LT Foods (LTFOODS) Status Update summary

Overview of recent U.S. countervailing duty (CVD) notice

• Ecopure Specialties, the organic arm, received a preliminary CVD notice from the U.S. Department of Commerce for organic soybean meal exports for 2023, with a provisional duty of 340% on INR 50 crore sales.

• The CVD applies only to 2023 sales; 2024 and 2025 will be reviewed separately, and current exports to the U.S. are subject to a 9.57% duty.

• Management expects the final duty to be significantly reduced, potentially to around 3%, after submitting further data and legal representation.

• Organic soybean exports to the U.S. represent less than 1% of total revenue and about 5% of the organic business, limiting financial exposure.

• The company is confident of minimal impact on cash flow or future earnings and is considering shifting some operations to Uganda, where CVD does not apply.

Financial and operational impact

• The maximum potential impact from the CVD is limited to about 4%-5% of the organic business, with plans to offset through new products and market diversification.

• No provisioning has been made yet as the notice is preliminary and management is confident of a favorable resolution.

• Other income from inventory management fees with a U.S. associate was about INR 50 crore in FY 2026, but this will be eliminated due to consolidation.

• No impact is expected from Middle East turmoil or Iran-related trade disruptions, as there is no business exposure to Iran and shipping lines remain unaffected.

• Basmati rice price declines are not expected to affect margins due to strong brand positioning and cost absorption.

Industry and regulatory context

• The CVD process involves selecting top exporters for review, with industry-wide rates applied; Ecopure's high duty resulted from data not being reviewed.

• The 340% duty is an adverse facts available (AFA) rate, not final, and is expected to be reduced after review.

• No other product lines are currently affected by similar U.S. duties, and any future duties are expected to be manageable.

• Any duty increases are typically passed on to customers, minimizing margin impact.