Advance tax payments by infrastructure companies, especially those in mining & metals, have been surprisingly robust in the second instalment, paid by September 15. Such a vote of confidence by miners in the economy comes amidst signs of a slowdown in key infrastructure areas in the last quarter and a hazy scenario for the economy in the coming quarters.
In fact, 13 of the top 100 advance taxpayers were from mining & metals. They include Steel Authority of India Ltd (SAIL), Tata Steel, National Mineral Development Corporation (NMDC), Rashtriya Ispat Nigam Ltd, Essel Mining & Industries and Rungta Mines, all have paid significantly higher advance tax over the same quarter last year. This, despite that mining grew by a mere 4.1% between April and August this year versus 4.9% in the same months last year.
By the latest industrial production numbers, though dismissed by government as incredible, mining output rose by 4% in August 2008 compared to 14.7% in August 2007.
A similar picture hangs in steel as well. Finished steel production grew at 4.4% in August 2008 compared to 9.6% last August. Steel production during April-August 2008 rose by 3.9% versus 7.4% in the year-ago period.
Thats why the advance tax figures come as a surprise. Tata Steels payment in September, for instance, was 124.72% more than what it paid a year ago. It shelled out Rs 1,000 crore in September this year.
SAIL paid Rs 1,061 crore as its second tranche of advance tax, an increase of almost 18% over September 2007.
NMDC also expects to do well this fiscal if the 77% increase in its advance tax payment is any indication. The mining major paid Rs 800 crore as advance tax in the September instalment this year, as against Rs 450 crore in September 2007.
Rashtriya Ispat Nigam Ltd paid Rs 369 crore in its second instalment of advance tax this fiscal?a healthy rise of 31.32%.
Advance tax is considered a good indicator of corporate profitability, as companies pay advance tax on their estimated annual earnings each year.