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LT FOODS LTD.

21 January 2025 | 03:54

Industry >> Agricultural Products

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ISIN No INE818H01020 BSE Code / NSE Code 532783 / LTFOODS Book Value (Rs.) 105.22 Face Value 1.00
Bookclosure 04/02/2025 52Week High 452 EPS 17.09 P/E 22.67
Market Cap. 13450.84 Cr. 52Week Low 160 P/BV / Div Yield (%) 3.68 / 0.39 Market Lot 1.00
Security Type Other

AUDITOR'S REPORT

You can view full text of the latest Director's Report for the company.
Year End :2024-03 

We have audited the accompanying standalone financial statements of LT Foods Limited ("the Company"), which comprise the Standalone Balance Sheet as at March 31,2024, and the Standalone Statement of Profit and Loss (including other comprehensive income), Standalone Statement of Changes in Equity and Standalone Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including material accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, and its profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing ('SAs') specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the 'Auditor's Responsibilities for the Audit of the Standalone Financial Statements' section of our report (Refer Annexure 'A'). We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the standalone financial statements for the year ended March 31, 2024. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sr.

No

Key Audit Matter

How the Key Audit Matter was addressed in our audit

1

Revenue recognition - Sale of goods

Our audit procedures in respect of this area, among others,

Refer Note 1 to the standalone financial statements

included the following:

with respect to the accounting policies followed by the

Understood the business process of revenue and

Company for recognizing revenue from sale of products.

receivables process for evaluating the design

The Company recognised revenues amounting to

effectiveness of internal financial controls;

H 4,02,012.20 lakhs for the year ended March 31, 2024,

Validated the operating effectiveness of internal financial

as disclosed in Note 30 and Note 52 to the standalone

controls in revenues and receivables process;

financial statements.

Assessed the appropriateness of the accounting policies

Revenue comprises of sale of manufactured goods

relating to revenue recognition by ensuring their

(rice), traded goods and by products - which is

compliance with Ind AS 115 -Revenue from Contracts

recognized when control of such goods is transferred

with Customers;

to the customers and there is no unfulfilled obligation in accordance with the requirements of Ind AS 115 - Revenue from Contracts with Customers. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of

Performed substantive analytical procedures on revenue which includes margins analysis (corroboration between revenues and costs for current year and its comparison with last year), analysis for key customers etc.;

variable consideration) allocated to that performance

Evaluated the terms and conditions of the key contracts,

obligation. The transaction price of goods sold and

including incoterms, with customers to ensure that

services rendered is net of variable consideration on

the revenue recognition criteria are assessed by

account of various discounts and schemes offered by

the management in accordance with the Indian

the company as part of the contract.

Accounting Standards;

Sr.

No

Key Audit Matter

How the Key Audit Matter was addressed in our audit

In accordance with Standards on Auditing, there is a

Performed substantive testing on test check basis

presumed fraud risk relating to revenue recognition.

for revenue transactions recognised during the year

Accordingly, occurrence of revenue is a key focus

by testing their underlying documents which include

area on account of the multiplicity of Company's

purchase orders from customers, proof of deliveries

products, multiple channels for sales, transactions with

(bill of lading for export sales and lorry receipts etc. for

subsidiaries and the volume of the sales made to them.

domestic sales), invoices and collection of money from

Due to the above factors, we have identified testing of revenue recognition as a key audit matter.

the customers (as applicable). Considering different categories of customers, the nature of documents supporting accuracy and occurrence of transactions varies. Our testing methodology was designed and implemented considering these facts and circumstances;

Reviewed reconciliation of revenues between books and revenues disclosed in statutory returns (i.e., GST returns);

Performed other substantive audit procedures including obtaining debtor confirmations on a sample basis, reviewed the subsequent collection of payment and proof of deliveries document of such selected debtors; and

Assessed the adequacy and appropriateness of the disclosures made in financial statements in compliance with the requirements of Ind AS 115 - Revenue from contracts with customer.

2

Inventory - existence and valuation

Our audit procedures in respect of this area, among others,

Refer Note 1 to the standalone financial statements

included the following:

which includes the accounting policies followed by the

Existence:

Company for valuation of inventory.

Assessed the appropriateness of the accounting policies

The Company's inventory is valued at the lower of cost

relating to valuation of Inventory by ensuring their

and Net Realizable Value (NRV).

compliance with Ind AS 2 ("Inventories") and Ind AS 23

The Company is engaged in the business of

("Borrowing Costs");

manufacturing and selling rice and the Company's

Obtained inventory reports (retrieved from SAP)

inventory primarily comprises of raw material i.e.,

and results of management conducted count and

paddy, semifinished rice, finished rice, stores and

reviewed reconciliation of differences, if any, between

spares and packing material. Such inventory is stored

management physical count and inventory records.

in plant, rented warehouses, silos and storage bags.

