VMS Industries Ltd 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
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 favourable 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

• T he 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.

• T he 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, 2025 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.

DISCLOSURE OF ACCOUNTING TREATMENT:

The Company does follow all the treatment in the financial statement as per the prescribed accounting standards.

KEY FINANCIAL RATIOS:

Disclosure of Financial Ratios:

Sr. No. Particulars	Numerator	Denominator	As At/For The Year Ended		% Change Compared to Last Year
			31/03/2025	31/03/2024
i. Current Ratio (times) @-1	Current Assets	Current Liabilities	2.77	1.58	75.27%
ii. Debt-Equity Ratio (times) @-2	Total Debt	Total Equity	0.56	1.66	66.75%
iii. Debt Service Coverage Ratio (times) @-3	Earnings available for debt Service	Debt Service	0.69	0.42	64.05%
iv. Return on Equity Ratio (%)	Profit for the year	Average Total Equity	8.50%	10.39%	18.18%
v. Inventory Turnover Ratio (times) @-4	Cost of Materials Consumed + Purchase of Stock in Trade + Employee Benefit Expenses+ Other Direct Expenses	Average Inventory	6.49	11.99	(45.89%)
vi. Trade Receivables Turnover Ratio (times)	Revenue from Operations	Average Trade Receivable	10.11	9.01	12.14%
vii. Trade Payables Turnover Ratio (times) @-5	Purchases during the year	Average Trade Payables	4.64	7.01	(33.86%)
viii. Net Capital Turnover Ratio (times)	Revenue from Operations	Average Working Capital	3.83	4.54	(15.60%)
ix. Net Profit Ratio (%)	Net Profit After Tax	Revenue from Operations	2.36%	2.37%	(0.54%)
x. Return on Capital Employed (%) @-6	EBIT	Capital Employed	8.04%	5.87%	36.84%
xi. Return on Investments (%) @-7	Net Profit After Tax	Average Total Equity	8.50%	10.39%	(18.18%)

@-1 Current ratio improved during the current year on account of reduction in outstanding balance of trade payables and short-term borrowings out of funds raised through proceeds of right issue and application of funds raised from operational activities.

@-2 Debt-Equity Ratio improved during the year on account of proceeds from right issue, increase in accumulated balances of profits on account of profits generated during the year from operational activities and decrease in outstanding balance of trade payables and short-term borrowings being part of total liabilities as at the end of the current year compared to the previous year.

@-3 Debt-Service Coverage Ratio improved on account of increase in operational activities which has increasing effect on profits of the company and also on account of settlement of short-term borrowings.

@-4 Inventory Turnover deteriorated during the year on account of margin increase in inventory holding period during the current financial year compared to the preceding financial year.

@-5 Increase in higher average balance of trade payables vis-a-vis purchases made resulted into having reducing effect on the trade payable turnover ratio.

@-6 Increase in operational activities and marginal decline in cost of purchase and cost of material consumed has positive impact on net profit margin during the year. Further proceeds from issue share capital and reduction in total liabilities have positive impact on capital employed. Improvement in factors resulted into improvement in return on capital employed.

@-7 Increase in operational activities and better resource management has positive impact on return of investment during the current year.

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 coulc differ from those expressed or implied therein.

	On behalf of the Board of Directors of
	VMS Industries limited
	Manojkumar Jain	Sangeeta Jain
Date: 16.07.2025	Managing Director	Whole Time Director
Place: Ahmedabad	(DIN: 02190018)	(DIN: 00125273)