Six of the seven new defence companies report provisional profits during the first six months
New Delhi, April 30, 2022
Six of the seven new defence companies have reported provisional profits during the initial six months of their business, from October 1, 2021, to March 31, 2022.
Except Yantra India Limited (YIL), all the other companies, Munitions India Limited (MIL); Armoured Vehicles Nigam Limited (AVANI); Advanced Weapons and Equipment India Limited (AWE India); Troop Comforts Limited (TCL); India Optel Limited (IOL) and Gliders India Limited (GIL) have reported provisional profits, an official press release said.
The release said the Government had taken various steps to handhold and support these new defence companies in starting their business as corporate entities. Outstanding indents with erstwhile OFB were grandfathered and converted into deemed contracts valuing about Rs 70,776 crore.
Against the targets for financial year 2021-22, Rs 7,765 crore was credited to the new defence companies as a 60% mobilisation advance before the commencement of the business date. An amount of Rs 2,765.95 crore has been released to the seven new companies during the current financial year for capital expenditure and equity.
With the functional and financial autonomy provided to these new corporate entities, coupled with handholding by the Government, a turnaround has been brought in the functioning of the Ordnance Factories, the release said.
"Within the first six months, these new companies have achieved a turnover of more than Rs 8,400 crore, which is significant considering the Value of Issue of erstwhile OFB during the previous financial years.
"From day one itself, these companies have started exploring new markets and expanding their business, including exports. Within a short time since their inception, these companies have been able to secure domestic contracts and export orders valuing more than Rs 3,000 crore and Rs 600 crore, respectively," the release said.
The MIL has bagged one of the biggest-ever export orders of ammunition of Rs 500 crore.
These companies are also taking measures for developing new products through in-house as well as collaborative efforts. The YIL has bagged orders of about Rs 251 crore from Indian Railways for axles.
These new entities have also initiated various measures for optimal utilisation of their resources and cost reduction. With focused attention on cost reduction, these companies have been able to make cumulative savings of about 9.48% in the areas like overtime and non-production activities during the initial six months itself.
The performance of the new companies is being monitored regularly by the Department for timely interventions if any so that the objectives of the corporatisation of OFB are fully met.
The Government had, on June 16, 2021, taken a major decision to bring in a long-awaited and major reform in defence manufacturing by converting the Ordnance Factory Board, a subordinate office of the Ministry of Defence, into seven Government-owned corporate entities with professional management.