Corporatization Of OFB Nears 2 Years, Is It A Success Story Or A Failed Experiment, The Great Debate Rages On

The Government is yet come out with statement about performance of these 7 Corporations for the past 18 months, say Unions

The Modi Government’s decision to dismantle OFB with 41 Ordnance Factories and to convert it into 7 Corporations is now nearing 2 years. Employees are agitating and Court Case also is going on against the
Government decision. The Government and the employees are at logger head on the issue of Corporatization of Ordnance Factories.

The Government’s statement that post Corporatization Ordnance Factories will achieve a production target of Rs. 30,000 crore and the Corporations will have more power, autonomy and accountability has come true ? Whether the Army is going to ignore the 7 Corporations and directly procure items from private corporates are the issues which are worrying the employees of Ordnance Factories.

The Government has not yet come out with any statement about the performance of these 7 Corporations for the past 18 months. The Government may claim with its own datas that Corporatization of OFB is a successful exercise. However, the Trade Unions have got a different story to say.

The three major employees organizations of Defence Civilian Employees of Ordnance Factories who are on deemed deputation have come out with a white paper which they have submitted to the Government as an agenda in which they have listed out 20 points to prove that the Corporatization of OFB is a misadventure of the Government and a failed experiment. They directly charge that the bureaucrats in the helm of the affairs in the MoD during 2020 and 2021 and also the KPMG Consultant has misguided the political bosses in the Government and for
which the employees and the nation is suffering. The persons and the consultants are no more there to address the post Corporatization issues and problems. accessed a copy of the joint Letter submitted by AIDEF, BPMS and CDRA to the Joint Secretary of the DDP and the 11 major points out of the 20 points which they have raised is published here for the benefit of the viewers of

1) The arguments put forth by the Government for corporatizing the Ordnance Factories is accountability, autonomy and efficiency and that the turnover of Ordnance Factories will increase to Rs. 30,000 crores. However none of the above has become a reality during this one year and six months period.

2) In the videos presented by MOD / DDP during the dedication ceremony by the Hon’ble Prime Minister and also in the presentation made before the Standing Committee of Defence in 2023, the new 7 DPSU’s have projected turnover in 2024 -25 Rs. 26,300 Crores. However, that the turnover in 2021-22 for the 7 Corporation is only RS. 8686 crores according to the information available with us. This is a total failure of the corporations when compared with the previous year when the 41 Ordnance Factories where under OFB. The 2022-23 figure will further give a clear picture of the performance of the Corporations.

3) There is no transparency in the matter of profit by the corporation which the government is claiming. The government seemed to be in hurry to claim success of their venture and on the basis of doubtful data all these corporations were declared profitable on the basis of 6 months performance. If the Government is so sure about success of the Corporatization misadventure, let the performance data be made public, which is yet to be done after the initial fanfare announcements.

4) Post corporatization of Ordnance factories there is an increasing trend of Armed Forces going to market to get their requirements, like the recent case of procurement of almost 12 lakh set of newly designed digital Army uniform by imposing restrictive conditions without placing the indent on TCL. Similarly, the procurement of 350 combat free fall Parachute System along with complete accessories under emergency procurement through Fast Track Procedure (FTP) ignoring the Ordnance Parachute Factory Under GIL. Tender dated 11.01.2023 floated by the Department of Military affairs/ Indian Air Force for procurement of 3,48,400 Overall (Ground Crew) (Q-3) without placing the indent to the TCL has created ruffles among the employees.

5) Inter linkages of Ordnance factories are deliberately broken with no visible remedy emerging to fill the gap. Schedule ‘B’ corporation’s non-viability has surfaced in less than 2 years. Lack of work load in TCL is a case in point. The Government ignored all the suggestions of the stake holders that the decision about the structure and system of Defence Production. Government industries cannot be based upon ‘FMCG analogies’ (Fast Moving Consumer Goods) and war capacity need hand holding by the Government. Other Schedule ‘B’ corporations will follow the suit, it’s just a matter of time. GIL, a corporation with a few crore’s paid up capital with the burden of transitional issues is definitely going to be in trouble.

