Scrapping of OFB: Does not appear to be a case of old wine in new bottle – fingers crossed! The Union Cabinet yesterday, on 16th June 2021, Our take: approved a ‘restructuring’ of the OFB such that it now appears a more structured segmentation of As always and as for every forward step resources under seven separate professionally announcement - Implementation is the key! managed 100% government-owned companies. ✓ The clubbing under sectors will enable more The 41 OFs will be individually clubbed under either accessible contact by the equivalent sector of the 7 ‘sector-specific çlusters’ that will be industry with OF sector head compared to OF corporatized. These seven sectors include: HQ at Kolkata. Each sector company will likely • Ammunition and Explosives group > ammunition have its board, and decision making will be and explosives decentralized • Vehicles group > defence mobility and combat ✓ The announcement of the EOI last year vehicles witnessed stiff resistance from the worker • Weapons and Equipment Group > small arms, unions calling for indefinite strikes. The chances medium and large calibre guns of a similar incident happening remain – if not • Troop Comfort Items group now, then two years later, up to which the • Ancillary Group Government has mentioned there will not be a • Opto electronics group change in service conditions • Parachute group. ✓ It will be essential to see who will professionally The objective is to allow autonomy to each such manage the seven new entities. While it will be identified company while improving accountability 100%, government-owned strategic OFs will and efficiency. The plan has also suggested no need to be based on a GOCO model while change in service conditions for two years/pension other factories can be progressively privatized. liabilities of the 70,000 employees. We believe the management should include retired Forces personnel from respective fields in a decision-making capacity along with What led to this decision: private industry representation ✓ While it will be a 100% government entity, the Indian Army, the primary user of OFB products, has workings should possibly be on the lines of highlighted time and again the poor quality of minimal government involvement in the day- defence equipment procured from OFs since 2014, to-day business activities be it (1) faulty ammunition causing accidents and ✓ In the long term, a few of the sector losses worth around INR 960cr or (2) slow companies, including troop comfort items development and production timelines of OFs group, ancillary group and parachute resulting in delayed operational readiness or (3) group, should be disinvested along with reportedly high costs of products or (4) the fact that sections like troop carriage vehicles segment reportedly 75% of OF production is based on under Vehicles group, foundries and low- imported technology. Moreover, it was essential for grade explosives/propellants in Ammunitions the 246-year-old behemoth umbrella entity to be group for which capability is there in the broken down for easy management and focused private sector; followed by Optoelectronics and efficient performance. It took a while to come, group and a section of the Weapons and but as is said: ‘While never late is better, but still Equipment group (small arms section) better late than never is good enough. ✓ Focus should be there on certain technologies and equipment whereby they can enter into collaboration with the private What this step aims to achieve: sector for such equipment ✓ R&D aspects can be isolated into each OFB • Increasing the total of these 41 factories (now to that is not necessarily competing with other be classified into seven companies) from around OFs for limited resources and technology INR 19,000cr currently to INR 30,000cr by 2025 partners within India or globally • Enhancing share of exports in turnover to 25% ✓ Segmenting the current 41 factories into the • Further increase self-reliance in technology by seven sector-specific heads would need to be 2030 worked out in few cases where a particular The above will not be achieved by just a change in factory is working on two different products nomenclature and will require a detailed plan to be prepared for each sector company. ©2021 Primus Partners Private Limited. All rights reserved Scrapping of OFB: Does not appear to be a case of old wine in new bottle – fingers crossed! Our understanding of how the existing 41 OFs will possibly be clubbed under the 7 new companies and also few factories which may face some challenges in the classification as certain factories have products which now will be feeding more than one sector. They will have to be either restructured or clubbed under ancillaries No. Factory/ Location Product range TELANGANA 1 Ordnance Factory, Medak Infantry Combat Vehicle BIHAR 2 Ordnance Factory, Nalanda, Bihar Propellant Bi-modular charges System (At Project Stage). CHANDIGARH 3 Ordnance Cable Factory, Chandigarh Cables of various types, optical sights MAHARASHTRA 4 Ammunition Factory, Kirkee, Pune Small Arms ammunition (medium and large caliber as well) 5 High Explosive Factory, Pune Explosives, Initiatory Explosives, Acids and Chemicals etc. 6 Ordnance Factory, Chandrapur Tank Gun Ammunition and Mortar ammunition. 