Corporatisation of functions of the 41 production units (Ordnance Factories) of the Ordnance Factory Board (“OFB”)

Report by All India Defence Employees Federation (AIDEF) and the correspondent of KEC

Despite the strong objection of ordnance factory workers and their unions, the opposition by workers’ organisations of other public and government sectors individually and jointly through AIFAP, the Government of India has gone ahead with transfer, with effect from 1st October, 2021 the management, control, operations and maintenance of these 41 units to 7 Government companies, wholly owned by the Government of India.
Ordnance factory workers observed 1st October as Black Day to demonstrate their opposition to the corporatisation of ordnance factories. (Already reported in detail on AIFAP website)
Since the corporatisation is being pursued in many sectors including railways, it is important to know how the corporatisation is being carried out in defence production.

Corporatisation of Ordnance Factories:

New companies formed are:
(1) Munitions India Limited,
(2) Armoured Vehicles Nigam Limited,
(3) Advanced Weapons and Equipment India Limited,
(4) Troop Comforts Limited,
(5) Yantra India Limited,
(6) India Optel Limited, and
(7) Gliders India Limited

The following Office Memorandums were issued by the Department of Defence Production, Ministry of Defence:
i) Creation of Directorate of Ordnance (Coordination & Services).
ii) Dissolution of Ordnance Factory Board and transfer and assignment of existing and subsisting contracts and agreements of Ordnance Factory Board (including its units) to new Defence Public Sector Undertakings and Directorate of Ordnance (Coordination & Services).
iii) Dissolution of Ordnance Factory Board and transfer of employees (Group A, B & C) of Ordnance Factory Board to new Defence Public Sector Undertakings and the Directorate of Ordnance (Coordination & Services).
iv) Dissolution of Ordnance Factory Board and transfer of assets and liabilities of Ordnance Factory Board to new Defence Public Sector
All the schools and hospitals at various factories will be transferred to the Directorate of Ordnance (Coordination & Services).
The surplus land measuring about 3150 acres at 16 ordnance factories will also be transferred to the Directorate. The surplus land is vary valuable as it is near big cities at many factories. It seems the government wants to monetise this land.
As per the information provided to the Registrar of Companies at the time of formation of the companies, out of the seven companies, Troops Comforts Limited and Gliders India Limited will produce textile while the remaining companies will manufacture defence machinery and armaments. The smallest company, Gliders India Limited will have share capital of Rs. 200 crore while the largest company, Advanced Weapons and Equipments India Limited will have the share capital of Rs 15,000 crore.
The headquarters of the companies have been located in Uttar Pradesh, Maharashtra, Uttarakhand and Tamil Nadu.
The companies will be allowed to raise capital from the market, with the permission of the government.
The FDI limit has already been raised to 74-100% for different categories of defence production.
The way the seven companies have been formed again confirms that corporatisation of ordnance factories is the first step towards their privatisation.
The Office Memorandum issued on 24 September 2021 by the Department of Defence Production is given below.

Defence prodn.OM.24.09.21


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