In a detailed assessment of the productivity levels of the OFB, the army has suggested that corporatisation is an imperative as it would lead to a higher quality of products, more competitive pricing as well as the ability to surge production in times of dire need, like the current border crisis with China.
Data analysed by the army shows that at least 403 accidents have taken place due to faulty ammunition since 2014, most of them suffered by infantry troops. More worryingly, the data shows that casualties due to OFB manufactured Ammunition and Armament are unacceptably high, with 27 soldiers losing their life and nearly 160 injured.
In terms of monetary loss, OFB produced ammo worth over Rs 960 crore had to be disposed off as it was found to be faulty, money that could been used to procure at least 100 new medium artillery guns for the army, according to the assessment.
When contacted, the OFB said that the assessment is faulty and that it would issue a detailed statement on the matter on Wednesday.
Suggesting that corporatisation of OFB that has been announced by the government is the only way ahead, the army has recommended that this should be carried out at the earliest as the organisation has performed below its potential over the past few decades and has been a drain on the defence budget.
The corporatisation will bring OFB at par with other defence PSUs like HAL and could help achieve the government to raise its target for a Rs 30,000 crore turnover by 20105, up from the annual Rs 12,000 crore.
The army assessment is that corporatisation will result in several benefits like improved efficiency, competitive pricing, flexibility in technology acquisition, increased defence exports and the capacity to shore up production in times of emergency.
“Corporatisation of OFB is likely to wake it from its slumber and transform ordnance factories into a modernised, state of the art facility with flexible and better decision making in its functioning. This move is likely to make them more competitive and self reliant in production of arms and ammunition and convert it to a profit earning organisation within next few years,” government officials say.
As reported by ET, the government has decided to go ahead with the corporatisation and has hired an external consultant to decide on a roadmap to reform the organisation over the next year. The corporatisation plan was one of the first decisions taken by Defence Minister Rajnath Singh after taking charge last year.