Listed pharmaceutical company Navana Pharmaceuticals is facing a VAT claim of Tk 139.45 crore from the National Board of Revenue (NBR), nearly three times its annual net profit of Tk 48.78 crore, according to its audited financial statements for the 2024-25 fiscal year.

The company has not made any provision against the disputed VAT claim, raising concerns over its potential financial liabilities. Navana Pharma maintains that the demand is based on incorrect and incomplete information and expects that it will not ultimately result in any significant liability.

An analysis of the company’s audited financial statements has also revealed several discrepancies in its financial reporting, including differences in raw material consumption figures, shareholders’ equity and a significant working capital deficit.

According to Note 36.01(7) of the financial statements, the Large Taxpayers Unit (VAT) issued a demand for Tk 139.45 crore on May 12, 2024, alleging irregularities in input VAT credit claims and failure to deduct VAT at source from suppliers’ bills.

The company responded to the demand on May 25, 2024, and subsequently wrote to the NBR chairman on September 15, seeking an independent review of the matter. A hearing was scheduled for November 11, 2025.

Based on legal and professional advice, the company believes the VAT authority’s claim is based on incorrect and incomplete information. It has therefore treated the entire amount as a contingent liability rather than making a provision. However, the audited report does not disclose any subsequent decision or final settlement of the dispute.

The financial statements contain a discrepancy of Tk 1.25 crore in the reported raw material consumption figures.

Note 25.01 shows raw material consumption of Tk 330.76 crore for FY2024-25, calculated by adding opening inventory and purchases and deducting closing inventory.

However, Note 38.04 reports raw material consumption of Tk 332.02 crore, resulting in a difference of Tk 1.25 crore. The audited report does not provide any explanation for the discrepancy.

A further inconsistency has been identified in shareholders’ equity. The statement of financial position reports total shareholders’ equity of Tk 486.49 crore, while the statement of changes in equity shows Tk 481.69 crore, leaving a difference of Tk 4.80 crore.

The difference relates to convertible bonds worth Tk 4.80 crore, which are separately included in equity in the statement of financial position but are not separately reflected in the statement of changes in equity.

Navana Pharma is also facing pressure on its short-term financial position. As of June 30, 2025, the company’s short-term borrowings stood at Tk 428.33 crore. Its current assets amounted to approximately Tk 518.21 crore, against current liabilities of Tk 604.66 crore.

As a result, current liabilities exceeded current assets by Tk 86.45 crore, indicating a substantial working capital deficit.

The company’s gratuity liability stood at Tk 11.67 crore as of June 30, 2025. However, the financial statements disclose that no actuarial valuation was conducted to determine the liability in accordance with International Accounting Standard (IAS) 19.

The company believes that an actuarial assessment would not result in any significant difference from the existing provision.

Meanwhile, commercial and other receivables stood at Tk 137.59 crore, including Tk 1.14 crore overdue for more than one year.

According to the company’s accounting policy, a provision for doubtful debts is maintained at 0.1 per cent of local sales. However, questions may arise over whether the provision is adequate considering the age and amount of outstanding receivables.

The company’s auditor, A. Qasem & Co, Chartered Accountants, highlighted the disputed VAT claim under the ‘Emphasis of Matter’ section of its audit report. However, the issue did not modify the auditor’s opinion on the financial statements.