Untraceable Firm Zooms 2200% On Cse

Shares of Patriot Trading Company, an "investment" company -- or a 'jama-kharchi' firm in the Lyons' Range parlance -- has risen over 2200 per cent in only 4 months.

The Rs 10 share started gaining momentum from October 10. The share, languishing for a long time, was first traded on the day at Rs 1.90 and registered a total volume of 1 lakh shares. Today, the scrip closed at Rs 44.

From October 10, there has been no looking back at the counter. Barring three days, the closing price of the stock on any given day has gone in only one direction, up from the previous day's closing.

 

Vinay Goenka, a law professional, claimed himself to be the person in-charge of handling the promoters' investment activities. He said the chairman of the company, P K Dhirubani, stayed in Chennai.

Goenka was not able to shed light on the company's business or financial performance.

When asked why the promoters of Patriot encouraged 'jama-kharchi' trading, Goenka posed a counter question. " There are so many companies involved in this kind of market-making. Why don't you probe them?"

Herein lies the beauty of a 'jama kharchi' firm. The spurt in share prices was masterminded by a group of closely-knit operators. Share prices are jacked up at such a counter through a fairly foolproof system. A tax consultant does the matchmaking between a taxpayer interested to book losses on paper to reduce his tax burden, and another taxpayer seeking to convert his black money into white by booking profits on paper. The tax consultant charges fees from both the parties.

The entity seeking to book losses enters in the counter a higher level and goes out at a lower level. The other party trying to book profits does the opposite. The company promoters are also associated with the entire act.

Such trades on stock markets throw up only one victim - a few naive but greedy investors. Lured by the huge growth at these counters, some retail investors park their funds and eventually lose their hard earned money if they cannot exit on time.

The share trading details of Patriot suggest that a same set of operators were circulating trades between themselves. There was almost no delivery of shares in trades done within this cartel.

Some insignificant deliveries suggest that retail investors were already entering in the counter. Most firms of the 'jama kharchi' type, unlike their big-ticket technology counterparts, camouflage their identity and location. Patriot is no exception. There is no trace of it at its registered office. The Calcutta Stock Exchange was not informed about the change in address, if any, either.