The Securities and Exchange Board of India (SEBI) has established serious violations by Varanium Cloud Limited and certain associated individuals, involving diversion and misuse of funds raised through public issues, fictitious transactions, misleading disclosures and misrepresentation of financial information.
The matter came under SEBI scrutiny following media reports concerning the company’s affairs. SEBI had earlier passed an interim order on May 10, 2024, followed by a confirmatory order on October 21, 2024. Subsequently, a Show Cause Notice dated October 20, 2025 was issued for alleged violations of the SEBI Act, PFUTP Regulations, LODR Regulations, ICDR Regulations and SAST Regulations.
SEBI Whole Time Member Amarjeet Singh concluded that the company’s financial statements and prospectus contained material misrepresentations arising from fictitious transactions and diversion of funds raised through its IPO and Rights Issue.
According to the findings, ₹18.98 crore from the IPO proceeds and ₹43.53 crore from the Rights Issue proceeds, aggregating to ₹62.51 crore, were diverted or misutilised. SEBI also identified fictitious sales and purchase transactions involving entities including Amtelfone Incorporated and promoter-group companies. For FY 2022–23, fictitious sales amounting to approximately ₹326.22 crore were identified.
The company’s promoter and Managing Director, Harshawardhan Sabale, challenged SEBI’s findings, including the alleged breach of natural justice and the methodology used to calculate unlawful gains of ₹128.77 crore. SEBI rejected these objections, holding that the transactions lacked credible underlying evidence and were found to be fictitious. The order also attributed control over the movement of IPO and Rights Issue funds to the Managing Director.
SEBI held the company and relevant noticees responsible for violations concerning fraudulent and unfair trade practices, disclosure failures and misuse of funds raised from public investors.
Under the directions, Varanium Cloud Limited has been ordered to repay ₹62.51 crore with 12% interest within three months. Harshawardhan Sabale has been directed to pay ₹128.77 crore with 12% interest and has been restrained from accessing the securities market for seven years. SEBI has also imposed monetary penalties of ₹20.40 crore on Sabale and ₹1.30 crore on the company. CASansaar