Aftab Auto sinks deeper into debt as banks move to auction collateral

Infographics: TBS

Once a proud name in Bangladesh's automobile industry, Aftab Automobiles Ltd is now struggling to stay afloat under a mountain of unpaid loans, facing multiple auction notices and court cases as lenders intensify recovery efforts.

According to Bank Asia, as of 31 August 2025, a total of Tk328.95 crore in loans remains outstanding from Navana Group's Aftab Automobiles and other concerns – Navana Limited, Navana Real Estate Limited, Navana Construction Limited, and Navana Building Product Limited. The debt-ridden Navana Group has seen many of its flagship businesses default in recent years.

Bank Asia has now called an auction to sell mortgaged assets, publishing a notice on Friday in national newspapers. Interested bidders have been asked to submit bids by 10 November.

The assets up for sale include 12.33 acres of land in Chattogram, 516.8 decimals of land in Gazipur, and two apartments with car parking spaces in Dhaka owned by Navana Real Estate.

Aftab Automobiles, which also holds a 20% stake in Navana Real Estate, has been listed on the Dhaka Stock Exchange since 1987. However, its once-thriving business has come under severe stress due to weak governance, declining sales, and excessive debt, according to the insiders.

As of March 2025, the company's total liabilities had surged to Tk1,518 crore, according to its latest financials. Major lenders include IFIC Bank with Tk360 crore, Agrani Bank with Tk200 crore, Bank Asia with Tk133 crore, Phoenix Finance with Tk100 crore, and Dutch-Bangla Bank with Tk187 crore.

A senior official at Bank Asia, seeking anonymity, said the decision to auction the assets came after "repeated delays and unfulfilled commitments" from the borrower.

"Aftab Auto has been a long-time client. But due to chronic mismanagement and weak leadership, most Navana Group companies are now loss-making. Loan recovery has become extremely difficult," he said.

He added that despite the auction move, there is still a window for the companies to repay their dues and regularise their accounts before the assets are sold.

Earlier in September, Dutch-Bangla Bank had announced plans to auction off Aftab Auto's mortgaged properties to recover Tk234.55 crore in defaulted loans, including accrued interest up to 3 August 2025. The auction, however, failed to attract bidders, prompting the bank to file a case in the money loan court.

Similarly, in July, Southeast Bank and National Credit and Commerce (NCC) Bank attempted to auction assets belonging to Navana Batteries Ltd – a subsidiary of Aftab Automobiles – and Navana Real Estate Ltd to recover Tk513 crore in unpaid loans.

Despite public auction notices, these efforts also failed to draw buyers, forcing both banks to pursue recovery through the courts.

"There's very little market appetite for distressed industrial assets right now," a senior Southeast Bank official said, noting that many of Navana Group's properties are tied up in legal complications.

The mounting pressure from banks underscores the deepening crisis at Navana Group, which has struggled to maintain operations due to the internal disputes, leadership vacuum, and delayed debt restructuring, worsening its liquidity crisis.

Aftab Automobiles' own performance paints a grim picture. The company, which assembles and distributes Hino-branded buses and trucks, has failed to generate sustainable profits for several years.

In fiscal year 2023-24, it declared a 10% cash dividend but failed to disburse it on time, resulting in its downgrade to the "Z" category on the Dhaka Stock Exchange. The company reported a net loss of Tk14.83 crore for FY24.

In the July-March period of FY25, the company's revenue rose 80% year-on-year to Tk57.92 crore, driven by a rebound in bus chassis demand. Yet, rising finance costs and provisioning for loans dragged it into another Tk10.69 crore loss.

Despite these setbacks, Aftab's management expressed cautious optimism in its latest financial statement, saying that while "delivery delays and supply chain disruptions" persist, the company expects some improvement as imports stabilise and public transport demand rebounds.

However, industry insiders remain sceptical. "The group's debt exposure is too large, and its business units are not generating enough cash flow to meet obligations," a market analyst commented.

"Unless there's a strategic investor or major restructuring, it's hard to see how they recover from this spiral."

As of Thursday, Aftab Automobiles' shares closed at Tk34.80.