Varanium Cloud sought to present itself as a leading IT service provider entering greenfield areas, utilizing public announcements to create a misleading perception. However, these transactions existed only on paper, with no real activity occurring as claimed. This narrative, orchestrated by promoter Harshawardhan Hanmant Sabale, generated positive sentiment among investors, leading many retail investors to purchase the stock. This situation provided an exit opportunity for the promoters, enabling them to significantly reduce their stake at the expense of unsuspecting investors. The gains made by Sabale underscored the intent behind such announcements. Consequently, Sebi determined that Varanium and Sabale violated the provisions of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP). Complaints regarding the financial statements and corporate announcements made by Varanium Cloud Ltd., listed on NSE’s SME platform, prompted Sebi to investigate potential rule violations from September 2022 to March 2024. Notably, Varanium raised funds of Rs 40.39 crore through an initial public offering (IPO) in September 2022.
