VMS Industries Limited reported a 78.5% decline in net profit to ₹146.29 lakh for the financial year ended March 31, 2026, compared to ₹680.45 lakh in the previous year. Revenue from operations fell 45.4% to ₹15,743.05 lakh from ₹28,855.88 lakh in FY25. The board of directors approved the audited financial results for the quarter and year ended March 31, 2026, at a meeting held on May 28, 2026. The results were subsequently published in newspapers on May 29, 2026, in compliance with SEBI regulations.

Financial Performance

For the quarter ended March 31, 2026, the company recorded a net profit of ₹29.55 lakh, a significant decrease from ₹514.11 lakh in the corresponding quarter of the previous year. Revenue for the quarter stood at ₹5,029.80 lakh, down from ₹5,210.36 lakh in Q4FY25. Total expenses for the year increased to ₹16,237.41 lakh from ₹28,417.45 lakh in the prior year.

Key Metrics and Ratios

The company's net profit margin for FY26 stood at 0.93%, down from 2.36% in the previous year. The debt-equity ratio was 0.66, and the current ratio was 2.48 as of March 31, 2026. Earnings per share (EPS) for the year dropped to ₹0.60 from ₹2.91 in FY25.

Auditor's Report

The statutory auditor, M/s S N Shah And Associates, issued an independent auditor's report. The report included an emphasis of matter regarding management's contention that no employees were eligible for gratuity, and thus no provision was required. The financial results were prepared in compliance with Indian Accounting Standards (Ind AS).

Meeting Details

VMS Industries Limited has received a substantial GST Order-in-Original from the Joint Commissioner, Central Goods & Services Tax, Bhavnagar, involving a total demand and penalty of ₹1988.18 lakhs. The company disclosed this significant development under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Order Details and Financial Impact

The GST order, bearing number BHV-GST-000-JC-CK-351-2025-26-CENTRAL-1416 and dated March 31, 2026, was received by the company on April 28, 2026, at 7:30 PM. The order stems from adjudication of Show Cause Notice CGST-BVR/AE/267/2025-26 dated August 12, 2025, covering the financial year 2024-25.

The demand represents approximately 6.89% of the company's turnover/net worth for FY 2024-25, indicating a significant financial implication for the organization.

Background and Context

VMS Industries initially received an order dated March 31, 2026, issued erroneously in the name of another entity due to a GST Department error but delivered to their address. The company immediately applied for rectification through appropriate forms. Subsequently, they received the correct order on April 28, 2026.

The order relates to investigations involving alleged circular trading and bogus invoicing without actual supply of goods. The GST authorities identified suspicious transaction patterns involving machinery parts (HSN: 84879000) among multiple entities, where goods appeared to move only on paper with values increasing approximately seven times without genuine value addition.

Investigation Findings

The adjudication order reveals extensive investigations conducted by the Anti-Evasion Wing, including:

• Physical inspections at various premises showing absence of declared goods
• Statement recordings from drivers, transporters, and company representatives
• Analysis of e-way bills and GST returns revealing discrepancies
• Identification of circular trading patterns among related entities

The authorities alleged that VMS Industries availed and utilized fraudulent Input Tax Credit (ITC) without actual receipt of goods, violating Section 16(2)(b) of the CGST Act, 2017.

Company's Response and Defense

VMS Industries has maintained that the transactions were genuine commercial activities conducted in the ordinary course of business. The company provided comprehensive documentation including:

• Tax invoices, lorry receipts, and insurance documents
• E-way bills and weighbridge slips
• Bank statements evidencing payments through proper banking channels
• Distributorship agreements supporting bill-to-ship-to transactions

The company argued that their business model involved legitimate trading arrangements where goods were directly shipped to end customers as per commercial instructions, supported by proper documentation and payment trails.

Regulatory Compliance and Next Steps

VMS Industries emphasized its commitment to regulatory compliance, stating it has been regularly paying taxes and filing returns in accordance with law since GST inception. The company has adequate provisions and grounds to contest the demand successfully and expects no material impact on operations.

The company plans to file an appeal before the Commissioner (Appeals), Central Goods and Service Tax, GST Bhavan, Race Course Ring Road, Rajkot, within the prescribed 90-day timeline as per Section 107(1) of the CGST Act, 2017.

Financial and Operational Outlook

Despite the significant demand, VMS Industries maintains confidence in its position, stating adequate provisions exist to contest the demand successfully. The company asserted that there would be no material impact on its operations, indicating management's confidence in the appeal process outcome.

The disclosure under Regulation 30 demonstrates the company's commitment to transparency and regulatory compliance, ensuring stakeholders remain informed of material developments that could impact the organization's financial position.