VMS TMT Ltd Management Discussions

Industry Structure and Developments

TMT (Thermo-Mechanically Treated) bars are high-strength reinforcement steel widely used in construction for their strength, ductility and corrosion resistance. Manufactured through quenching, self-tempering and atmospheric cooling, they have a tough outer surface and ductile core, making them suitable for earthquake-resistant structures. They offer superior weldability and cost-effectiveness by reducing steel requirements and are used in building frameworks, infrastructure and reinforced concrete structures. Grades include Fe-415D, Fe-500D, Fe-550D and Fe-600D, generally in 6–50 mm sizes.

TMT Size	Product Feature / Application
8 mm	Mainly used for rings attached/fitted in pillar and lintel structures, providing support during construction.
10 mm & 12 mm	Used in RCC roof slabs and recommended for heavy-load applications including columns, beams, slabs and cantilevers.
16 mm	Generally used for ground-floor-plus-one and higher structures to bear upper-floor loads.
20 mm, 25 mm & 32 mm	Used to strengthen foundations; larger thickness provides greater grip for upper-floor loads and large projects.

Global Steel Industry

During 2020 2025, global crude steel production fluctuated due to COVID-19, economic conditions and geopolitical uncertainties. Production rose 4.1% in 2021, declined 3.7% in 2022, remained broadly stable in 2023, marginally declined in 2024 and stood at approximately 1,850 million tonnes in 2025, down around 2.0% from 2024. Long-term demand remains supported by infrastructure, urbanization, industrialization and construction, particularly in emerging economies.

China remained the largest producer, producing approximately 960.8 million tonnes in 2025, about 52% of global output. Despite weaker domestic demand, overcapacity and environmental pressures, its scale and supply chains continue to influence international steel prices and trade flows.

India, the second-largest producer, produced approximately 164.9 million tonnes in 2025, up around 10.4% over 2024. Abundant iron ore, expanding capacity, the National Steel Policy, 2017, infrastructure spending and Make in India support continued growth in production and domestic consumption.

Current Overview of Indian Steel Industry

Indias crude steel capacity increased from 154.1 million tonnes in FY2022 to 200.3 million tonnes in FY2025, while production increased from 120.3 million tonnes to 152.2 million tonnes. During April December FY2025 26, production was 124.6 million tonnes, approximately

11.5% higher than 111.8 million tonnes in the corresponding period of the previous year. Capacity expansion and demand from infrastructure, construction, automobiles and other steel-intensive sectors are expected to support growth.

Industry Developments

1. Union Budget 2026 27 The Budget continues to support domestic manufacturing, infrastructure and the steel value chain. The PLI : Scheme for Specialty Steel remains important for domestic production, investment and import substitution, with 380 crore allocated for FY2026 27. Continued infrastructure and capital expenditure is expected to support steel demand, capacity expansion, technology development and domestic availability of value-added and specialty steel.

2. Railway Construction The Ministry of Railways has received Gross Budgetary Support of approximately 2.93 lakh crore in Budget : Estimate 2026 27 for capacity enhancement, track renewal, electrification, signalling, rolling stock, station redevelopment and other infrastructure. Railway bridges, stations, platforms, tunnels, elevated structures, freight corridors and high-speed rail can generate substantial TMT demand, while related logistics parks, warehouses, industrial and residential development may create additional demand.

3. Airport Infrastructure: During FY2024 25, Indian airports handled approximately 376.43 million passengers (306.79 million and 69.64 million international). Operational airports increased from 74 in 2014 to 164 in 2025. Continued airport expansion, modernization and regional connectivity initiatives such as UDAN are expected to support demand for terminals, runways, elevated structures, parking and other civil infrastructure, benefiting TMT demand.

4. Residential Real Estate: In 2025, the top seven cities recorded approximately 4,19,170 new residential launches, up 2% year-on-year, while sales were approximately 3,95,625 units, down 14% from 4,59,645 units in 2024. Despite lower sales volumes, housing sales value increased about 6% to over 6 lakh crore, supported by premium and luxury housing demand.

Opportunities and Threats

Opportunities:

1. Expansion into emerging markets and geographic diversification beyond Gujarat can broaden the sales/distribution network and reduce geographic dependence; 2. Urbanization and infrastructure growth are expected to increase demand for TMT bars; and 3. Technological advancements in production and logistics can improve efficiency, quality, cost savings and competitiveness.

