On Target... Kind Of

Nearly three and a half years after the Ordnance Factory Board (OFB) was corporatized, merging 41 production units into seven new defence public sector undertakings (DPSUs), a report presented by the Parliamentary Standing Committee on Defence last week highlighted encouraging profitability.

- BHASWAR KUMAR

However, a closer look at the data points to uneven future prospects, variations in projected order books, and differences in export performance.

While six of the seven DPSUs reported profits in 2023-24 (FY24), one remained in the red, and only two managed to establish any discernible export presence. Also, at least one of the DPSUs showed limited prospects for future orders.

That said, corporatization appears to be making headway in its goal of improving efficiency and financial viability.

Of the six DPSUs that turned a profit, Avadi (Chennai)-headquartered Armoured Vehicles Nigam Ltd, or AVNL, led with a profit of 605.06 crore. Kanpur-based Advanced Weapons and Equipment India Ltd, or AWEIL, which focuses on small- and large-calibre weapons, meanwhile, recovered from a loss of 12.79 crore in FY23 to register a profit of 20.24 crore in FY24.

Troop Comforts Ltd (TCL), also headquartered in Kanpur, which manufactures uniforms and extreme-climate clothing, was the only DPSU to post a loss, reporting a deficit of 303 crore. The committee attributed this to a weak order book of just 340 crore, but noted that the army headquarters had placed fresh orders worth over 1,200 crore in the last quarter of FY24. This suggests TCL's position may improve in FY25.

Before the Indian ordnance factories were corporatized and the OFB dissolved on October 1, 2021, all the 41 production units that went on to form the seven DPSUs had cumulatively incurred losses over the preceding three years.

This changed almost immediately. In the first six months of operations—from October 1, 2021, to March 31, 2022—six of the seven DPSUs reported provisional profits. The only exception was Nagpur-headquartered Yantra India Ltd (YIL).