THE NAME CHANGING GIMMICK - FORTE OF PENNY STOCKS

By Ruma Dubey

What does a fugitive do when he wants to remain incognito? He changes his identity and that begins with first changing his name. William Shakespeare said that a rose by any other name would smell as sweet but try telling this to companies which spend millions on establishing their names.

People who change their name are usually eyed with a lot of suspicion as it is assumed that the name change is associated with a lot of hanky- panky activity.  And what about companies who do that? One cannot help but wonder why companies would want to change names especially when they could have spent a lot of money first establishing the name.

Keeping track of changing names is a job in itself for investors. Of the 7000 odd companies listed on the BSE, nearly 1500 have changed their names at least once since 1999 and of this, 800 have changed names since 2008. One in every five companies have changed its name in 13 years. At least 33 other companies changed names in the first half of 2015.

To do away with the taboo or “reputation” associated with the name and changing it to establish a new identity is one of the most common reasons. Like Satyam Computers; its name still brings to mind Ramalinga Raju and his scam and post the takeover, it has been renamed Mahindra Satyam yet on the BSE, it continues to get traded under Satyam Computers.  Or there is Adlabs Film which after Anil Ambani took over was renamed as Reliance Mediaworks.  Areva T&D changed to Alstom T&D; Geojit Financial changed to Geojit BNP after BNP Paribas bought 33% stake in the company; Henkel India changed to Jyothy Consumer Products. VSNL is Tata Communication. And do you remember that it was Times Bank which became HDFC Bank and UTI Bank which became Axis Bank?

Many companies change their names to reflect the change in business. In 2000, there was an IT and dot com boom and many companies wanted to get into this wave and thus changed their names to reflect the change in business.  Like Mold Tek Plastics changed its name to Mold-tek Technologies, Classic Global became Warner Multimedia. XL Telecom changed to XL Energy

Then there are companies which change names when it there is a change in the management, an integral partner separates. Like Hero Honda which is now Hero MotoCorp or TVS Suzuki which is now TVS Motors, Wabco TVS is now Wabco India, Tata Honeywell to Honeywell Automation. There are companies which change crucial partners and that demands a name change – like Swaraj Mazda changing its name to Swaraj Isuzu.

Names of companies also get changed when the company gets into more activities and businesses than what it started out with. Like Tata Global Beverages, which earlier was just Tata Tea. Or Arvind Mills which is now Arvind Ltd. Sesa Goa is now Vedanta.

Majority of the companies changing names unfortunately fall into the category of penny stocks which are in a hurry to change their name, hoping it will change investor perception and do away with all negative sentiments.

Take a look at the list below and one would realize that even if such companies change their names, it would make no difference at all, just as a rose can be recognised from its fragrance, garbage can also be recognised from far away due to its rotting stink.

The list is long and tedious and if one wants to have a look at the companies that have changed names, please visit: http://www.bseindia.com/corporates/Comp_Name.aspx?expandable=1