The Hindu Business Line : Name change is the game

FROM cement to software and then on to bio sciences, the Hyderabad-based Hindustan Bio Sciences Ltd has come a long way. And the move hasn't hurt its stock price in recent times, either. The stock has gained 147 per cent in value since the beginning of April. On Friday, the scrip closed at a little over Rs 56 on the BSE. The number of shares traded in this counter is a few thousand shares on daily basis.

But many brokers are surprised over the price movement, as the financials of the company are not very good.

In the first nine months of 2003-04, the income of the company was only around Rs 13 lakh, according to the data available with the BSE.

But some brokers said the company has been regularly changing its name in line with they thought was the market flavour. They said in the last one-year, biotechnology companies have been attracting a lot of market attention. The rise in the stock price has been at a time when biotechnology major Biocon was listed on the stock exchanges.

For instance, the company was incorporated in 1991 and commenced its operations in 1992 as Garuda Cements. In 2001, the company diversified into software and subsequently changed its name to Hindustan Softel Ltd. Later that has been changed to Hindustan Bio Sciences. But companies such as Hindustan Bio Sciences which wish to change their name into something they think best reflects the source of future profits may find the going a little tougher, in the future. SEBI wants concrete results on the ground before they do so.

Recently SEBI had come out with new regulations on name change by companies that says that 50 per cent of a company's turnover in the preceding 12 months must come from the activity suggested by the new name.

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