Capillary Technologies India says fraud was external impersonation, not system breach

Capillary Technologies India (NSE: CAPILLARY) said in a filing on 31 Oct 2026 that it had received a forensic report from KPMG on 30 Oct 2026 on a cyber-enabled banking fraud at a step-down subsidiary. The report says external parties impersonated a senior executive and an outside lawyer to divert four payments.

What the forensic report found

KPMG Česká republika, s.r.o. concluded that the incident was a fraud carried out by external parties who impersonated a senior executive and an outside lawyer, using a look-alike email domain and off-channel communications. The report establishes there was no traditional email spoofing, no forged use of the company's real domain, no malware, no endpoint or mailbox compromise, no account takeover and no unauthorised access to the company's systems. It also establishes no questioned employee involvement or wrongdoing.

The four disputed payments, totalling EUR 3,041,169.90, were made from Session M Czech Republic s.r.o. between 26 Jun 2026 and 2 Jul 2026. Three went to ZZDJB CO LIMITED at HSBC Hong Kong and one to ZHONGXIAN TRADING PTE. LTD at UOB Singapore. The summary calls the use of deepfake voice or video an unverified allegation that could neither be substantiated nor refuted.

Limits of the findings and the company's response

The KPMG summary says the absence of identified compromise is limited to the artefacts and records reviewed, and should not be presented as proof that compromise was impossible. It says the first-hop payments are evidenced, while onward fund movement, beneficial ownership and recovery are outside the current forensic scope. No attribution to a specific individual, group or threat actor was established.

The company says it has further strengthened its payment controls and is actively pursuing recovery and legal remedies. The summary is an internal management and legal review document and, by its own terms, should not be used as a standalone expert report, legal opinion or insurance proof of loss without approval.

What the fraud report means for Capillary Technologies India's shareholders

The filing concerns payments diverted from a step-down subsidiary and does not give the loss in rupees after conversion from euro. The company's latest quarter, Q1 FY27, showed a consolidated net loss of ₹9.55 crore on total income of ₹262.35 crore, and the filing does not say what effect the incident has had on results. Also not stated: how much, if any, has been recovered, whether funds can be traced beyond the first hop, and the outcome of the legal remedies.

The filing does not set out a next dated step. The company has not said when recovery or legal proceedings will conclude.

At a glance