Subsidiaries of Aftab Auto, Navana CNG default on nearly Tk100cr Janata Bank loans

Infographics: TBS

Two subsidiaries of listed companies — Aftab Automobiles and Navana CNG — have defaulted on nearly Tk100 crore loans from Janata Bank, prompting legal action by the state-owned lender.

Navana Batteries Ltd, a subsidiary of Aftab Automobiles, defaulted on loans totalling Tk72.94 crore as of 21 January, while Navana LPG Ltd, under Navana CNG, owes Tk25.79 crore, according to a source at Janata Bank.

In response, Janata Bank has filed cases against the chairmen and directors of both companies for failing to repay the loans, the source added.

A Money Loan Court in Dhaka has summoned the chairman and directors of Navana Batteries to appear for a hearing on 17 July, and those of Navana LPG on 20 July, through issuing notices which were published in newspapers on Tuesday. The court also warned that it will announce the verdict in absentia, as stated in the notice.

Earlier in February this year, Agrani Bank attempted to auction the assets of Navana Batteries to recover defaulted loans amounting to Tk125 crore. However, the auction failed to attract buyers. As a result, the bank filed a case against the company in the Money Loan Court, according to a bank official who spoke on condition of anonymity.

According to financial statements, Aftab Automobiles holds a 99.95% stake in Navana Batteries, while Navana CNG owns 99.99% of shares in Navana LPG. All of these firms share common directors and management teams.

Aftab Auto's Managing Director, Saiful Islam, and Navana CNG's Managing Director, Sajedul Islam, could not be reached for their comments. Shafiul Islam Kamal, founder of Navana Group, serves as the chairman of these companies.

A senior officer of Janata Bank, on condition of anonymity, said, "Navana Group has been a long-time client of the bank. However, due to mismanagement and a lack of effective leadership, most of the group's companies are now operating at a loss, leading them to default on their loans."

He added, "The bank is now taking a firm stance on loan recovery. As part of this effort, cases have been filed in the Money Loan Court against two entities of Navana Group."

"Even after a case is filed, there is still an opportunity for the companies to repay the loans and exit default status," he noted. "But if the companies and their directors remain defaulters, their businesses will inevitably suffer, as they will no longer receive support from other banks."

According to the financial statements for FY24, Navana Batteries has total outstanding loans of around Tk500 crore, with its top lenders being Dutch-Bangla Bank, Agrani Bank, and Southeast Bank.

Meanwhile, Navana LPG owes approximately Tk700 crore, primarily to City Bank and Shahjalal Islami Bank.

As per the FY24 audited report, Janata Bank extended short-term loans to both firms, intended for working capital purposes.

Navana Batteries' revenue rose by 75% year-on-year to Tk34.58 crore in FY24, while the company returned to profitability with a net profit of Tk39 lakh, recovering from a loss in the previous year.

Navana LPG also saw a modest increase in revenue, reaching Tk220 crore, but still recorded a net loss of Tk1.60 crore.

Their parent companies showed mixed performance during the July–March period of FY25. Aftab Automobiles reported a loss of Tk10.69 crore, whereas Navana CNG posted a net profit of Tk71 lakh for the same period.

On the Dhaka Stock Exchange, Aftab Auto shares rose by 9.54% on Tuesday, closing at Tk37.90. The rally, which began on 24 June, has so far resulted in a 39.33% gain. The company remains in the Z category for failing to disburse its approved 10% cash dividend for FY24.

Similarly, Navana CNG shares increased by 2.65% on Tuesday, closing at Tk23.20, with an 18% gain since its rally began on 3 July. It also remains under the Z category for not distributing the declared 10% cash dividend for the same fiscal year.