LT Foods Limited has received an unfavorable appellate order from tax authorities, resulting in the confirmation of a significant GST demand that was previously dropped by lower authorities.

Appellate Order Details

The Commissioner of CGST (Appeals-II), Delhi issued Appellate Order No. C.NO 1316/C/GST/DL-APPEAL-II/2025-26/6801 dated January 30, 2026, which the company received on February 4, 2026. The order has reversed an earlier favorable decision and confirmed a substantial tax demand against the rice manufacturer.

Background of the Tax Dispute

The case involves a complex sequence of decisions by different tax authorities. Initially, the Additional Commissioner, CGST, Delhi South Commissionerate had passed an Order-in-Original dated January 27, 2025, whereby the GST demand of ₹32.41 crore proposed in the Show Cause Notice was dropped, providing relief to LT Foods.

However, the Assistant Commissioner, CGST, Delhi South Commissionerate subsequently filed a departmental appeal before the Commissioner of CGST (Appeals-II), Delhi, challenging this favorable order. The appellate authority has now allowed the departmental appeal and set aside the Order-in-Original to the extent of dropping the demand.

Nature of Alleged Violation

The tax demand stems from alleged wrongful availment of GST exemption under Notification No. 02/2017-CT (Rate) dated June 28, 2017. The authorities contend that LT Foods' supplies of rice made in plain packaging were not eligible for exemption under the applicable provisions of the CGST Act, 2017.

The GST demand of ₹32.41 crore has been confirmed under Section 74 of the CGST Act, 2017, along with applicable interest under Section 50 and penalty as prescribed under Section 74 of the same Act.

Company's Response and Next Steps

LT Foods has indicated its intention to challenge the appellate order through further legal recourse. Based on legal advice received from the company's counsel, LT Foods believes it has strong grounds on merits to challenge the order and intends to file an appeal before the appropriate GST Appellate Tribunal within the prescribed timelines.

The company has stated that at this stage, it does not foresee any material impact on its financial position or operational performance arising from the order. This assessment suggests confidence in the company's legal position and its ability to manage the financial implications during the appeal process.

Regulatory Compliance

The disclosure has been made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, demonstrating the company's commitment to transparent communication with stakeholders regarding material developments that could impact its operations.

LT Foods Limited released the complete transcript of its investor and analyst conference call held on January 30, 2026, to discuss the unaudited financial results for the quarter and nine months ended December 31, 2025. The transcript was disseminated to stock exchanges on February 3, 2026, in compliance with SEBI Listing Regulations.

Financial Performance Overview

The company reported record quarterly and nine-month performance during the earnings call. Key financial highlights include:

For the nine-month period, LT Foods achieved record revenue of ₹8,085 crores with 24% year-on-year growth, while normalized growth excluding U.S. tariff and Golden Star impact stood at 12%.

Management Commentary on Key Challenges

During the earnings call, Managing Director Ashwani Kumar Arora addressed several critical issues affecting the business:

U.S. Tariff Impact

The company has successfully passed on the majority of the 50% U.S. tariff to consumers. CFO Sachin Gupta clarified that the tariff applies to imported value, translating to approximately 25-26% impact on overall sales value. Management indicated some slowdown in January consumption but expects clearer trends by March quarter-end.

Basmati Crop Situation

The company reported that basmati crop yields fell short of earlier projections across major production states, resulting in higher price levels. Average paddy price increases of 7-8% are expected on a consolidated basis, with the company maintaining its policy of covering 80% of annual requirements.

Segment-wise Performance Updates

Management provided detailed insights into various business segments:

Geographic Market Analysis

The earnings call revealed strong performance across key markets:

North America (46% of revenue): Normalized growth of 12% excluding tariff and Golden Star impact. Royal brand maintains 60% market share in basmati segment.

India (29% of revenue): 10% year-on-year growth with Daawat household reach expanding from 45.56 lakh homes in March 2023 to 58.11 lakh homes in September 2025.

Europe (16% of revenue): Robust 35% year-on-year growth, primarily driven by U.K. operations that became operational in the latter part of last year.

Strategic Initiatives and Future Outlook

Management outlined several strategic developments during the call:

Hungary Acquisition Update

The proposed acquisition of Hungary-based Global Green Group was not approved by the Ministry of National Economy Hungary due to identified national, economic, and sectoral risks.

Middle East Expansion

The company launched Hadeel brand specifically for HoReCa segment in Saudi Arabia, with branded revenue from Saudi Arabia reaching ₹35 crores in nine months compared to ₹17 crores last year.

CVD Duty Status

Regarding Ecopure Specialties Limited, the final determination on CVD duty, originally expected by November 17, 2025, has been extended to February 17, 2026, due to U.S. government shutdown.

Management Guidance and Outlook

During the Q&A session, management reaffirmed their double-digit revenue growth guidance while acknowledging margin pressures. Ashwani Arora emphasized that current challenges are temporary and geopolitical in nature, with strong underlying business fundamentals across diversified global operations.

The company maintains its target ROCE improvement from current 20% levels to 23%, supported by strong brand equity, disciplined investments, and expanding market penetration across segments and geographies.