vms industries ltd share price Management discussions


DISCLAIMER STATEMENT:

Certain statements in this report on Management Discussion and Analysis may be forward looking statements and have been issued in terms of the applicable security laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results could however differ materially from those expressed in the statements or implied due to the influence of external and internal factors, which are beyond the control of the Company. The Company assumes no responsibility in respect of forward looking statements, which may be amended or modified in future on the basis of subsequent developments, informations or events.

BACKGROUND:

VMS Industries Ltd was originally incorporated on December 2, 1991 as a Private Limited Company in the name and style of "Varun Management Services Private Limited" by its Promoters. The Company acquired a Ship Breaking Plot in the year 2007 and to reflect the business of the Company the name was changed to "VMS Industries Private Limited". The constitution of the Company was changed to Public limited Company with effect from January 29, 2010 and consequently the name was changed to "VMS Industries Limited".

BUSINESS OVERVIEW:

Our present business mainly Ship Recycling Activities:-

During the year 2004, Gujarat Maritime Board auctioned vacant plots and under open bid we have been allotted vacant Plot No. 160 at Alang-Sosiya Ship Breaking Yard admeasuring 1350 sq. meter on a lease basis. However, our Company could not start ship breaking activities due to change in policy for ship recycling plant, requiring higher size (2700 sq mtrs ) of plot and therefore we could not get permission for utilization of plot from GMB. Meanwhile, in the year 2007, the plot size was enlarged to 2700 sq. meter as per the instructions given by the Inter Ministerial Committee constituted by Hon. Supreme Court, by merging the adjoining Plot No. 159 and our Company was permitted to use the merged Plot No. 160M for a period of 5 years and subject to renewal thereafter.

We started the ship recycling activity during the financial year 2009-10 and purchased total 37(Thirty Seven) ships for our ship recycling activities till date, whose details are as under:-

SR.NO.

NAME OF THE SHIP

WEIGHT (MT)

1

LORETTA D

6,150

2

COLOMOBO STAR II

5,850

3

MADRE

8,150

4

VENUS GAS

3,912

5

WINCO

2,987

6

MT MAR

9,653

7

LIBRA GAS II

3,126

8

ANNOULA

9,749

9

KAPADOKIA

11,432

10

M V GREEN NEPTUNIC

2,420

11

JAMAIMA

6,522

12

KINGSWAY

16,691

13

THERESA LEPOARD

10,730

14

MV OCEAN

9,890

15

BLU

7,426

16

SHAN

14,850

17

INTERBOARD

9,040

18

HACI ALI SARI

5,203

19

MV ABM PIONEER

6,862

20

M.V NOA

16,809

21

ARMIA KRAJOWA

13,575

SR.NO.

NAME OF THE SHIP

WEIGHT (MT)

22

M.V.HANJI

18,650

23

M.V. MASUREN

11,282

24

M.V. COMMODORE

12,658

25

M.V. BALEEN

9,497

26

M.V. ESPINA

11,610

27

M.V. OPUS

17,059

28

M.V. LISSY SCHULTE-I

7,710

29

M.V. HILLA

2,770

30

M.V BRITANNIA

16,567

31

M.V VARDHAN

5,922

32

M.V DWAJ

17,117

33

M.V DEN

28,000

34

M.V DYNAMIC

21,820

35

M.V COSMOS ACE

12,783

36

M.V THERAS TIGA

5,969

37

M.V MELATI SATU

10050

INDUSTRY OVERVIEW: SHIP BREAKING INDUSTRY: Overview

Scrap from ship breaking fetches a very good price in the market. If prices express consumer preference, then there is a strong preference for the ship-recycling scrap. This is because of the high quality of steel that comes in the form of re-rollable scrap from ships. Ships are manufactured with acute specifications. The manufacture of ships is done usually in the developed countries and the specifications are monitored closely in order to avoid accidents. The general features of steels that are used to manufacture ships are ability to withstand pressure, high impact and strain on account of severe cold. These features if translated into manufacture of bars and rods may give us similar qualities of steel with equal strength.