7 Ordnance Factory, Varangaon Small Arms ammunition 8 Ordnance Factory, Bhandara Propellants and Commercial Explosives 9 Ordnance Factory, Dehu Road Various Pyrotechnic compositions 10 Ordnance Factory, Ambajhari Ammunition hardware for various ammunitions. Brass and Guilding Metal cups of various Calibre for small arms and other 11 Ordnance Factory, Ambarnath ammunition. Machine Tool Prototype Factory, Design, development and manufacture of special purpose machine tools 12 Ambarnath and equipment, components and sub-assemblies for A & B vehicles. 13 Ordnance Factory, Bhusawal Drums, Barrels, Ammunition boxes. MADHYA PRADESH Small arms ammunition, anti aircraft ammunition, Heavy calibreanti tank 14 Ordnance Factory, Khamaria, Jabalpur ammunition, bombs, mines, ammunitions for Airforce and Navy. 15 Ordnance Factory, Itarsi Propellants of various types, Acid, Sulphuric Acid, Picriteetc Non-Ferrous Rolled and Extruded sections, cups for small arms 16 Ordnance Factory, Katni ammunitions, Heavy calibre cartridge cases Carriages for Artillery Guns, Tank Gun Recoil System, Anti aircraft Gun, 17 Gun Carriage Factory, Jabalpur Mortars 18 Vehicle Factory, Jabalpur Army Transport vehicles 19 Grey Iron Foundry, Jabalpur Automobile casting of Grey and Malleable Iron ODISHA 20 Ordnance Factory, Badmal, Bolangir Tank Gun and Artillery ammunition Ammunition and Explosives Weapons and Equipment Troop comfort Items Group Vehicles Group Group Group Ancillary Group Opto electronics Group Parachute Group Difficult to classify ©2021 Primus Partners Private Limited. All rights reserved Scrapping of OFB: Does not appear to be a case of old wine in new bottle – fingers crossed! Our understanding of how the existing 41 OFs will possibly be clubbed under the 7 new companies and also few factories which may face some challenges in the classification as certain factories have products which now will be feeding more than one sector. They will have to be either restructured or clubbed under ancillaries No. Factory/ Location Product range TAMIL NADU Heavy Alloy Penetrator Project, 21 Empty Shots for Kinetic Energy ammunition. Tiruchirapalli 22 Ordnance Factory, Trichy, Tiruchirapalli Small Arms 23 Heavy Vehicle Factory, Avadi Tanks 24 Engine Factory, Avadi Engines for Battle Tanks and ICV 25 Ordnance Clothing Factory, Avadi All Combat Clothing and Parade Garments, Parachutes 26 Cordite Factory, Aruvankadu Propellant of various types. UTTARAKHAND Sighting and Fire Control instruments for tanks, Fire Control instruments for 27 Ordnance Factory, Dehradun Guns and Mortars, Binoculars. Precision Opto Mechanical/Electronic Instruments for sighting and fire 28 Opto Electronic Factory, Dehradun control for A vehicles. UTTAR PRADESH 29 Ordnance Factory, Muradnagar Plain Carbon and alloy steel castings for Tanks, ammunitions, Steel forgings. 30 Ordnance Factory, Kanpur Medium & High calibre guns, Shell empties. 31 Small Arms Factory, Kanpur Small Arms. 32 Field Gun Factory, Kanpur High Calibre Ordnance & Spare Barrels, .32” Revolver Leather items, textile items, engineering equipments including 33 Ordnance Equipment Factory, Kanpur mountaineering items 34 Ordnance Parachute Factory, Kanpur Parachutes of different types. 36 Ordnance Equipment Factory, Hazratpur Tents & other clothing items 37 Ordnance Factory, Korwa. Testing and inspection facilities, AK-203 rifles manufacturing WEST BENGAL 38 Gun & Shell Factory, Cossipore Medium Calibre Guns, Shells &Fuzes, pistols and Rocket Launcher 39 Rifle Factory, Ishapore Small Arms. Various Ferrous and non-ferrous castings & extrusions, Light/Medium/Heavy 40 Metal and Steel Factory, Ishapore Steel Forgings including Gun Barrel Forgings 41 Ordnance Factory, Dum Dum Various Precision Machined and Fabricated items for Defence Forces. Ammunition and Explosives Weapons and Equipment Troop comfort Items Group Vehicles Group Group Group Ancillary Group Opto electronics Group Parachute Group Difficult to classify ©2021 Primus Partners Private Limited. All rights reserved.