diff --git a/Makefile.builder b/Makefile.builder
index 3e3b27f..424f563 100644
--- a/Makefile.builder
+++ b/Makefile.builder
@@ -1,8 +1,14 @@
 ifeq ($(PACKAGE_SET),dom0)
 RPM_SPEC_FILES := kernel.spec
 else ifeq ($(PACKAGE_SET),vm)
+
 ifdef UPDATE_REPO
+# If DIST_DOM0 defined, copy kernel-devel from there
+ifneq ($(DIST_DOM0),)
 # Include kernel-devel packages in VM repo - dummy spec file
 RPM_SPEC_FILES := kernel-devel.spec
+OUTPUT_DIR = pkgs/$(DIST_DOM0)
 endif
 endif
+
+endif