VMS Industries Limited is a prominent Indian public company specializing in the circular economy through ship recycling, industrial asset dismantling, and metal trading. Operating from the **Alang-Sosiya Ship Breaking Yard** in Gujarat—the world’s largest ship-breaking cluster—the company provides a sustainable source of ferrous and non-ferrous scrap, serving as a critical raw material supplier for the Indian steel industry. --- ### **Core Operations & Infrastructure** Effective **June 30, 2025**, VMS Industries consolidated its reporting into a **single integrated segment**: **Manufacturing and Trading of Iron and Steel Scrap**. This strategic shift allows the Audit Committee and management to monitor the business as a unified entity sharing common risks and returns. * **Ship Recycling:** The company’s primary revenue driver involves dismantling retired marine vessels. It operates at **Plot No. 160M** in Alang, which underwent a significant expansion in **2022**, doubling its footprint from **2,700 Sq. Mtr.** to **5,400 Sq. Mtr.** Since commencing operations in **FY 2009-10**, the company has successfully recycled **37 ships**. * **Asset Dismantling & Demolition:** VMS has diversified into industrial decommissioning, bidding for defunct factories and infrastructure. A landmark achievement in this segment is the contract for dismantling incomplete ships and blocks at **ABG Shipyard (Dahej)**, involving approximately **48,000 MT** of material with a contract value of **₹163.20 Crores**. * **Metal Trading:** Leveraging deep industry contacts, the company trades various metal grades derived from its recycling and dismantling activities. --- ### **Operational Excellence & "Green" Certifications** VMS Industries positions itself as a leader in "Green Ship Recycling," adhering to stringent international environmental and safety standards. This compliance is critical for attracting high-value vessels from international ship owners who prioritize ESG (Environmental, Social, and Governance) standards. | Certification / Body | Standard / Compliance | | :--- | :--- | | **BUREAU VERITAS** | **ISO 9001:2015** (Quality), **ISO 14001:2015** (Environment), **ISO 45001:2018** (Health & Safety) | | **RINA SERVICES** | **HKC** (Hong Kong Convention), **EU-SRR** (EU Ship Recycling Regulation) | | **NK Class (Japan)** | Class Certification for Ship Recycling | --- ### **Financial Performance & Growth Metrics** The company demonstrated exceptional growth in **FY24**, reaching record-high revenue and profitability levels. **Key Financial Indicators (FY24 vs. FY23):** * **Revenue:** Surged **89.74%** to **₹266.37 Crore**. * **EBITDA:** Increased **110.14%** to **₹10.54 Crore**. * **Profit After Tax (PAT):** Grew **152.86%** to **₹6.32 Crore**. * **Order Book:** Secured new orders worth approximately **₹168 Crore** in **June 2023**. **Capital Structure & Liquidity:** In **May 2024**, the company strengthened its balance sheet via a **Rights Issue**, issuing **8,000,000 Equity Shares** at **₹35 per share** (including a **₹25 premium**) to raise **₹28 Crores**. * **Authorized Capital:** **₹26.00 Crore**. * **Paid-up Capital:** **₹24.47 Crore**. * **Dividend:** Declared **₹0.50 per share** in **July 2024** (**₹1.22 Crore** total). * **Banking:** Facilities are managed through **Bank of Baroda** and **Axis Bank**, secured by inventory and a pledge of **4,442,017 promoter shares**. --- ### **Strategic Market Positioning & Outlook** VMS Industries is positioned to capitalize on India’s dominant role in the global recycling market. * **Market Share Expansion:** India currently processes over **35%** of global vessels. Management anticipates this volume will **double** over the next decade as global fleet retirement accelerates. * **Sustainability Advantage:** Ship scrap is a preferred feedstock for Indian re-rolling mills because it requires significantly less power and fuel compared to integrated steel production using coal and iron ore. * **Diversification Strategy:** By aggressively bidding for defunct industrial plants, the company is reducing its cyclical reliance on ship arrivals and international maritime freight rates. * **Related Party Ecosystem:** The company has established frameworks for transactions up to **₹100 Crores** each with **Aditya Ultra Steel Limited (AUSL)** and **VMS TMT LIMITED (VTL)** to streamline the supply chain and ensure consistent off-take of processed scrap. --- ### **Risk Profile & Contingent Liabilities** Investors should note significant regulatory and market-based risks that could impact future valuations. **1. Tax Litigation & GST Disputes:** As of **April 2026**, the company is contesting multiple demands under the **CGST Act, 2017**, totaling approximately **₹19.85 Crores** in disputed exposure. * **Allegations:** Authorities have alleged "circular trading" and "bogus invoicing" involving related parties (**Rajendra Shipbreakers** and **Rajendra Recyclers**), citing a **500% price escalation** of a ship engine without physical movement. * **ITC Claims:** Demands include **₹7.65 Crore** for irregular Input Tax Credit (ITC) and **₹4.46 Crore** for ITC availed from suppliers with cancelled registrations. **2. Operational & Financial Risks:** * **Commodity Volatility:** Profitability is tied to the spread between the purchase price of old ships (LDT-based) and the domestic selling price of re-rollable scrap. * **Forex Exposure:** Ships are purchased in USD on **180 to 360-day credit**. The company does not consistently hedge, leaving it exposed to currency fluctuations. * **Audit Qualifications:** The **FY25** financial statements received a "True and Fair" opinion **except for non-provisioning for gratuity** and long-term employee benefits as per **Ind-AS-19**. * **Compliance Lapses:** Noted lapses include **Section 185** (loans to related parties) and **FEMA** regulations regarding Foreign Liabilities and Assets (FLA) filings. --- ### **Inventory & Valuation Methodology** The company employs a rigorous valuation process for its primary assets: * **Uncut Ships:** Valued at cost. * **Finished Scrap:** Valued at the lower of cost or net realizable value. * **Weight Estimation:** Inventory is calculated based on **Light Displacement Tonnage (LDT)**, adjusted for sold scrap and estimated cutting wastage. This ensures a realistic representation of on-site value during the dismantling cycle.