Gameskraft net profit falls due to unsanctioned payments, GST impact; files police complaint

New Delhi, Sep 5 (PTI) Online gaming firm Gameskraft Technologies Ltd has filed a police complaint against its former CFO for allegedly siphoning off over Rs 231 crore -- whose write-off led to a decline in the company's FY25 net profit.

The Bengaluru-based firm on Friday reported a net profit of Rs 706 crore on a revenue of Rs 4,009 crore in the fiscal year 2024-25 (April 2024 to March 2025). This compared with Rs 947 crore net profit on a revenue of Rs 3,475 crore in the previous year.

The company said FY25 was the first full year of 28 per cent GST tax on its operations. The previous year earning was factoring in a six-month impact of the newly introduced GST regime for the online gaming sector.

The 2024-25 profit was also impacted by "a one-time accounting adjustment of past unsanctioned transactions amounting to approximately Rs 231 crore," it said in a statement.

While the company did not elaborate on the nature of unsanctioned transactions, sources with knowledge of the matter said the write-off pertained to discovery of money allegedly siphoned off by the firm's former CFO.

A police complaint has been registered against him in a Bengaluru police station.

The former employee, who was removed as Group Chief Financial Officer in May this year, could not be contacted for comments.

The complaint states that he executed unauthorised financial transactions totalling Rs 231.39 crore for the past years. It goes on to state that he had in a purported email to the company in March this year "voluntarily admitted" of misusing company funds for personal equity and derivatives trading.

He is said to be absconding since March.

Following the discovery of unauthorised use of company funds, Gameskraft instituted a forensic audit which revealed the extent and nature of funds being siphoned off, sources said adding the company will make all attempts to recover the money from the accused.

Following best accounting practices, Gameskraft has recognised the amount in its P&L, resulting in the impact on profit.

"While recording steady increase in revenues, the decline in Gameskraft's profit after tax (PAT) is primarily due to the full-year impact of the 28 per cent GST, which led to a rise in tax outflows from Rs 1,512 crore in FY 2023-24 to Rs 2,526 crore in FY 2024-25, and a one-time accounting adjustment of past unsanctioned transactions amounting to approximately Rs 231 crore," the company statement said.

The Indian online gaming sector is undergoing a fundamental transformation with the recent Promotion and Regulation of Online Gaming Act, 2025, which prohibits all online real-money games, whether skill-based or chance-based.

"The legislation has created widespread disruption, compelling operators to shut down online money game operations and begin the arduous journey of reimagining their business models. This regulatory shift comes after the introduction of the 28 per cent GST on deposits in October 2023, which compressed margins and slowed growth," it said.

The sector also faces uncertainty from retrospective tax notices totalling Rs 2.5 lakh crore, currently under review by the Supreme Court.

"In light of the recent Promotion and Regulation of Online Gaming Act, 2025, Gameskraft has already stopped 'Add Cash' and 'Gameplay' services across their rummy apps and has maintained a strong focus on compliance, transparency, and operational continuity, working closely with auditors, banking partners, legal advisors, and policymakers during this transition," it said.

The company said it has cleared all regulatory dues and has proactively safeguarded the interests of its players, employees, partners, vendors, and service providers through timely action and consistent and transparent communication.

Founded in 2017, Gameskraft in less than a decade, has grown into one of India's gaming bellwethers and has already initiated structured internal discussions to chart the road ahead.

Guided by their core values of responsible innovation, player protection, regulatory alignment, and strengthened compliance frameworks, the company is actively exploring new avenues and solutions to adapt to the evolving regulatory landscape, while contributing to the sustainable growth of India's digital gaming ecosystem. PTI ANZ DR DR