Varanium Cloud, a technology company, and its promoter and managing director Harshawardhan Hanmant Sabale have been banned from the securities market with immediate effect, by the financial market regulator Securities and Exchange Board of India (Sebi).
The company was listed on NSE's SME Platform or NSE Emerge on 27 September 2022.
As per the company's disclosures, it was incorporated on 21 December 2017, and was formerly known as Streamcast Cloud. Varanium is a technology company and, as per its website, is focused on providing services surrounding digital audio, video, and financial blockchain (for PayFac) based streaming services.
As per a Sebi order, the company allegedly misutilised its initial public offer (IPO) proceeds and used dubious transactions to paint a false picture of good financial health and promising growth prospects to the general public.
This, according to the SEBI's order issued 10 May, helped its promoter entities to exit the company "at the cost of gullible investors".
The investigations into the company by the financial market regulator SEBI were initiated after the publication of certain newspaper articles and social media posts and receipt of certain complaints raising concerns regarding, its financial statements published and corporate announcements made by it.
"Prima-facie observations and findings clearly indicate that Varanium has mis-utilised the IPO proceeds and has manipulated its financial statements by recording fictitious sales and purchases. The misstated financial statements had presented a rosy picture about the financial health of the Company, leading to increase in investors' interest in the stock," the Sebi order read.
The order noted that the same is evident from the increase in the number of public shareholders from around 1,000 in September 2022 to more than 10,000 in December 2023.
The share price of Varanium also witnessed a significant increase during the said period.
"The promoter, taking advantage of such price rise, off-loaded shares and made huge gains..."
It has prima facie emerged that the money raised through the IPO and subsequent Rights Issue was not used for the intended purpose mentioned in the offer documents, Sebi order said.
It is also alleged the Promoter shifted part of IPO funds to an entity, BM Traders, and the end use of such funds is not known.
Also, Sabale is restrained from acting as a Director or Key Managerial Personnel of any listed company or its subsidiary or any company which intends to raise money from the public or any SEBI registered intermediary, until further orders. (ANI)
