit. The company is reviewing the structure as it seeks to reduce the working-capital pressure from its smart metering business.
Narayanaswamy said the company is already in discussions with bankers and investors and is also looking for strategic partners. He said Kaynes expects to come out with "positive news" on the plan around February.
"The management is already working on models of a different model to ensure that we spin off a part of the company as an SPV so that we don't have this much of an impact," Narayanaswamy said.
The potential restructuring comes as smart metering accounts for about 70% of Kaynes' receivables, while contributing about 25%-30% of revenue, according to Narayanaswamy.
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Business Model
The review of the metering business is not new. During the Q1 FY27 earnings call, management said it was considering different business models, including separating the service-provider portion so that its receivables would not directly affect Kaynes' balance sheet. It said the company was working on the model and would provide clarity around February.
The latest interview provides more detail on the process, with Kaynes now working with bankers, investors and potential strategic partners.
Narayanaswamy said the company's metering business has a different model from its core electronics manufacturing services business, with both capital expenditure and operating expenditure elements affecting receivables.
He said Kaynes continues to generate 60%-65% of its revenue from the EMS business and is looking at ways to separate the other portion of the metering service so that its receivables do not directly affect the balance sheet.
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Collections
Kaynes has already slowed its smart metering business to improve collections.
The company reported metering revenue of Rs 204 crore in Q1 FY27, down 12% from Rs 231 crore a year earlier. Management said it had taken a conscious decision to reduce metering growth and focus more on its core EMS business while working to improve collections.
Narayanaswamy said smart metering receivables would remain elevated in Q2 but should start declining from Q3 as the company reduces revenue from the business.
"In the second quarter results it will continue to be there, but from the third quarter it'll start dropping down," he said.
He said Kaynes expects its working-capital position to improve by the third and fourth quarters.
Narayanaswamy also said the company remains confident of growing at twice the market rate. When pressed for an absolute number, he said 35%-40% growth is currently possible under the prevailing market conditions.
The company has not disclosed the exact structure of the proposed SPV, the portion of the business that could be transferred, the identity of potential investors or strategic partners, or the financial terms of any transaction.
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