6) Out of Schedule ‘A’ corporations, the YIL is struggling to break even. Even if they do so in short term, there looks almost improbable scenario to have a sustained load in the future. How good, AVNL has gone after corporatization may be assessed from the actual issue figures of their products post corporatization. Despite lofty claims by MIL of having good load and substantial export orders will be tested in future if they are able to deliver in time and with profitability. The export orders are not permanent. It would be really difficult to dig out if AWEIL has any achievement in corporatized period if compared with the performance prior to that. The workload situation of VFJ under AVNL is in an alarming situation. In GCF under AWEIL, even though it is claimed that workload is available in GCF for the next 10 years, production is suffering without proper supply of Raw Materials and components etc. The Workload situation of Small Arms Factories are also grim. OFMK under AVNL is also not having sufficient workload for next year and material shortage for current year. Similar situation is EFA also. In a nutshell we doubt that there is a conspiracy to deliberately picture that Ordnance Factories are not able to supply its products on time to the Armed Forces and hence Armed Forces are going for procurement from Private sources. This will endanger the very existence of 41 Ordnance Factories which is neither in the interest of Armed Forces nor the Country.

7) The Ordnance Factories used to appear in the list of 100 top Arms producing Industries up to 2020 according to the rank list published by Stockholm International Peace Research Institute (SIPRI). However the name of Ordnance Factories is not listed by the SIPRI in the List published for 2021.This is a major setback for the Indian Ordnance Factories.

8) At the unit level no fundamental changes in working system. In fact, the established system of command and control got badly disrupted by creation of field units which is under undue strain and gasping more from confusion than establishing administrative excellence than the old system of straight hierarchical disciplinary and administrative control and management. There are many such measures which shows that the bureaucratic leadership of DDP had no clear-cut management solution but their decisions were more of adhoc measures to tide over unforeseen hiccups in transition.

9) The motivation of manpower is at its lowest ebb. Except for higher bureaucracy of DDP and their handpicked CMDs and Director of these 7 unfortunate corporations, none of the employee believes in better prospect of these ventures. It would be the eighth wonder of the world, if a successful company can be built by false propagated premise of higher functionaries whereas all other stake holders are convinced of its failure.

10) The process of corporatization is steered in such in sensitive and hasty way that it looked like a negative verdict upon OFB’s contribution and a damning statement upon employee’s achievement and contribution. Therefore, an impression has been created amongst employees that this corporatization measure is a punishment afflicted upon employees and eventually this is a step towards privatization in line with the policy of the present government to promote private sector at the cost of the Government sector.

11) There is an increasing tendency of autocracy by the CMD and Board of Directors. In the name of autonomy, powers are centralized with CMDs instead of delegating powers to Factory GM’s/CGM’s. Even deploying employees on Overtime, conduction of meeting etc., with Unions/Associations permission is to be taken from the CMD’s. The faith in management is at its lowest ebb, evident from the fact the hundreds of employees applying for voluntary retirement from service. There are complaints of stress-related Health disorders of the employees and many employees at an younger age group have died of stress by cardiac arrest. In HVF Avadi alone post corporatization 10 employees died out of cardiac arrest.

Apart from the above 11 points the remaining 9 points are pertaining to the sufferings of the employees, with regard to their wages, career progression, health management, hospitals, school admissions, transfer policy etc. They are very much worried that even the compassionate appointment to the wards of the deceased employees including employees who died in accident are not being given, whereas the Cabinet decision is all the service conditions and benefits of the employees will be protected. Employees feels that only violation of the cabinet decision is taking place in the Ordnance Factories.

They have also charged that due to the stress and depression amongst the workforce many have died due to cardiac arrest at an younger age and many have already taken voluntary retirement.

Situation of the Ordnance Factories is going from bad to worse. Time has come now for the Government to introspect and ensure that Ordnance Factories remain as a Fourth Force of the Defence of our Country.

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