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Corporatization of Ordnance Factory Board (OFB)

The Centre wishes to corporatize the Ordnance Factory Board (OFB) with enhance functional autonomy, efficiency, increased growth potential and lesser Government control amidst growing discontent among employees due to doubts on job security and related issues. It is proposed to be given the status of a Maharatna Public Sector Undertaking (PSU) and will perform as a holding company with the freedom to reorganize the Ordnance Factories and other units under its control. OFB will also be allowed to forge partnerships with the private sector as per the MoD’s approved policy. It may also forge joint ventures (JVs) with 49% equity of the Government of India.

Further, OFB will continue to receive orders from the country’s security forces on a nomination basis for products it now supplies and for new ones for which it is the designated agency. For “Make” and “Buy and Make” category products, OFB will be granted a special preference of 15% above L1 price. In case of losses, the Centre shall support OFB by way of loan for 30% of the total shortfall and by way of equity investment for balance 70% of the amount. The working capital for the next five years will be provided by the Department of Defence Production (DDP) as a one-time corpus fund. Capital investment for ongoing and sanctioned projects will also be provided.

The proposed Corporatization of OFB will bring it at par with other DPSUs of MoD. The structure will provide operational freedom and flexibility to make OFB into a competitive, productive and efficient organization with higher turnover and enhanced profitability.

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