Verify the necessary adjustments made in the inventory

Inventory holding is generally significant at the end

records by the management on test check basis;

of the financial year considering seasonality of the agricultural produce of paddy and natural ageing process followed by the Company for getting desired level of quality. High quantity of inventory at the year-end makes inventory physical verification an extensive procedure for the management.

Reviewed reconciliation of inventory quantitative details in valuation workings with inventory reports obtained from the management, as retrieved from SAP i.e., the integrated ERP used by the company. Understood and verified the reconciling items on test check basis;

Obtained independent confirmations, on sample basis, for inventory lying with third parties as at year-end;

Observed physical verification done by the management as at year-end and also, independently verified few items physically on sample basis for locations scoped-in, basis materiality of stock lying at such locations to overall inventory balance of the company as at year-end;

Sr.

No

Key Audit Matter

How the Key Audit Matter was addressed in our audit

The valuation of raw material, semi-finished and finished rice is a comprehensive exercise and is carried out manually. The valuation process involves estimation around determination of:

• Allocable overheads and their absorption rates;

• Determination of net realisable value of by-products;

• Capitalisation of borrowing costs to paddy, semifinished and finished rice, given significant holding period between acquisition and production. Period and rate of finance costs to be capitalised.

Accordingly, existence and valuation of the year-end inventory balance, which is significant with respect to the total assets held by the Company, it is considered to be one of the areas which requires significant auditor attention owing to the complexity and judgements involved in the process of physical count and valuation. Hence, we have identified Inventory existence and valuation as a key audit matter.

• Corroborated the results of our physical verification procedures, on test check basis, with valuation workings obtained from the management; and

• Presented our approach and results of physical verification, including but not limited to scoped-in locations, methodology followed for verification of inventory stored in bags and silos and confirmation procedures, to the audit committee.

Valuation:

• Obtained an understanding of management process of inventory valuation;

• Evaluated design effectiveness of controls over inventory valuation process and tested key controls for their operating effectiveness;

• Verified inputs into the valuation process from source documents/ general ledger accounts on test check basis;

• Verified, on test check basis, quantitative reconciliation of opening inventory, purchase/ production, sales and year-end inventory to validate the rice yield during the year and to identify any abnormal production loss. Compared the yield between current year and prior year to identify abnormalities, if any;

Compared basis of key estimates, including those involved in computation of allocable overheads and borrowing costs, to prior year and enquired reasons for any significant variations;

Verified net realisable value of by-products from supporting documents and arithmetical accuracy of valuation calculations on test check basis; and

Assessed the adequacy and appropriateness of the disclosures made in the standalone financial statements with respect to Inventory in compliance with the requirements of applicable Indian Accounting Standards and applicable financial reporting framework.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report but does not include the standalone financial statements and our auditor's report thereon. The Annual Report is expected to be made available to us after the date of this auditor's report.

Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take necessary actions, as applicable under the relevant laws and regulations.

Responsibilities of Management and Board of Directors for the Standalone Financial Statements

The Company's Management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, the Management and Board of Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

We give in "Annexure A" a detailed description of Auditor's responsibilities for audit of the standalone financial statements.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including other comprehensive income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flow dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.

(e) On the basis of the written representations received from the directors as on March 31, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024 from being appointed as a director in terms of Section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure C".

(g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 41 to the standalone financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2024.

iv. (a) The Management has represented

that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) The Management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, as on the date of this audit report, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, and according to the information and explanations provided to us by the Management in this regard, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e) as provided under sub clause (iv)(a) and (iv)(b) above, contain any material mis-statement.

v. The dividend declared and paid by the Company during the year is in compliance with Section 123 of the Act.

vi. Based on our examination, the Company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility. The audit trail feature has been operated throughout the year for all transactions recorded in the accounting software. Further, during the course of our audit, we did not come across any instance of the audit trail feature being tampered with.

3. In our opinion and according to information and explanations given to us, the remuneration paid and provided by the Company to its directors during the year is within the limits prescribed under Section 197 of the Act and the rules thereunder.

For M S K A & Associates

Chartered Accountants

ICAI Firm Registration No. 105047W

Rahul Aggarwal

Partner

Membership No. 505676

UDIN: 24505676BKGPQG3011

Place: Gurugram

Date: May 17, 2024