Cos abandon IT ship to stoke valuations

Artefact Software Finance, earlier registered as a non-bank finance company, now wants to concentrate on infrastructure and real estate consultancy. Accordingly, it has changed its name to Artefact Projects Ltd.

"The promoters had plans to undertake software business, too, but for certain reasons, it did not take off," says Bhavana Rokade, its company secretary.

What has taken off is the company's share price since the change of name in April this year. Artefact's shares closed at their 52-week high of Rs 201 today, a rise of 233 per cent since June 4.

There are at least nine other companies listed on the Bombay Stock Exchange that have also changed names to dissociate themselves from the information technology sector.

Corcomp Infosystems Ltd has become SJ Corporation Ltd, SGR Infotech Ltd is now Pan India Corporation, Karuturi.com is now Karuturi Networks Ltd, Chamatkar.

Net is CNI Research Ltd, Sun Beam Infotech is Hit Kit Global Solutions Ltd, Vel Software Ltd is Venus Universal Ltd, Induj Infotech Ltd is Unitex Designs Ltd, and Geometric Software Solutions Ltd has morphed into Geometric Ltd.

In the late 1990s, when IT stocks were on song, many companies that had little to do with the sector acquired suffixes to suggest that they did. The reverse is happening at a time when the sector has fallen out of favour at the stock markets.

"Companies now realise they need to get rid of the IT tag to catch investors' eye. More often than not, it is the retail investors who fall prey to such gimmicks," said a broker.

The IT index of BSE fell nearly 16 per cent this year even as its Sensitive Index rose 45 per cent.

The new names seem to be striking a chord. Just like Artefact's, the stock prices of the other nine have moved up by 200-400 per cent since the change of name.

Ankit Rathi, director with New Delhi-based Pan India Corporation, said his company was earlier a register and transfer agent, which had changed its name to reflect its entry into real estate and infrastructure financing.

"Since we already had a clause in our memorandum of association, we decided to shift our focus to real estate and infrastructure financing."

According to stock exchange rules, companies should generate at least 50 per cent of the income from new businesses to justify a name change.

"Like the stock exchanges, the registrar of the companies should take up the matter very seriously and not allow them to change names at will," said Prithvi Haldea, the head of research outfit Prime Database, said.