The material processed from ship breaking scrap is better in terms of yield strength, notch impact strength and through thickness ductility. In terms of chemical composition it is consistent and has low sulphur and phosphorus content. In terms of metallurgical properties, steel from ships are normalized, fully killed and has finer and more compact grain structure, free from inclusions, pores and cracks and austenitic properties. Hence for all kinds of applications those require impact resistance, corrosion resistance, mach inability, bend ability, and formability, steel from ship breaking scrap has been found to be more suitable than steel from ingots and billets. Incidentally, everywhere else in the world the scrap from the demolished ships are usually sent into melting furnaces, India is probably only country that has the technique of re-rolling scrap into producing construction steel without having to first cast scrap as billets and ingots.

In order to produce a tonne of steel through the integrated steel plants one tends to consume more power and fuel and non-replenish able resources like coal, iron ore and limestone and other minerals. The sunk costs in terms of capital employed are higher in the integrated steel plants and the integrated plants create far less employment. Indeed, we can obtain our required input material from the ship recycling industry at (Reference taken from http://www.sriaindia.com/alang-info/role-in-steel-economy/)

RISK MANAGEMENT

The Company is exposed to the risk from the market fluctuations of foreign exchange as well as the fluctuation in the price of iron and steel. The Companys raw material is old ship, which is purchased from the international market on credit ranging upto 180 days to 360 days. Though the Company is not hedging or covering the foreign exchange requirement, the Company is regularly monitoring the foreign exchange movement and suitable remedial measures are taken as and when felt necessary. Though the Company is employing such measures, the Company is still exposed to the risk of any foreign exchange fluctuation.

Likewise, the Companys finished products are mainly re-rollable scrap generated from Ship Recycling and the price of the same is linked to the market rate for iron and steel. Any ups and downs in the price of the iron and steel will affect the profitability of the Company. The Company keeps a watch on the movement of scrap prices and accordingly decides its policy regarding purchase of ships and sale of scrap

FUTURE PROSPECTUS

The business activity of Ship-Recycling industry at Alang Ship Breaking Yard is likely to increase substantially in view of favorable availability of second hand ships and demand of ship-recycled material. Your Company is also optimistic that with the stabilization in price for the

old ship in the international markets and in the sale price of recycled products in the domestic market, the Company will be able to improve the turnover and the profitability ratios in the coming years.

CERTIFICATES AND ACHIEVEMENTS

• The company marked its presence at the award ceremony of "Financial Times" by being one of the High-Growth Companies Asia- Pacific 2020.

• The company is certified with ISO 9001:2015, ISO 14001:2015 & ISO 45001:2018 and ISO 30000:2009 from BUREAU OF VERITAS CERTIFICATION for Ship Relying Activities & Sale of Recyclable Material such as Steel, Equipment, Machinery and Sales of Other Materials obtained from Ship.

• The Company is Certified with ISO 30000:2009 and Statement of Compliance" for engaging in ship recycling at the facility in accordance of IMO Resolution MPEC. 210(63) -2012 guidelines for Safe and environmentally sound ship recycling by the independent verifier RINA INDIA PVT LTD.

• The Company is also certified from NIPPON KAIJI KYOKAI (Class NK) for Statement of Compliance for Firm Engaged in Ship Recycling. HUMAN RESOURCE DEVELOPMENT

The Company recognizes human resources as its biggest strength which has resulted in getting acknowledgement that the Company is the right destination where with the growth of the organization, value addition of individual employees is assured. The total number of employees as on 31st March, 2023 is 40.

INTERNAL CONTROL

The Company has an adequate internal control system for safeguarding the assets financial transactions of the Company. The strong internal control system has been designed in such a way that, not only it prevents fraud and misuse of the Companys resources but also protect shareholders interest.

CAUTIONARY STATEMENT

Certain statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied therein.

On behalf of the Board of Directors

Date : 11.08.2023

Manojkumar Jain Sangeeta Jain

Place : Ahmedabad

Managing Director Whole Time Director
(DIN: 02190018) (DIN: 00125273)