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Informist, Tuesday, Aug. 25, 2026

 

--SEBI issues final order in Varanium Cloud matter

--SEBI directs Varanium Cloud to bring back diverted funds of INR 625 mln

--SEBI orders Varanium Cloud MD to disgorge illegal gains of INR 1.29 bln

--SEBI imposes penalty of INR 204 mln on Varanium Cloud MD Sabale

 

MUMBAI – The Securities and Exchange Board of India has issued strong directions and hefty disgorgement orders and penalties in its final order Tuesday against Varanium Cloud Ltd, its promoter and managing director, and other entities in a case of fraud and severe violations of rules.

 

SEBI directed Varanium Cloud to bring back siphoned-off public issue proceeds of INR 189.8 million and siphoned-off rights issue proceeds of INR 435.3 million, aggregating to INR 625.1 million. The market regulator also imposed a monetary penalty of INR 13 million on the company for fraudulent diversion of funds.

 

SEBI ordered the promoter and managing director of the company, Harshawardhan Sabale, to disgorge unlawful gains of INR 1.29 billion made from trading in the company's shares. Sabale has also been hit with a hefty monetary penalty of INR 204 million for fraud and egregious breach of rules.

 

SEBI also imposed a hefty monetary penalty of INR 101 million on Raj Jagtani, proprietor of BM Traders, for aiding and abetting Varanium Cloud and its directors in executing the fraudulent scheme to siphon off the initial public offer and rights issue proceeds and also benefitting from it. Fines ranging from INR 600,000 to INR 5 million were imposed on six other individuals.

 

SEBI said in its order that Varanium Cloud, spearheaded by Sabale, raised funds from public investors with the claimed objective of expanding its business, including setting up data centres and digital learning centres. "However, none of the money raised went where it was said to go. It was diverted instead and siphoned off to Mr. Sabale's personal account" and to the promoter group and other entities, SEBI said in the order.

 

SEBI said Sabale sat at the centre of the fraudulent scheme, as he held 99.99% of two involved promoter group entities and personally controlled the transfer of funds out of Varanium Cloud. Sabale also got INR 327.3 million of the rights issue proceeds transferred directly to his own account, the market regulator said.

 

Another limb of the manipulative design was the company's post-listing reporting of a sharp rise in revenue, which was driven almost entirely by sales to a single offshore entity, Amtelfone Inc., with no verifiable operations, SEBI said. Sabale made unlawful gains of INR 1.29 billion by trading in shares of Varanium Cloud on the back of this manufactured picture, according to SEBI. The market regulator said the facts taken together pointed to a fraud of considerable scale and executed brazenly with evident deliberation.

 

In its order, SEBI also issued a debarment direction against Sabale from accessing the securities market and dealing in the securities market for seven years from Tuesday. SEBI said Sabale is also restrained from being associated with any listed company or market intermediary as a director or key managerial person for seven years from Tuesday.  End

 

Reported by Rajesh Gajra

Edited by Rajeev Pai

 

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