BM Desk : In order to recoup about Tk47 crore in past-due loans, Bank Asia would auction the mortgaged assets of National Hatchery Private Limited and National Feed Mill, both owned by the National Group and listed.
According to an auction notice this week, the bank’s Shanti Nagar Branch in Dhaka made the announcement in response to a Gazipur Money Loan Court judgment.
The sale of the mortgaged properties on a loan-consolidation basis has been put up for bid by Bank Asia, and the deadline is July 15 of this year.
The letter states that as of April 30, 2024, the borrowers, National Feed Mill and National Hatchery, owed Tk46.93 crore. According to Bank Asia, the loans were classified since they were not repaid despite many demands and notifications.
National Feed Mill experienced a loss during the 2023–24 fiscal year, resulting in no dividends for its shareholders. This represents the company’s first annual loss since it went public in 2015, when it raised capital for loan repayment and business growth.
In FY24, the company reported a net loss of Tk6.62 crore. National Feed Mill, which produces and sells feed for poultry, fish, and cattle, has not been able to distribute dividends for two consecutive fiscal years. Consequently, it has been downgraded to the Z-category, often referred to as the “junk stocks” category.
As the business continues to decline, the company’s share price has fallen to Tk10.5 — a significant drop from its peak of Tk49 in 2015.
National Feed Mill raised Tk18 crore through its initial public offering (IPO) in 2015 by issuing 1.8 crore shares at a face value of Tk10 each. The funds were mainly designated for loan repayment and business expansion. According to the IPO fund utilization plan, 40% of the proceeds were set aside for loan repayment, 45% for operational expansion, and 5% for working capital, with the remainder allocated to IPO-related expenses.
ICB Capital and PLFS Investments managed the IPO, with the latter being a subsidiary of People’s Leasing — a non-bank financial institution currently facing financial irregularities and operational challenges.
In its first year post-listing, National Feed Mill showcased robust growth, achieving revenue of Tk225 crore and a net profit of Tk11.44 crore in FY16. Building on that success, it announced a 15% stock dividend — the highest in its history. However, its performance has consistently declined since that time.
By FY24, its revenue had decreased to approximately Tk30 crore, while net losses reached Tk6.62 crore.
In a price-sensitive disclosure for FY24, the company cited severe inflationary pressures affecting farmers and low- to middle-income consumers, its primary customer base, as the reason for its profit decline.
The report also highlighted several additional challenges: the continuous depreciation of the local currency against the US dollar, a liquidity crisis within the banking sector limiting access to working capital, and production disruptions due to insufficient gas and electricity supply, along with political instability, all contributing to increased costs.
As stated in the company’s FY23 annual report, National Feed Mill was established by Akhter Hossain Babul after his return to Bangladesh from the United States. He utilized his personal savings, earned overseas, to invest in the company after recognizing the potential in the country’s underdeveloped feed market.
In the first quarter of FY25, the company’s revenue decreased by 53% to Tk4.36 crore, resulting in a loss of Tk2.27 crore. However, it has not released any quarterly financial reports since that time.
In its assessment of the FY24 financial report, the auditor — Islam Quazi Shafique & Co — identified several issues regarding the accuracy and dependability of National Feed Mill’s financial statements.
The auditor discovered that while the company reported a long-term loan of Tk63.51 crore at the conclusion of FY24, it could only verify Tk61.55 crore. Efforts to clarify the discrepancy with the relevant banks were unsuccessful, as none provided a response.
Moreover, the company reported Tk6.07 crore in interest expenses on its loans, but the auditor could only find Tk4.11 crore in statements from banks — indicating a potential overstatement of Tk1.95 crore in financial costs, which could significantly impact the reported profit.
Additionally, the auditor said that National Feed only used ledger entries and did not supply source documentation, such as invoices or receipts, for its reported turnover and material purchases. This calls into question how transparent its financial reporting is.
Additionally, the business declared Tk87.10 crore in accounts receivable but failed to write down or make provisions for sums that might not be collectable, a practice that has been identified as a danger to the company’s financial stability.
The accuracy of the company’s financial records was again called into question when the auditor was unable to verify accounts payable totaling Tk2.47 crore.
Additionally, the audit found that National Feed Mill gave Tk2.50 crore to National Hatchery and Karnopur Agro Industries, two connected companies, without providing a valid business rationale.
