27 more software8217; cos to change names

MUMBAI, JANUARY 10: With no action coming from the government and regulators, more shady companies are entering into the infotech sector t...

MUMBAI, JANUARY 10: With no action coming from the government and regulators, more shady companies are entering into the infotech sector to take advantage of the boom by changing their names. The BSE on Monday released the list of another 27 companies which have proposed to change their names to suggest a shift in focus to software-related activities.

However, most of these companies have no software activity, and there are at least 10 finance companies in the latest list. 8220;Why should they suddenly become software companies? The main idea is to push up their share prices to take advantage of the stock market boom in software shares,8221; said a broker.

With this, a total of 70 companies have changed their names to reflect software business. The BSE had first released a list of 20 companies on January 27, 1998. The second list of 23 companies came out on December 14, 1999. 8220;The names of such companies are being announced to safeguard the interest of investors and protect the safety and integrity of themarket,8221; the BSE said while releasing the list on Monday.

8220;Investors should be careful in investing money in such companies. Such companies are out to fool the investing public by changing their names. Many of these companies which included in the previous list had shot up after changing their names,8221; said BSE broker D Pawan, adding that the Registrar of Companies RoC, Department of Company Affairs and the SEBI should take action against such shady8217; companies.

The main reason for changing the names is the continuing boom in software shares. Stocks like Infosys, NIIT, Mastek and Wipro have gone up by 3,000 to 4,000 per cent with their shareholders becoming millionaires in less than a year. Gullible investors are lapping up everything coming in the name of software. 8220;Why is the government allowing this change of name? This is plain fraud which will affect the safety and integrity of the market,8221; analysts said.

Share prices of some of these companies which are planning to become software8217;companies were manipulated recently. SSL Finance was quoting only at Re one some months ago, but had shot up to Rs 38 recently before settling at around Rs 25.10 on last Friday. Meghana Finance, which was quoting at Rs two, zoomed to Rs 33 recently before reacting to Rs 20.90. Nouveau Finance, which was quoted at Re one recently, spurted to Rs 47 before coming down to Rs 41.50. Chitalia Corp Services soared from Re one to Rs 20 recently before coming down to Rs seven.

Most of the companies in the latest BSE list were quoting below Rs 3 till some months ago. Now chances are that these companies will rise again once they change their names. It8217;s time the regulators and other government agencies investigated their software business8217; activity. Otherwise, one can expect a major scam in the near future. According to one fund manager, the SEBI should come out with guidelines regarding change of names so that fly-by-night operators can be kept out. After the BSE announced previous two lists naming 43 so-calledsoftware companies, no action has come from the government side. 8220;Seventy companies have changed their names. The government and the regulators should put an end to this game,8221; said a fund manager.

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If BSE sources are to be believed, another two dozen dud companies are also preparing the groundwork to change their names. Even the hefty margins imposed by the exchanges on software stocks have not dampened their plans.