OFB corporatisation and the road ahead

IN PERSPECTIVE

The Ordnance Factory Board (OFB) marched into history in October 2021. Its 41 production units along with its assets, employees, operations, maintenance and management control were transferred to seven defence public sector undertakings (DPSUs) viz., Munition India Limited, Armoured Vehicles Nigam Limited, Advanced Weapons and Equipment India Limited, Troop Comforts Limited, Yantra India Limited, India Optel Limited and Gliders India Limited.

The OFB — now headquartered at Ayudh Bhawan in Kolkata — dates back to the British Raj, when the East India Company established the Board of Ordnance at Fort William, Calcutta, and a factory for producing gunpowder at Ishapore.

From their masters, OFB’s officers and staff inherited not only British-built clubs and hospitals but also a colonial mindset. Soaked in a colonial industrial work culture, they had got used to staying in huge bungalows with attached servants’ quarters, which further raised their high sense of self-esteem. Salaries were high, with a generous distribution of ‘overtime’ to foremen and workers. This was a perfect example of a colonial lifestyle hangover, and it bred in the workers and staff so much arrogance that they refused to notice that the industrial environment had changed.

An assured process of procurement by the armed forces by raising indents irrespective of quality, cost and delays further aggravated the system, making it unnecessary to innovate. Complacency crept in and hardly any product met the expectations of the armed forces.

Of course, there have been previous attempts to corporatise the OFB. In fact, its demise was on the cards since the last 20 years, but it was invariably stonewalled by workers’ unions and other employee federations. The OFB’s inefficiency, lack of accountability, poor work culture, costly and substandard products, wasteful expenditure and corrupt practices, which the CAG would dutifully point out, continued to be glossed over.

Given the stated intention of the government to go in for asset monetisation and privatisation, stopping involvement in the business of running businesses, how was the government to get rid of the OFB?

The status quo had to be altered and it is here that the strategy of converting OFB to DPSUs made sense. Naturally, the en masse transfer of 76,000 OFB workers to the seven new DPSUs was not going to make a substantial difference.

How can a sloppy work culture, production slippages, wasteful expenditure and corruption within the organisation and structure go away overnight? Was the government itself expecting a transformation?

How can deep-drawn systemic changes come into being when the overall control and management in new DPSUs will continue to remain with the same set of Department of Defence Production and OFB officials? The only change would be a 7-way division of the very same management personnel responsible for today’s shoddy performance, who lack a competitive attitude. They will continue to work with the same outdated plant and machinery, lacking a commercial approach to production and a non-existent R&D. They still need to cater to obstructionist stakeholders, representatives of the Directorate General of Quality Assurance, audit, finance personnel and labour unions unfettered by the change of status from a government organisation to a DPSU.

Undoubtedly, the new defence PSUs will have more functional autonomy and an opportunity to deliver through improved accountability and efficiency. The OFB’s Indian Ordnance Factories Service (IOFS) officers, a multi-disciplinary composite cadre selected through the Civil services and Engineering services examination, together with IAS and other service officers, deserve another chance to demonstrate their capability.

There will be a requirement of additional officialdom — the seven new DPSUs will need seven sets of vigilance staff, statutory audit, independent audit, internal audit and various types of finance and accounts personnel, ‘Hindi Officers’ to review the progress made in the use of Hindi by each PSU at its headquarters and also at far-flung regional offices. Seven sets of Board of Directors will be required with vacancies for senior serving officials of the OFB, the Department of Defence Production the Armed Forces, and Defence Accounts personnel from the nine existing DPSUs.

As a sequel, the route to further privatise DPSUs by handing them over to the private sector already exists and has been demonstrated by a government flush with Air India disinvestment success besides having several other PSUs like BEML, BPCL, Pawan Hans and SCI awaiting privatisation.

The second part of the strategy can be implemented with minimal fuss, not even necessitating legislation like the Essential Defence Services Bill, 2021, passed by Parliament in August to bar employees in defence production units (read OFB) from going on strike. If this is actually the bold vision the government has in mind, it deserves to be complimented for carrying out a brilliant can-do strategy. Eventually, the handover to the private sector is a sure-shot panacea — the best is yet to come.

(The writer is former Executive Director and Member, Board of Directors, BEML)