Kajaria Ceramics Fraud: Subsidiary CFO Siphons ₹20 Crore

Introduction to the Incident

Kajaria Ceramics Ltd., India's largest manufacturer of ceramic and vitrified tiles, has disclosed a significant financial fraud amounting to ₹20 crore within one of its step-down subsidiaries. The company identified Dilip Kumar Maliwal, the Chief Financial Officer of its wholly-owned subsidiary Kajaria Bathware Pvt. Ltd., as the individual responsible for the embezzlement. The incident, which unfolded over the last two years, has prompted immediate action from the company, including the termination of the CFO and the filing of a police complaint. This development is expected to have a material impact on the company's financials and has raised concerns about internal controls.

Uncovering the Fraud

The financial irregularity was discovered at Kerovit Global Pvt. Ltd., a wholly-owned subsidiary of Kajaria Bathware, which itself is a subsidiary of the publicly listed Kajaria Ceramics. According to the company's management, the fraud came to light during a routine systems, processes, and MIS audit initiated as part of a broader corporate initiative dubbed "Kajaria 2.0." The management team noticed inconsistencies while migrating existing vendors to the company's new vendor portal. A deeper review revealed that Maliwal had allegedly registered himself as a company vendor and siphoned funds by processing payments to his own accounts. The management also claimed that Maliwal forged the signatures of his superiors to authorize these transactions.

Company's Immediate Response

Upon unearthing the fraud, Kajaria Ceramics' management acted swiftly. On December 18, 2025, a formal complaint was filed with the Deputy Commissioner of Police, Economic Offences Wing (EOW) of the Delhi Police, and an FIR was lodged at the Badarpur police station. The matter is now under official investigation. In parallel with the legal action, Kajaria Bathware Pvt. Ltd. terminated Dilip Kumar Maliwal's employment. To maintain transparency with stakeholders, the company organized an investor conference call on December 22, 2025, to discuss the event and its implications.

Management Addresses Investors

During the analyst call, the management of Kajaria Ceramics provided further details. They asserted that their internal findings suggest this was a single-person act and that a comprehensive review of all other companies and subsidiaries found no other discrepancies. However, they did not rule out a forensic audit for Kerovit Global to ensure a thorough investigation. The management expressed that they are not optimistic about recovering the entire embezzled amount. "We are not hopeful even half will be recovered," they stated, although they mentioned that Maliwal has promised to return some of the money. Approximately ₹50 lakh has been recovered so far.

Financial and Market Impact

The ₹20 crore fraud represents a significant financial blow. It accounts for approximately 15% of Kajaria Ceramics' consolidated net profit of ₹133 crore reported for the second quarter of FY26. The company has stated that this loss will be recorded as an exceptional item in its financial statements. The news had a direct, albeit moderate, impact on the company's stock. On the day the management addressed analysts, Kajaria Ceramics' shares were trading 0.4% lower at ₹1,049.50 on the National Stock Exchange. The stock had already closed the previous session 1.9% lower at ₹1,048 per share.

Strengthening Internal Controls

The incident has exposed a critical lapse in the company's internal financial systems. The management has committed to implementing more stringent processes to prevent such occurrences in the future. "There will be no compromise at all. We will make complete watertight systems, very, very strict systems," the management team assured investors. The matter will be presented to the appropriate board committee to formulate and oversee the implementation of enhanced safeguards across the organization.

Future Outlook

The focus for Kajaria Ceramics now shifts to three key areas: cooperating with the police investigation, pursuing the recovery of the siphoned funds, and reinforcing its corporate governance framework. The outcome of the investigation and the company's ability to strengthen its internal controls will be closely monitored by investors and the market. Restoring full investor confidence will depend on the effective implementation of these new safeguards and transparent communication regarding the progress of the investigation.