Advance taxes buck slowdown

Advance tax collections, a bellwether of corporate profitability, have grown strongly in the fourth quarter of 2007-08, prompting analysts to say that the expected slowdown in economic growth has not yet impacted corporate bottom line.

Latest indications suggest advance tax collections, which are paid on the basis of internal estimates of profits, are likely to be over Rs 50,000 crore in the fourth quarter till March 15 this financial year across India. Companies are required to pay the tax in four quarterly instalments, the last being on March 15 every year. Finance ministry sources said the trend shows that advance tax collections have grown at a similar pace as overall direct tax collections, which have grown over 40 per cent so far this fiscal. The list of top 10 companies paying advance tax was led by public sector oil major ONGC, which retained its position of pre-eminence, although its tax payout declined 25 per cent.

When the markets hit new highs on January 8, around seven per cent of the stocks were trading below their paid-up value. With the Sensex having corrected by 30 per cent, almost 17 per cent of the actively traded stocks are now quoting below their paid-up values.

Most of the penny stocks became multi-baggers during Sensex’s momentous journey despite reporting net losses in the quarter ended December 2007. As many as 214 of the 488 companies announced aggregate net losses of Rs 392 crore in October-December quarter.

The aggregate market value of the 488 stocks has declined by 60 per cent from their highs. On the other hand, the combined market value of mid-cap stocks declined 40 per cent and small-cap stocks went down by 47 per cent from their respective highs.

Among the stocks trading below their paid-up values, 78 per cent (379) are from the B group, 71 from Z group, 27 from S group and the remaining 11 are from T group.

A total of 83 stocks are quoting at one-year lows, including Ginni Filaments, Interface Finance, Svam Software, TN Telecom, Vishnu International and Virat Crane Industries.

Chandni Textiles fell by 78 per cent from Rs 26.47 on January 8 to Rs 5.85 on Tuesday. Tripex Overseas declined 74 per cent to Rs 7.05 (Rs 27.45), while Torrent Gujarat Biotech weakened 73 per cent to Rs 7 (Rs 25.70).