Kajaria Ceramics Limited — Q2 FY26 earnings call

Call held 22 Dec 2025

Management summary

Kajaria Ceramics held an update call to disclose a fraud of approximately INR 20 crores at its subsidiary, Kerovit Global, perpetrated by its CFO. The fraud was detected through internal initiatives like 'Operation Manthan,' which has also yielded over INR 150 crores in annualized cost savings. While INR 60 lakhs have been recovered and a police complaint filed, the company is not hopeful for full recovery. Management is implementing stronger systems and controls to prevent future incidents.

Highlights

  • Fraud of approximately INR 20 crores identified in step-down subsidiary Kerovit Global Pvt. Ltd.

  • INR 60 lakhs recovered immediately from the accused CFO.

  • Annualized cost savings of over INR 150 crores achieved through 'Operation Manthan'.

  • New robust vendor onboarding system being implemented across all subsidiaries, expected to be complete in 2-3 months.

  • Fraud involved the CFO creating a fake vendor and forging signatures for advance payments related to capex.

  • Police complaint filed and investigation is ongoing.

Concerns

  • Fraud/misappropriation of funds by a senior employee (CFO of subsidiary).

Key financials

  1. Fraud Amount Identified ₹20 Cr
  2. Fraud Amount Recovered ₹0.6 Cr
  3. Annualized Cost Savings ₹150 Cr

What they filed

Q1 FY27: revenue up 20.4%, net profit up 55.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,179 1,156 1,222 1,103 1,186 +1%1,168 +1%1,373 +12%1,328 +20%
EBITDA156 152 138 187 213 +37%200 +32%263 +91%260 +39%
Net profit86 79 43 110 134 +56%86 +9%157 +265%171 +55%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Profitability

  • Annualized Cost Savings Profitability · Annualized (achieved) · High confidence >INR 150 crores
    During the year, we have achieved cost savings of more than INR150 crores on an annualized basis.

    — Rishi Kajaria, Managing Director

Operations

  • Vendor Onboarding System Completion Operations · In coming 2-3 months · High confidence 2-3 months
    In coming, maximum it will take maybe 2 to 3 months, which will complete this activity to all the subsidiaries of Kajaria.

    — Anubhav Sharma, GM Purchase

  • Data Mitigation and New Process Implementation Operations · Around 3 months · Medium confidence Around 3 months
    That is the reason it will take around three months to mitigate the data and implement to this new process.

    — Anubhav Sharma, GM Purchase

Fraud Recovery

  • Recovery of Siphoned Funds Fraud Recovery · Ongoing · Low confidence INR 60 lakhs recovered, full recovery not hopeful
    Actually, we have recovered on the very next day. He has given us around INR60 lakh back... We are not very hopeful the full amount will be recovered.

    — Management

Risks & concerns

  • Fraud/misappropriation of funds by a senior employee (CFO of subsidiary).

    high

    Approximately INR 20 crores siphoned by the CFO of Kerovit Global Pvt. Ltd. over two years.

    Management acknowledged

  • Difficulty in recovering the full siphoned amount.

    medium

    INR 60 lakhs recovered, but management is not hopeful for full recovery of the INR 20 crores.

    Management acknowledged

  • Lapse in internal systems and controls, allowing fraud to persist for 2 years.

    medium

    Management admitted to a lapse in systems and controls, which allowed the fraud to go undetected for a period.

    Management acknowledged

Areas of evasion (1)

  • Discussion of other business questions not related to the fraud incident on a special call.

Q&A highlights

2 direct
Detailed explanation of the fraud, its nature, and how it was perpetrated. Direct
The person accused has created vendor in his own name... he has forged the signature of the approving authority management signature to mislead the other signatory who was doing online.

Provided crucial details about the mechanism of the fraud, identifying the perpetrator and the method used.

Asked by Shaleen, UBS

Recoverability of the INR 20 crores siphoned funds and its financial treatment. Partial
Actually, we have recovered on the very next day. He has given us around INR60 lakh back... We are not very hopeful the full amount will be recovered... 99% it will be shown as an exceptional expenditure.

Clarified the company's realistic expectations for recouping losses and how the amount would be accounted for financially.

Asked by Shaleen, UBS; Keshav Lahoti, HDFC Securities

Duration of the fraud, employee tenure, and the role of internal/statutory auditors in detection. Direct
He has been with us for the last 8 years. This thing has been happening for the last 2 years, but it was much lesser earlier. In the last 4 or 5 months, it increased a lot... this was our internal team which got us all our you know, lot of things were taken out... and this was the resultant of that.

Provided context on the longevity of the fraud and highlighted that internal governance improvements (Operation Manthan) led to its discovery, rather than external audits.

Asked by Sneha Talreja, Nuvama Wealth Management Limited; Amreen Gulnaaz, Individual Investor

2 min read 5 chapters

Detailed narrative

Discovery of Fraud at Kerovit Global

Kajaria Ceramics identified a fraud of approximately INR 20 crores at its step-down subsidiary, Kerovit Global Pvt. Ltd. The fraud, which occurred over the last two years with a significant increase in the last 4-5 months, involved the subsidiary's CFO creating a fake vendor in his own name and forging management signatures to siphon funds. The siphoned amount was related to capital work in progress (CWIP) for a new sanitary plant, with INR 6 crores in the last financial year and INR 14 crores in the current financial year.

Operation Manthan and Cost Optimization

The fraud was detected as a result of 'Operation Manthan,' an internal initiative launched in May 2025 to review internal systems, processes, and business frameworks. This exercise has already yielded significant results, with over INR 150 crores in annualized cost savings achieved. These savings stem from areas such as INR 80-90 crores in raw material negotiations, INR 20-25 crores from manpower reduction, and INR 15 crores from reduced travel expenses.

Enhanced Governance and Vendor Onboarding

In response to the identified discrepancies and as part of the 'Kajaria 2.0' philosophy, the company is strengthening its governance framework. A robust, automated vendor onboarding system, already in place for Kajaria Ceramics, is being rolled out to all subsidiaries. This process, which includes online verification of GST and PAN numbers, is expected to be fully implemented across all subsidiaries within the next 2-3 months.

Recovery Efforts and Financial Impact

Following the discovery, Kajaria Ceramics immediately recovered INR 60 lakhs from the accused CFO. A police complaint has been filed with the local police station and the Economic Offences Wing, and the individual is currently under interrogation. While the company is pursuing all avenues for recovery, management expressed low confidence in recouping the full INR 20 crores, stating it would likely be treated as an exceptional expenditure.

Commitment to Stronger Systems

Management acknowledged the lapse in systems and controls that allowed the fraud to occur. However, they emphasized a strong commitment to rectifying these issues and building 'watertight systems' to prevent future occurrences. The company aims to become a 'leaner and meaner organization' by continuing to identify and implement cost efficiencies and strengthening its operational and financial controls.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Consumer Durables earnings calls