Ordnance Factory Board (OFB)
OFB was corporatised on October 1, 2021, merging 41 production
units into 7 new Defence Public Sector Undertakings (DPSUs). A Parliamentary Standing
Committee on Defence report highlighted improvements in profitability but noted uneven
future prospects.
Corporatisation refers to converting a government department into a corporate entity
with a commercial structure.
Before 2021, the Ordnance Factory Board (OFB) operated as a government department,
lacking financial autonomy and accountability. Corporatisation aimed to improve
efficiency, ensure market competitiveness, and enhance self-reliance in defence
manufacturing.
Performance of the DPSUs
- Six out of seven DPSUs reported profits in FY24.
-
Armoured Vehicles Nigam Ltd (AVNL) led with ₹605.06 crore profit.
-
Advanced Weapons and Equipment India Ltd (AWEIL) recovered from a loss in FY23 to
₹20.24 crore profit in FY24.
-
Troop Comforts Ltd (TCL) was the only DPSU to report a loss of ₹303 crore due to a
weak order book, though fresh orders worth ₹1,200 crore were placed.
Order Book and Future Growth
-
Munitions India Ltd (MIL) holds the highest projected order book for FY25 at
₹23,120 crore.
-
Over FY26–FY30, MIL is expected to maintain its lead with ₹67,250 crore in
potential orders.
-
AVNL's order book is expected to increase over sevenfold, from ₹5,544 crore in
FY25 to ₹41,735 crore in FY30.
-
Together, MIL, IOL (India Optel Ltd), and AVNL account for nearly 80% of the total
projected order book (~₹1.99 trillion) for FY26–FY30.
-
Gliders India Ltd (GIL) has the smallest projected order book.
Concept of an Order Book
-
An order book is a record of confirmed purchase orders received by a
company for future delivery of goods or services.
-
It represents the total value of pending orders that a company has to
fulfill.
-
Used primarily in manufacturing, defence, and construction industries,
where large-scale production is based on pre-approved contracts.
Exports and Competitiveness
- DPSU exports surged from ₹82.18 crore in FY23 to ₹1,976.51 crore in FY24 (2,300%
growth).
- However, MIL alone contributed 86% of exports, and AVNL reported zero exports.
- The government is supporting DPSUs with financial and non-financial aid.
- Private sector competition (Adani Group, Kalyani Group, L&T) is expected to
challenge DPSUs.
Challenges and Recommendations
-
Public sector inefficiency arises from bureaucratic red tape, lack of autonomy,
and slow decision-making.
-
Capital expenditure (Capex) underutilization: Out of ₹5,757 crore disbursed, only
₹3,261.78 crore (57%) was utilized.
-
The committee recommended modernization and technology upgrades.
-
Suggestions for the future:
-
Privatisation could be an option but requires political will.
-
Consolidation of 7 DPSUs into 2-3 entities for better efficiency.
-
Greater autonomy to compete with private players.
