Bank Asia to auction National Feed Mill assets over loan defaults

Infographic: TBS

Bank Asia will auction mortgaged assets of National Feed Mill, a listed company, and National Hatchery Private Limited — both owned by the National Group — to recover nearly Tk47 crore in overdue loans.

The bank's Shanti Nagar Branch in Dhaka announced the decision following an order from the Gazipur Money Loan Court, according to an auction notice published in newspapers this week.

Bank Asia has floated tenders for the sale of the mortgaged properties on a loan-consolidation basis, with bids open until 15 July this year.

According to the notice, the borrowers — National Feed Mill and National Hatchery — had an outstanding loan of Tk46.93 crore as of 30 April 2024. Bank Asia said the loans became classified due to non-payment despite repeated demands and notices.

After obtaining legal authority to sell the mortgaged properties under the Money Loan Court Act, the bank decided to proceed with the auction. The mortgaged assets comprise 15.77 acres of land, including factory buildings, located across Gazipur.

Attempts to reach National Feed Mill's Managing Director, Akther H Babul, for comment were unsuccessful.

According to its unaudited quarterly report for the July–September period of FY25, National Feed Mill had total outstanding loans of Tk63.50 crore. Of this, Tk27.74 crore was borrowed from Bank Asia, Tk17.16 crore from Meghna Bank, and Tk18.60 crore from Social Islami Bank. The company reported fixed assets worth Tk28.11 crore and total assets of Tk176 crore.

National Feed Mill's financial performance

National Feed Mill incurred a loss in the 2023–24 fiscal year, leaving its shareholders without dividends. This marks the company's first annual loss since its stock market listing in 2015, when it raised funds for loan repayment and business expansion.

In FY24, the company posted a net loss of Tk6.62 crore. National Feed Mill, which manufactures and sells feed for poultry, fish, and cattle, has failed to pay dividends for two consecutive fiscal years. As a result, it has been relegated to the Z-category, commonly referred to as the "junk stocks" category.

Amid continued business decline, the company's share price has plummeted to Tk10.5 — a steep fall from its all-time high 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 primarily intended for loan repayment and business expansion. According to the IPO fund utilisation plan, 40% of the proceeds were allocated to repay loans, 45% to expand operations, and 5% for working capital, while the remainder was spent on IPO-related expenses.

ICB Capital and PLFS Investments managed the IPO, the latter a subsidiary of People's Leasing — a non-bank financial institution currently mired in financial irregularities and operational crises.

In its first year after listing, National Feed Mill reported strong growth, with revenue of Tk225 crore and net profit of Tk11.44 crore in FY16. Riding on that success, it declared a 15% stock dividend — the highest in its history. However, its performance has steadily deteriorated since then.

By FY24, its revenue had dropped to around Tk30 crore, while net losses hit Tk6.62 crore.

In a price-sensitive disclosure for FY24, the company attributed its profit decline to severe inflationary pressures that hurt farmers and low- to middle-income consumers, its main customer base.

It also cited several other challenges: ongoing depreciation of the local currency against the US dollar, a liquidity crisis in the banking sector restricting access to working capital, and disruptions in production caused by an inadequate supply of gas and electricity, as well as political instability, all of which pushed up costs.

According to the company's FY23 annual report, National Feed Mill was founded by Akhter Hossain Babul after he returned to Bangladesh from the United States. He invested his personal savings, earned abroad, into the company after identifying potential in the country's untapped feed market.

In the first quarter of FY25, the company's revenue fell by 53% to Tk4.36 crore, with a corresponding loss of Tk2.27 crore. However, it has failed to publish any quarterly financial reports since then.

Auditor flags financial irregularities

In its opinion on the FY24 financial report, the auditor — Islam Quazi Shafique & Co — raised multiple red flags about the accuracy and reliability of National Feed Mill's financial statements.

The auditor found that while the company reported a long-term loan of Tk63.51 crore at the end of FY24, it could verify only Tk61.55 crore. Attempts to confirm the discrepancy with the respective banks were unsuccessful, as none responded.

Additionally, the company claimed Tk6.07 crore in interest expenses on its loans, but the auditor found only Tk4.11 crore in bank-provided loan statements — suggesting a possible overstatement of Tk1.95 crore in financial costs, which could materially affect reported profit.

The auditor also stated that National Feed failed to provide source documents — such as invoices or receipts — for its reported turnover and material purchases, relying solely on ledger entries. This raises concerns over the transparency of its financial reporting.

Further, the company reported accounts receivable of Tk87.10 crore but made no provision for, or write-off of, potentially uncollectible amounts — a practice flagged as a financial health risk.

Similarly, accounts payable of Tk2.47 crore could not be verified by the auditor, casting doubt on the integrity of the company's financial records.

The audit also revealed that National Feed Mill provided Tk2.50 crore to related parties — Karnopur Agro Industries and National Hatchery — without any clear business justification.