Retired Chairman of OFB Gives Alternative Proposal to Corporatisation of Ordnance Factories

Frivolous allegations that OFB costs are high and are borne out of ignorance and vested interest says K. Dwarakanath

Posted : 30 November, 2020
Author : Admin
Retired Chairman of OFB Gives Alternative Proposal to Corporatisation of Ordnance Factories

www.indianpsu.com has already published the report submitted by AIDEF, INDWF and BPMS which has given lot of suggestions to the Government to improve the performance of OFB within the government set up as an alternative to Corporatisation. The Government has not yet responded on this report. After the Federations of the Defence Civilian Employees of 41 Ordnance Factories now a retired DGOF & Chairman, K. Dwarakanath, who is in his 80’s has also given a proposal for “Internal Restructuring of Ordnance Factory Board”. 

www.indianpsu.com accessed a copy of the report forwarded by K.Dwarakanath, IOFS (Retd.) to the Secretary (DP). He with his experience in different high level posts in the OFB including the DGOF & Chairman,  has dealt in detail about what is to be done to avoid the untimely Corporatisation decision and to convert the OFB in to a Competitive Defence Industry as a Govt. organization. Some of his views are given below :

“Ordnance Factories were created as a strategic entity with an unorthodox capacity creation system. Capacities are created as captive to the Armed Forces of India, to cover replenishment of war wastage reserve over a predetermined time frame and annual training requirements. Creation of economic capacity was never a criterion and hence was not intended to be exploited commercially. Whereas the built-in surge capacity would serve in ramping up capacity at short notice in times of need, the additional capacity created is treated as war reserve and cost of carrying them in a premium the organization has to incur and charged to the final issues to the armed forces based on a formula designed for the purpose. The increased cost of final issues has to be borne by the nation. Making frivolous allegations that OFB costs are high and are borne out of ignorance and vested interest capitalizing on the lack of knowledge of the details and the background as enumerated above, to spread blasphemy and canard against an organization which has stood by the nation during every occasion when we were attacked by our adversaries”.

The disproportionate fixed overhead charges being carried by OFs arising out of the unorthodox capacity creation which has been spelt out elaborately in previous letters to the DDP, has to be brought down to make the costs of products competitive and realistic to embark on diversification through sale of products to countries/companies other than our Armed Forces. The first chance is to our Armed Forces and the shareable spare capacity would be utilized for making foray into sale of products to third parties. This predicates the necessity for DDP to clearly define the capacities to be set apart for exclusive use of the Armed Forces.

The absorption of the surplus fixed overheads would be achieved through a process of linear and lateral diversification. From the export front, there is hardly any possibility of exporting obsolescent items as obviously there would be no takers. Our best bet is to export the products under manufacture through transfer of technology with foreign parties.

Export of Arms is a dirty business. We should select an Arms exporter of repute with established credentials to take on the function of export of our products and such preliminary work as required to get clearance from technology transferor wherever necessary. Adequate checks and balances must be designed to monitor and ensure clean and transparent process in export of arms.
It would be necessary in the initial stages to work out a costing mechanism as is presently available for supply to civil trade to make our cost favourable viz a viz our competitors.. We can progressively increase the absorption of the surplus overheads till we reach a stage when the entire surplus of overheads can be recovered from through supply to third parties. The entire exercise has to be in continuum and calls for a well equipped marketing and costing centre drawn from experts in the field and preferably from within the organization backed up by experts brought from outside on contract.

The concept as explained above has to be expanded, converted in to an action plan, modalities worked out and put them into motion. This would establish a launching pad to transform OFB in to a commercial entity. Coupled with its expertise built over a period of centuries, it would be a dawn of a new era and let there be no doubt that the employees would take the organization forward to greater heights and glory. To accomplish this task, a high level committee under the Chairmanship of the DGOD with the members represented y appropriate disciplines covering finance, marketing, manufacturing, quality systems and represented by agencies like DDP, OFB, Federations, Retd. Officers of OFB who have all round expertise to be formed on an immediate basis.

It is therefore necessary to bring the R&D activities under the administrative and functional control of OFB while DRDO can continue to function in the area of mission projects. This would ensure that accountability and authority would be co-terminus and OFB would be held responsible from development to serial production. All facilities which are under the control of DRDO which are relevant to carrying out development work including certain laboratories should be brought under the control of OFB.

The hitherto followed practice of DGQA inspecting the final product to be dispensed with and issues would be made by self-certification by OFB. Considering the matrix of the Departments who would be stake holders in this exercise being placed in parallel Line and Staff organization reporting to different Heads of Departments. The suggested High Power Committee should be headed by Secretary, Defence production and represented by all the disciplines and departments who are directly and indirectly interested in the final outcome.

www.indianpsu.com also asked for the reaction of C.Srikumar General Secretary of AIDEF on the proposals given by the former DGOF & Chairman. His said “Shri.K.Dwarakanath is one of the rare DGOF & Chairman/OFB who stood like a rock and fought with the MoD/DDP whenever Ordnance Factories were attacked or neglected. It was his initiative for modernizing the Ordnance Factories, ISO Certification, NADC accredited Labs etc., today which has turned around the OFB in to a modern defence manufacturer. He has dealt the whole matter as a technocrat, and as an Industrial veteran. The Govt. should honour such free of cost advise given by the former DGOF & Chairman. After all at the age of 80 plus he is not having any personal agenda. As a person who loved the Ordnance Factories and its employees inspite of his ripe age he has given his valuable suggestions to the Govt. Let the DDP spare some time to study his proposal and interact with him and also the suggestions forwarded by the three Federations and come forward to make a clear road map, so that OFB remain with Government and also performs effectively as a vibrant Industrial Organisation and as a solution provider”.