Threats:

1. Volatility in MS scrap and sponge iron prices can affect production costs and margins, requiring effective procurement and cost management; 2. Intense competition among TMT manufacturers may create pricing pressure, requiring continuous innovation and quality focus; and 3. Changes in industry regulations and environmental policies may require operational changes and additional compliance costs. Overall, VMS TMT Limited has strengths and growth opportunities to leverage while addressing weaknesses and mitigating external threats.

Segment-wise / Product-wise Performance

Segment reporting under Ind AS 108 is not applicable as the Company operates in only one segment.

Outlook

The Company was incorporated on 9 April 2013 and is a manufacturer of Thermo Mechanically Treated Bars (TMT Bars) from scrap and billets, with its manufacturing facility at Bhayla Village, near Ahmedabad, Gujarat. TMT Bars are manufactured through a 30-ton induction furnace, continuous casting machine (CCM) and rolling mill, and from billets through reheating furnace and rolling mill. In Fiscal 2026, over 98% of revenue from operations was generated within Gujarat. The Company has installed capacity of 200,000 metric tonnes per annum and produced 141,611 metric tonnes in FY2026, representing 71% capacity utilization.

The manufacturing plant has power, roads and water supply and good road connectivity, facilitating procurement of raw materials and dispatch of finished goods to distributors and dealers in Gujarat. Products are sold through a non-exclusive distribution network comprising 3 distributors and 227 dealers as of July 31, 2025. The Company seeks to expand penetration by appointing additional distributors and dealers and relies on effective management of this network.

The Company has completed backward integration of its CCM division, enabling TMT manufacturing from scrap and reducing dependency on billets. Earlier, billets were primarily sourced domestically from Gujarat, Chhattisgarh, Maharashtra, Madhya Pradesh, Odisha and Rajasthan. Presently, major raw materials include scrap, manganese, non-coking coal, dolomite, limestone and bentonite, sourced domestically and internationally, including from Hong Kong, UAE, Kuwait, Australia and Singapore. Local sourcing helps reduce transportation cost and delivery time and maintain inventory levels. Power is a major production cost; approximately 22 MW is required for uninterrupted operations and is sourced from Uttar Gujarat Vij Company Limited. The Company has initiated setting up ecaptiv 15 MW solar power plant in Gujarat to reduce electricity expenses.

Risk and Concerns

The Company faces competition from small-scale manufacturers, while manufacturing and administrative costs are increasing. It seeks to meet these challenges through better marketing and effective cost and expense management. The Company is required to comply with Gujarat Pollution Control Board (GPCB) norms for effluent discharge and has undertaken significant expenditure on replacing old machinery and installing new machinery to comply with stringent environmental requirements.

Internal Control Systems and their Adequacy

The Company has an adequate internal-control system covering purchases of stores, raw materials, plant and machinery, equipment and components and sale of goods, commensurate with the size and nature of its business. The system is regularly reviewed to ensure effectiveness.

Operational and Financial Performance

Operational capacity is approximately 70% 80% of installed capacity, supported by increasing demand and operation of the factory at maximum operational efficiency. Detailed financial performance for the year is discussed in the Directors Report and financial statements forming part of the Annual Report.

Human Resources / Industrial Relations

Human resources remain important to manufacturing operations. The Company focuses on a technically competent and trained workforce through appropriate in-house and external training, with emphasis on safety, employee development, quality and operational efficiency. The Company had 225 employees at the close of the financial year and maintains cordial and harmonious employee relations.

Key Financial Ratios

Ratio	2025–26	2024–25	Change
Debtors Turnover	28.19	37.83	-25.47%
Inventory Turnover	4.81	6.45	-25.43%
Interest Service Coverage Ratio	0.64	1.08	-40.98%
Current Ratio	1.31	1.12	16.98%
Debt Equity Ratio	1.00	3.77	-73.39%
Operating Profit Margin	6.11%	5.03%	21.47%
Net Profit Margin	2.51%	2.00%	25.30%
Return on Net Worth	18.44%	24.62%	-25.10%

Disclosure of Accounting Treatment

In preparation of the financial statements, no treatment different from that prescribed in an Accounting Standard has been followed during the financial year under review.

Regd Office:	For and on behalf of Board of Directors of
Survey No. 214, Nr. Water Tank,	VMS TMT LIMITED
Village – Bhayla, Tal. Bavla. Dist.
Ahmedabad-382220
	VARUN MANOJKUMAR JAIN
Place: Bhayla	MANAGING DIRECTOR
Date: 26.08.2026	DIN: 03502561