National Tea sinks deeper into crisis as auditors question survival, governance
Its accumulated losses stands at Tk239 crore as of June 2025
National Tea Company Limited, once a stalwart of the country's plantation sector, has spiralled into a state of acute financial distress, characterised by a staggering accumulation of losses and a series of grave regulatory irregularities.
The company's latest audited financial report for the fiscal year ending on 30 June 2025, reveals a grim reality where mounting debt, negative equity, and systemic governance failures have led its statutory auditors to cast significant doubt on its ability to continue as a going concern.
With accumulated losses now reaching nearly Tk240 crore and a streak of consecutive annual deficits, the company's future hangs in a precarious balance, leaving general shareholders in a state of deep uncertainty.
The financial trajectory of National Tea over the last five years paints a picture of consistent and accelerating decay. In the fiscal 2020-21, the company reported a loss of Tk21 crore, which marginally increased to Tk23 crore the following year. However, the situation deteriorated sharply thereafter, with losses ballooning to Tk64 crore in FY23, Tk71 crore in FY24, and reaching a historic high of Tk105 crore in FY25.
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This persistent bleed has been accompanied by a steady decline in revenue, which has dropped from Tk102 crore in FY21 to a mere Tk71 crore in FY25.
Consequently, the company has been unable to reward its investors with any dividends since 2022, a sharp contrast to its earlier years of relative stability.
Chartered accountant firm Artisan, in its audit report for FY25, issued a qualified opinion that serves as a severe warning to the capital market.
The auditors highlighted that as of 30 June 2025, the company's accumulated losses stood at Tk239 crore, and it continued to suffer from negative operating cash flows.
The audit underscored that these losses are not merely temporary setbacks but part of a downward trend that began in the 2019-2020 period. The company's financial health has been further compromised by a massive reliance on borrowings, with total outstanding long-term and short-term loans surging to Tk443.28 crore.
The auditors noted that for four consecutive years, the company has failed to generate positive cash from its operations, fundamentally impairing its ability to meet its financial obligations and repay bank liabilities.
One of the most alarming aspects of the audit report is the revelation of negative equity. As of the end of June 2025, National Tea reported a negative equity amounting to Tk95.68 crore, which has resulted in a negative Net Asset Value (NAV) per share of Tk144.97. In simple terms, the company's total liabilities now far exceed its assets, a condition that the auditors described as a state of "significant financial stress." This erosion of the capital base indicates that the company is effectively insolvent on paper, and its continued operation is almost entirely dependent on the willingness of lenders and regulators to provide ongoing support.
The crisis at National Tea is not limited to its balance sheet; it extends to the very core of its management and governance framework. The auditors observed significant weaknesses in internal controls and a flagrant disregard for regulatory compliance.
The company has failed to meet statutory filing requirements with the Bangladesh Securities and Exchange Commission, the Dhaka and Chittagong Stock Exchanges, the Registrar of Joint Stock Companies and Firms, and the National Board of Revenue.
Beyond filing delays, the company lacks a functioning internal audit department, a proper budgeting system, and an effective performance monitoring mechanism. Frequent changes in top management and a lack of competent resources within the accounts and finance departments have further weakened the control environment, leading to instances of unauthorized payments made without adequate supporting documentation.
Furthermore, the company's attempt to raise capital through a rights share issuance has been mired in controversy and procedural irregularities. While the BSEC initially gave consent for the issuance of 2.34 crore rights shares to raise approximately Tk280 crore, the process was fraught with inconsistencies.
The auditors revealed that National Tea allotted over 44 lakh rights shares in October 2024 without obtaining approval from its own board of directors and prior to the actual completion of the subscription process. This move appeared to be in direct violation of the conditions set by the BSEC.
Even more concerning is the disclosure that the company utilised approximately Tk29 crore from the rights issue proceeds to repay bank loans before fulfilling the necessary regulatory requirements for fund utilisation. The company also failed to submit required quarterly utilisation reports to the regulator, prompting investigations by several government agencies that could lead to further penalties.
These combined factors – mounting losses, negative equity, and a total breakdown in corporate governance – led the auditors to conclude that material uncertainty exists regarding the company's "going concern" status. This means that without a radical turnaround or massive external intervention, the company may not be able to sustain its operations in the foreseeable future.
While the company's share price closed at Tk154.70 on the Dhaka Stock Exchange recently, market analysts warn that this valuation may not reflect the deep underlying risks disclosed in the audit report.
