What’s in a name? Plenty

Scamsters use a host of similar-sounding names of firms to hide their trail

Were you asked what is the purpose of having a registered corporate name, you would probably sneer at the stupidity of the question. Like a person’s first name, it establishes the very identity of a company.

Well then, welcome to corporate India where the company’s name has been turned into a tool to confuse and confound investors and other stakeholders. Outdated and corrupt name-registration systems and sleepy regulators aid this misuse.

My recent brush with the skilful confusion over names was while chasing the shenanigans of DSQ Software last year. The Enforcement Directorate discovered DSQ Software had registered a company called New Vision Technologies as an Overseas Corporate Body (OCB) at Mauritius and another shell company with the same name at a New Delhi address.

When it palmed off shares to Kolkata broker Harish Biyani, it used the New Delhi address. Nobody would have been any the wiser, but for a detailed scrutiny following the Ketan Parekh led scam. I later discovered that causing confusion with similar prefixes is probably well-worked strategy of DSQ’s Dinesh Dalmia.

Even later, when he was trying to sell off the core of his businesses to the NRI consortium led by Ramesh Vangal and Satyen Patel, it was part of the strategy to register a series of mirror companies with identical names to obfuscate identification.

Accordingly, companies with the suffix of Scandant Network were sought to be registered across Europe to enable the sale.

While Dinesh Dalmia operates globally, the same degree of confusion is possible within the country. For instance, the recent scandal over four brokers allegedly cheating the Nagpur Cooperative Bank and failing to deliver over Rs 125 crore of securities. Two of those firms were Home Trade Ltd. and Gilt Edge Management Services (GEMS, according to the website).

Incidentally, although Nagpur Cooperative Bank’s FIR calls Giltedge a brokerage firm, it is in fact an RBI approved Non Banking Finance Company. Both firms have close linkages with Ketan Sheth & Co (changed to KSC Securities) and Ways India. Further Giltedge (which the is the official spelling of the name) has spawned off nearly a dozen companies with exactly the same name and overlapping businesses. None of them have a debt market membership, although the companies and their directors claim enormous expertise in ‘debt trading’ and ‘treasury management’.

Here is a list of Giltedge’s sister and daughter companies which are grandly listed under the Giltedge group of companies: Giltedge Investment Banking Services Ltd (a merchant bank), Giltedge Portfolio Management Services Ltd, Giltedge Credit Capital Ltd. (a NSE equity trading member), Giltedge Infotech Ltd (which opens to a site called Giltech.com and may or may not be connected to another firm called Ahuja Computers in an earlier avatar).

Then there’s Giltedge Asset Management Services Ltd, Giltedge Venture Capital Ltd (India), Giltedge Venture Fund Ltd. (yes, the two venture capital companies with similar names are separately listed), Giltedge Equity Derivatives Ltd, Giltedge Plasto Chem Ltd and KSC Securities Ltd. It doesn’t stop here.

The companies mentioned above are only those listed on the company website as part of the Giltedge group. A search in the Registrar of Companies’ website throws up several more companies listed with the Giltedge name.

For instance, Giltedge Advertising & Marketing Ltd, Giltedge Holdings Ltd, Giltedge Debt Derivatives Ltd, Giltedge Forex Ltd, Giltedge Financial Counsel Ltd, Giltedge Finance & Investments Ltd, and two more companies with the name Giltedged Traders and Giltedged Securities. It is not quite clear whether these other companies on the ROC site are part of Giltedge’s future plans or are totally unconnected with this group.

The existence of such large number of companies suggests that Giltedge is a well-funded group, when in fact, its background and source of funds is extremely obscure. Between them, these companies would cause plenty of confusion among regulators and others who do business with them. For instance, it is not quite clear whether G-Sec deals with the Nagpur Co-op Bank were conducted by Gilt Edge Management Services, in its capacity as a NBFC or by illegally representing itself as a broker, as media reports seem to suggest.

The problem is that the mischief of a few unscrupulous entities tarnishes all brokers. After all, RBI’s first knee-jerk reaction was to ask co-operative banks to stop dealing with brokers altogether, instead of simply asking them to deal with registered brokers. The same applies to Indramani Merchants, which is reportedly a Kolkata company.

Is this company a sister concern of Indramani India, which was one of the 36 CRB Group companies whose accounts were frozen on May 29, 1997 by the RBI? The ROC site shows that there are at least 15 Indramani companies too which may or many not be related.

Of these five including Indramani India and Indramani Merchants are both registered in Kolkata and there is also an interesting company called Indramani Finance & Investment Co. (interestingly located at 9, Samartha Nivas, near Congress Bhavan at Nagpur) Mumbai and an Indramani Holdings in New Delhi.

Which of these are rogue companies and which of them are not?

Clearly, it is in everybody’s interest to bring in statutory changes to stop companies spawning off similar sounding companies and misusing brand names.

E-mail the author

Earlier Columns