Sebi bars Varanium Cloud, promoter from securities market for seven years
Mumbai, Aug 25, 2026
The regulator has directed promoter Harshawardhan Sabale to disgorge Rs 128.77 crore in unlawful gains and imposed monetary penalties on him and the company
The Securities and Exchange Board of India (Sebi) on Tuesday barred Varanium Cloud and its promoter Harshawardhan Sabale from the securities market for seven years for allegedly siphoning off funds from the company’s initial public offering (IPO).
The market regulator has also directed Sabale to disgorge Rs 128.77 crore in unlawful gains, while the company has been directed to bring back to its account Rs 62.51 crore that was allegedly diverted, along with 12 per cent interest.
Sabale has additionally been restrained from associating with any listed company or Sebi-registered intermediary as a director or key managerial person for seven years.
In the final order, Sebi also imposed monetary penalties, including Rs 20.4 crore on Sabale and Rs 1.3 crore on Varanium Cloud. The penalties are to be paid within 45 days of the order.
The regulator has also restrained merchant banker First Overseas Capital from the securities market for two years for alleged failure to exercise due diligence and proper care while preparing the prospectus of the company.
Sebi found that Rs 18.98 crore from Varanium Cloud’s IPO proceeds and Rs 43.53 crore from its rights issue proceeds had been diverted to related parties and other entities. Of the total, Rs 32.73 crore was transferred to Sabale, who, according to the order, exercised control over the movement of the issue proceeds.
In the 155-page order, Sebi alleged that Varanium misrepresented financial statements and the prospectus, showed fictitious sales and purchases, submitted incorrect shareholding data, filed a false statement of deviation on IPO proceeds utilisation, provided misleading information to investors on acquisitions, and failed to disclose related-party transactions.
“The misleading announcements coupled with substantial decrease in promoter shareholding, also go on to prove that VCL was moving with an active malafide to defraud investors and manipulate the securities market,” noted Amarjeet Singh, whole-time member, Sebi, in the order.
The order follows Sebi’s interim order of May 2024 and a confirmatory order issued in October 2024. Subsequent investigation examined alleged violations involving misrepresentation of financial statements and prospectus disclosures, misuse of issue proceeds and other securities-law violations.
The regulator has also imposed market-access restrictions on other executives and entities.
[The Business Standard]
