800 listed firms changed names since 2008 bull run

Many have gotten into other ventures, including beaten down segments like real estate and metals

Shareholders in a number of smaller companies are said to have stopped tracking their portfolios after the market cracked in 2008. Those looking at their investments as the indices hit new highs over the past year might have been surprised by the presence of many an unfamiliar name in their holdings.

An analysis of data since the earlier bull run shows  800 listed companies went in for a name change over the past seven years. The bulk of these happened between the end of that bull run in 2008 and the beginning of a revival in market sentiment during 2014-15.

Some include duplications when multiple securities issued by the same company undergo name changes. However, the bulk are non-duplicate entries. About 500 name changes occurred between 2010 and 2013 (both years inclusive). The highest was in 2011. 148 companies changed names during the year.

At least 33 other companies changed names in the first half of 2015, exchange records show.



Clarus Finance and Securities has been renamed as Scan Steels. Excel Infoways is now Excel Realty N Infra Limited. Similarly, Denim Enterprise is now Divine Entertainment.

“Certain companies do it depending on what is in fashion. Everyone was a technology company during the time of the dot.com bubble. Finance companies had become popular. Often, it is penny stocks which use this as a means of increasing their  share price before dumping stock in the market,” said Amit Tandon, founder and managing director of Institutional Investor Advisory Services.

Other companies might do it for genuine reasons, related to the business being redefined, a change in the product or business.

 

 

The Securities and Exchange Board of India requires companies to only indicate a new area of business in their name if it contributes a certain proportion of total revenues. For example, a company can change its name from XYZ Ltd to XYZ E-Commerce Ltd only if a certain portion of its revenues come from e-commerce. However, this does not apply to overall name changes.

So, if an investor has lost money in XYZ Ltd, the company may still be able to change its name to ABC Ltd and manage to again trap the unwary investor.

“A company can change its name a hundred times if it wants, so long as it does not indicate a new area of business in the name. Many people who invest in penny stocks are not likely to conduct too much research. So, they are more likely to be ensnared by companies that have changed their names once already,” said J N Gupta, managing director of corporate governance firm Stakeholders Empowerment Services.