VMS TMT Limited IPO Details

1. We are dependent on a retail licence agreement with Kamdhenu Limited for sale of TMT bars and the agreement is non-exclusive in nature. Pursuant to this Agreement, we have paid a royalty of Rs. 208.57 lakhs, Rs. 654.83 lakhs, Rs. 610.66 lakhs and Rs. 535.45 lakhs, respectively, representing 0.98%, 0.85%, 0.70% and 0.61% of our total revenue from operations for the three month period ended June 30, 2025 and Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively. The agreement has certain restrictions and obligations, such as minimum sales quotas, branding guidelines, packaging, and royalty payments. We have derived 95.99%, 91.63%, 94.06% and 96.85% of our revenue from operations for the three month period ended June 30, 2025 and Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively from sale of TMT Bars and 100% of the revenue from such sale is only under Kamdhenu Brand. If the retail licence agreement with Kamdhenu Limited is terminated, we may face difficulties in retaining our network of distributors and dealers that distribute our products, which could materially and adversely impact our business, results of operations and financial condition.

2. Our business and profitability are substantially dependent on the availability and cost of our raw materials and we are dependent on third party suppliers for meeting our raw material requirements which are on purchase order basis. Our raw material's consumption accounted for 82.58%, 70.25% 87.86% and 96.63% of our total expenses for the three months period ended June 30, 2025 and the Fiscals 2025, 2024 and 2023, respectively. Any disruption to the timely and adequate supply of raw materials, or volatility in the prices of raw materials may adversely impact our business, results of operations and financial condition.

3. Royalty payments under our agreement dated November 7, 2022, with Kamdhenu Limited may impact our profitability. We have paid royalty of Rs. 208.57 lakhs, Rs. 654.83 lakhs, Rs. 610.66 lakhs and Rs. 535.45 lakhs, representing 0.98%, 0.85% 0.70% and 0.61%, of our total revenue from operations for the three month period ended June 30, 2025, and Fiscal 2025, Fiscal 2024, and Fiscal 2023, respectively. Any increase in such royalty payments may adversely impact our business, results of operations, and financial condition.

4. We derive a significant portion of our revenue from operations from our top ten customers, with our single largest customer contributing 30.19%, 30.11%, 29.09% and 28.55% of our revenue from operations in the three months period ended June 30, 2025, Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively. Loss of any of these customers or a reduction in purchases by any of them could adversely affect our business, results of operations, cash flows and financial condition.

5. We do not have long-term arrangements with any of our customers, distributors or dealers. Any termination of our current arrangements with our customers, distributors or dealers could materially and adversely affect our business, results of operations and financial condition.

6. We rely on our distributors for the distribution of our TMT Bars with whom we do not have any exclusive formal arrangement. Any significant loss of our distribution network or failure by our distributors to effectively sell or market our products could have an adverse impact on our business, results of operations, and financial condition.

7. Our Company primarily manufactures TMT bars contributing 95.99%, 91.63% 94.06% and 96.85% of our revenue from operations in the three months period ended June 30, 2025, Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively. The demand and pricing of TMT Bars is volatile and sensitive to the cyclical nature of the industries it serves including raw material prices. A decrease in TMT Bar prices or sales may have a material adverse effect on our business, results of operations, prospects and financial condition.

8. Our Company has a high debt to equity ratio of 3.78 times, 3.77 times, 4.25 times and 5.28 times for the three months period ended June 30, 2025 and Fiscal 2025, Fiscal 2024 and Fiscal 2023 respectively, which denote our significant outstanding debt and financial obligations and our inability to meet our financial obligations may limit our ability to pursue our business and could adversely affect our business, financial condition, results of operations and cash flows.

9. We have entered into related party transaction with our Group Companies and a few our promoter group companies and will continue to enter into related party transactions. We cannot assure you that such transactions, individuals or in the aggregate, will not have an adverse effect on our business, financial condition, cash flows and results of operations.

10. We have experienced negative operating cash flows of Rs. (2,241.88) lakhs, Rs. (1,793.82) lakhs and Rs. (1,134.76) lakhs during three months period ended June 30, 2025, Fiscal 2025 and Fiscal 2023, respectively .