Kajaria Ceramics Limited addressed a significant fraud incident at its subsidiary during a conference call. The company disclosed fraudulent activities worth approximately ₹20.00 crores at Kerovit Global Private Limited, a step-down subsidiary specializing in sanitary ware manufacturing.

Fraud Details and Discovery

The fraudulent scheme involved the creation of fake vendors and unauthorized payments orchestrated by Kerovit Global's Chief Financial Officer over a two-year period. The CFO created vendor accounts in his own name and forged management signatures to mislead other signatories in the maker-checker approval process.

The fraud was discovered during the company's vendor migration process as part of Operation Manthan, when discrepancies were found in Capital Work in Progress (CWIP) entries. The fraudulent payments were disguised as advances for machinery purchases related to a new sanitary ware plant expansion.

Operation Manthan and Cost Optimization

Kajaria Ceramics launched Operation Manthan as a comprehensive review of internal systems, processes, and business frameworks. This initiative has yielded significant cost savings across multiple operational areas.

The cost optimization efforts included better raw material negotiations, carton re-engineering, packaging material cost reduction, manpower reduction following sales team unification, and comprehensive travel expense cuts affecting employees, directors, and promoters.

Financial Impact and Recovery Prospects

The fraudulent amount was distributed across two financial years, with ₹6.00 crores in the previous year and ₹14.00 crores in the current financial year. Since the amounts were parked in CWIP, no depreciation was charged on these fraudulent entries.

The company expects to treat the loss as exceptional expenditure in its financial statements. While the accused employee has promised to return additional funds, management remains conservative about recovery prospects, stating they are "not hopeful even half will be recovered."

Strengthened Governance Measures

Kajaria Ceramics has implemented enhanced vendor onboarding systems across all subsidiaries through partnership with Sequelstring, a third-party vendor management platform. The new system includes:

• Automated online vendor verification processes
• Four-member approval authority for vendor onboarding
• Comprehensive validation of GST numbers, PAN details, and banking information
• Elimination of manual intervention in vendor creation
• Migration of existing vendors to the new platform within 2-3 months

The company has filed complaints with local police and the Economic Offences Wing. Management emphasized their commitment to creating "watertight systems" and transitioning from a person-based to system-based organization to prevent future incidents.

Company Response and Future Outlook

Managing Director Rishi Kajaria characterized the situation as part of "Kajaria 2.0," where the company's philosophy involves sharing bad news immediately while announcing good news only upon completion. The management stressed that this incident reflects their enhanced commitment to transparency and robust governance.

Despite the fraud incident, the company's fundamentals remain strong, with the new sanitary ware plant at Kerovit Global now operational and contributing to production. The comprehensive review of all other subsidiaries revealed no similar discrepancies, providing confidence in the isolated nature of this incident.

Kajaria Ceramics has implemented stricter controls under Operation Manthan, which has also resulted in significant cost savings. The company reports achieving ₹150.00 crore in annual cost savings through various optimization efforts across raw materials, plant operations, manpower, and travel expenses.

Kajaria Ceramics Limited has made available the audio recording of its investor conference call held on December 22, 2025, which addressed the recent ₹200 crore fraud case at its subsidiary. The company uploaded the recording to its official website following the completion of the call that was organized to update stakeholders about the unexpected fraud event.

Conference Call Completion and Recording

The company has fulfilled its commitment to transparency by providing public access to the complete discussion held with investors. In its communication to stock exchanges, Kajaria Ceramics confirmed that the audio recording has been uploaded and can be accessed through their corporate website.

Fraud Case Overview

The fraud was committed by Mr. Dilip Kumar Maliwal, who served as the Chief Financial Officer of Kajaria Bathware Private Limited (KBPL), a wholly-owned subsidiary of Kajaria Ceramics. The fraudulent activities involved embezzlement and siphoning of funds over a period of two years.

Regulatory Compliance and Transparency

The company's approach demonstrates adherence to regulatory requirements under Regulation 30 of SEBI Listing Obligations and Disclosure Requirements Regulations, 2015. The management's decision to make the complete audio recording publicly available reflects their commitment to maintaining transparency with all stakeholders during this challenging period.

Immediate Actions and Investigation

Following the discovery of the fraud, Kajaria Ceramics took swift corrective measures including filing a police complaint against the CFO and terminating Mr. Dilip Kumar Maliwal from the service of KBPL. The case remains under active police investigation as the company works toward recovery and strengthening internal controls.