The award also includes a servicing contract, which includes Alstom employees providing maintenance services such as planning, supply of spare parts and main inspections until the end of 2032 in the workshop near Chemnitz.
As part of the contract, VMS can exercise purchase options for up to 23 additional trains.
Alstom Transport Europe senior vice-president Andreas Knitter said: "We are pleased that VMS has chosen our modern solutions, which include the rolling stock and the servicing. These contracts constitute a new economic model for the customer as it guarantees the quality and reliability of service."
Manufacturing of 13 three-car and 16 five-car trainsets will be carried out at Alstom's site in Salzgitter and are scheduled to enter revenue operations in June 2016.
The trains will run on the Mittelsachsen II electricity network, from Elsterwerda and from Dresden through Chemnitz and Zwickau to Hof.
Alstom's three-car and five-car Coradia Continental trainsets will be able to carry nearly 320 and 520 passengers respectively and can travel at a commercial speed of 160kmph.
Fitted with the traction equipment on the roof, the trains are designed to provide a large corridor for easier movement inside and space for wheelchairs, bicycles and strollers.
Belonging to Alstom's Coradia range of modular trains, the Continental units are equipped with a low floor, and handrails, as per the latest European crash standards for safety of the train drivers and passengers.
More than 3,000 Alstom regional trains have been sold to date and 1,200 Coradia trains are currently operating in Denmark, France, Germany, Italy, Luxembourg, Netherlands, Portugal, Spain and Sweden.