Adroit Industries' Export Model Retains 25% US Tariff Risk

Adroit Industries (India) Limited derives nearly all product-sale revenue from exports, leaving its operating performance exposed to overseas demand, trade policy and currency movements. Adroit Industries generated Rs 121.244 crore, or 95.39%, of Fiscal 2026 product sales outside India, while its United States propeller-shaft and driveline-component shipments remained subject to a 25% Section 232 tariff.

How dependent is Adroit Industries on export sales?

Adroit Industries is highly dependent on export sales because overseas revenue accounted for more than 94% of product sales in each of the last three fiscals. Export revenue rose to Rs 121.244 crore in Fiscal 2026 from Rs 116.683 crore in Fiscal 2025 and Rs 104.475 crore in Fiscal 2024. Domestic product sales were Rs 5.865 crore in Fiscal 2026, or 4.61% of total product-sale revenue of Rs 127.109 crore.

The export model reached more than 32 countries during the three fiscals ended March 31, 2026, including markets in North America, Europe, Latin America, the Middle East, Africa and Asia-Pacific. That geographic reach does not remove cross-border exposure: Adroit Industries identifies overseas recession, trade-policy changes, import duties, customs restrictions, shipping disruption, foreign-exchange movements and delayed export-receivable collection as factors that may affect orders, costs, margins and working capital.

The export share declined by 0.88 percentage points from 96.27% in Fiscal 2025 to 95.39% in Fiscal 2026, but this did not represent a substantial move towards domestic sales. Total product-sale revenue rose by Rs 5.9 crore year on year, while India revenue increased by Rs 1.339 crore. The export model therefore continues to depend on overseas customer demand, shipment execution and collection of payments in export markets.

Why does the US tariff matter to Adroit Industries' export model?

The United States matters because it supplied Rs 65.178 crore of Fiscal 2026 export revenue, equal to 53.76% of exports and approximately 51.28% of total product-sale revenue. Although United States revenue declined from Rs 77.8 crore in Fiscal 2025, the country remained the source of more than half of export sales. Changes in United States demand, customs enforcement or trade policy can therefore affect a larger portion of sales than developments in any other individual country.

Propeller shafts and driveline components exported to the United States have been subject to an additional 25% tariff under Section 232 of the Trade Expansion Act of 1962 since May 3, 2025. Section 232 is a United States trade measure applied to imports under that law. Adroit Industries states that the tariff may reduce product competitiveness, raise customer costs, alter order volumes or pricing, and potentially require the company to absorb part of the cost impact.

The United States share declined from 71.93% of export sales in Fiscal 2024 and 66.68% in Fiscal 2025 to 53.76% in Fiscal 2026, producing a broader export mix. Colombia became the second-largest market at Rs 14.089 crore, or 11.62% of exports, compared with Rs 4.918 crore and 4.21% in Fiscal 2025. Canada contributed Rs 10.764 crore, or 8.88%, in Fiscal 2026, but these changes have not removed United States concentration.

Will a proposed US tariff quota remove the 25% charge?

No, the proposed preferential tariff-rate quota had not removed the Section 232 charge as of the Red Herring Prospectus date because it had not been formally notified or operationalised. A tariff-rate quota, or TRQ, is a framework under which specified import volumes may receive preferential tariff treatment. The February 6, 2026, India-United States joint statement contemplated a TRQ for certain automotive parts, but implementation remained with United States authorities.

The unresolved details are material to Adroit Industries because the quota available to Indian auto-component suppliers had not been specified and relevant Harmonized Tariff Schedule, or HTS, codes had not been identified or operationalised. HTS codes are United States customs classifications that determine product tariff treatment. Until these matters are finalised, Adroit Industries says its relevant United States exports remain subject to the additional 25% Section 232 tariff.

A separate United States action in July 2026 imposed an additional 10% Section 301 tariff on imports from India, but automotive parts and other products already covered by Section 232 measures were excluded. That exclusion means the disclosed tariff affecting Adroit Industries' relevant United States shipments remained 25%, rather than a combined 35%. The exposure would persist if the TRQ is not implemented, if relevant HTS codes are excluded, or if tariffs are continued or increased.

How does unhedged currency exposure add to the export risk?

Adroit Industries reported nil hedged foreign-currency exposure in Fiscal 2026, Fiscal 2025 and Fiscal 2024, and states that it does not have a hedging policy. Its exposure primarily comprises export receivables, foreign-currency monetary assets and liabilities, and packing credit in foreign currency, or PCFC, facilities. PCFC is export-related working-capital borrowing denominated in a foreign currency, so exchange-rate movements can affect both receivable realisations and borrowing liabilities.

Adroit Industries recorded a net foreign-exchange gain of Rs 50.4 lakh in Fiscal 2026 after losses of Rs 3.815 crore in Fiscal 2025 and Rs 5.378 crore in Fiscal 2024. The reported foreign-exchange result changed direction in Fiscal 2026, but the figures do not establish a recurring benefit from currency movements. Timing differences between procurement, production, billing and collection, together with the currency mix of assets and liabilities, determine the eventual net effect.

A weaker rupee can increase rupee realisations from foreign-currency receivables, but it can also increase the rupee value of PCFC borrowings and other foreign-currency liabilities. A stronger rupee can reduce export realisations while lowering these liabilities. With Rs 121.244 crore of Fiscal 2026 sales outside India and no disclosed material derivatives, forward contracts or options, currency volatility can affect revenue, cash flow, working-capital requirements and financial position.

What other export-market concentrations could affect collections?

Colombia became a larger dependency because its Fiscal 2026 contribution rose by Rs 9.171 crore year on year to Rs 14.089 crore. Adroit Industries states that the Colombian peso appreciated against the United States dollar during 2025, which may have increased import purchasing power among Colombian buyers. A depreciation of the Colombian peso, import restrictions or weaker customer purchasing power could affect demand and export realisations.

Receivable recovery is also relevant because Kozzyb International Private Limited, a related party in which one of Adroit Industries' directors has substantial interest, had Rs 1.392 crore of trade receivables outstanding at March 31, 2026. That amount equalled 0.99% of revenue from operations, compared with Rs 1.596 crore and 1.19% at March 31, 2025. Delayed payments, customer credit deterioration, sanctions-related restrictions and banking delays may extend collection cycles and increase working-capital requirements.

Conclusion

Adroit Industries' export model combines scale with concentrated external exposures: 95.39% of Fiscal 2026 product sales came from outside India, the United States supplied 53.76% of export sales, and relevant United States shipments remained subject to a 25% Section 232 tariff. Colombia's rise to 11.62% of exports reduced the United States share from 71.93% in Fiscal 2024, but did not alter the export-led nature of revenue.

The next disclosed development to watch is whether United States authorities operationalise the proposed TRQ for automotive parts, including its quota allocation and covered HTS codes contemplated in the February 6, 2026 framework. Until then, the 25% tariff continues, while Adroit Industries remains exposed to unhedged currency movements, overseas collection risk and trade or logistics disruption across markets that generated Rs 121.244 crore of Fiscal 2026 product-sale revenue.