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CORPORATIZATION OF OFB – THE UNKNOWN ANGEL BY LT GEN P R SHANKAR (R)

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General

Corporatization of OFB and ‘not privatization’ repeat ‘not privatization’ of OFB was announced with emphasis by the Finance Minister as one of the big bang reforms being undertaken in the Defense Sector as part of the  Atma Nirbharta campaign. I welcome it whole heartedly. It is more than time for this reform to happen. However in the past few days the social media is flooded with views and suggested SOPs to corporatize the OFB. One look at the SOPs, suggestions and arguments which are floating suggests that these are attempts by vested interests to hijack the agenda. Some are apparently from within to maintain status quo to live happily ever after. Some to craft a new system to the insidious advantage of the chosen few. That is when I thought that I should throw in my hat in the ring and weigh in my opinion despite all that is happening in China and about the Virus. For a change they can wait. To my mind there are some serious issues which merit attention. These issues should be resolved by the corporatization process.

Quality

The OFB has been notorious for its lack of quality. Poor quality is compounded by systemic lack of responsibility and accountability. The nation has paid very dearly for this. Let me elucidate. Poor quality of ammunition has been endemic. It has led to a staggering number of accidents. Result. Loss of lives, limbs, and morale.  Weapon systems destroyed. Immediate cost. Lifelong compensation to victims. Recruitment and training cost of individuals to replace casualties. Replacement cost of weapons at current rates. That itself is quite a bit but it is still only the superficial loss. An ammunition accident means segregation of a lot of ammunition (which could be in thousands in numbers). So the cost of that entire lot of ammunition is lost. That much ammunition is not available for operations. An order is given only after that ammunition is sentenced for destruction after a time-consuming inquiry. Means lack of operational capability till such time that many rounds come into the kitty after the ammunition is re-ordered and produced. The replacement cost for the entire lot will be later in time so inflation kicks in and the ammunition is now costlier. The old ammunition is then destroyed. So destruction costs are involved. Environmental pollution is endemic. Factor all these losses and it is staggering. It could involve a multiplicative factor of 3-5. No amount of increase in defense budget has been able to offset poor quality. OFB has been notorious for it since no one has been taken to task or held accountable for this gross and criminal dereliction of duty. 
Nomination

OFB has been the go-to agency on nomination basis for any item which is within its production capability. This is as per law. In the absence of any alternatives and this binding and unquestioned assurance by the Government there is an inevitability of orders going to OFB. This has resulted in the OFB adopting ‘a could not care less and where else will you go’ arrogant attitude. It has also led to heavy over costing in league with some conniving and some ignorant but largely incompetent IFAs since there is no price negotiation or transparency.  In one case of procurement of a weapon system, from a foreign OEM I did a cost comparison. Over a time span, the inflation rate of the Foreign OEM was about 10%. For the same period, the OFB inflation rates were about 100%. During my presentation to the DAC, the then Secretary Defence Production was pointedly looking away when these figures came up. The OFB has been a law unto itself where the user has virtually no say in the whole process. I have always wondered as to what kind of governance we have which allows itself to be perpetually skinned. Will Nomination continue when OFB is corporatized? That is the worst thing that can happen – a Corporate entity which is assured of orders without any responsibility, accountability, and competition. 
Reputation

If one goes into the details of the Nalanda ammunition factory which was to produce modern Bi Modular Charge Systems for 155mm systems one will see the cost the nation has had to pay and will continue to pay ahead for the way OFB (mis)handles cases. The reputation of the OFB nosedives due to such cases. Till date all the units of the original intended factory have neither come up nor are the ones which were built functional. This is because that factory has never been completed, since the Government has not been confident of the veracity of issues involved due to poor reputation of OFB. We are going in with great pride for many 155mm guns. Very shortly we will be faced with the situation when we might have guns but not the charge systems. I am sure someone will do a scramble after this to get all their Ps and Qs right to negate what I am pointing at. The fact remains that we are still hollow and continue with the quick fixes, untenable solutions, and glib explanations which will count for nothing when a firefight breaks out and we find that we have guns without ammunition. 

Pride

The OFB has a low threshold on pride. In fact it has extraordinarily little. Strong words? Let me prove the point. From around 2010, we went all out to come up with the Dhanush 155 mm Gun based on a TOT of the 155 mm Bofors, which OFB had held for over a quarter of a century. After going through all tribulations and trials we come up with the Dhanush. In my opinion the 155 mm Dhanush is a top line gun. Indigenous. Something to be proud of after 35 years. Dhanush was the rising and setting sun, spoken of, and quoted as an unqualified success by OFB in every forum. It was having teething troubles and that bis par for the course. We would have got over it.  However the OFB was seemingly happy that the Government was going in for over 1100 guns of an inferior quality from a foreign supplier with TOT to OFB! It eventually meant that the Dhanush would be sidelined. Look at that. The OFB was prepared to throw out its baby and the bathtub and be content with producing an imported Gun. Thank god for Corona Virus. I do hope that we cancel that intended order and the PM, RM, CDS, COAS and OFB Chairman  sit down and get to ensuring that the future of Indian Army revolves around the Dhanush till such time the ATAGs come up.  Otherwise Atma Nirbhar Bharat will be a joke on the nation.
      
Relationship with DRDO

The relationship between DRDO and OFB has always been testy to put it mildly. At the first hint of trouble, the speed with which the DRDO and OFB personnel point fingers blaming the other is like a shootout in a western movie. Clint Eastwood and Lee Van Cleef were never that fast on the draw. Over the years the relationship between these two establishments has been on a down slope for a variety of reasons. Their differences of opinion and egos has been costly for the nation. Challenge me on this and I can substantiate this with cases and facts. However this is a huge problem which needs to be addressed.

Leadership and Professionalism

I visited the Metal and Steel Factory, Ishapore, and Bharat Forge, Pune a few years back. The capability and professionalism of both were at par. In fact ESR Steel plant and radial forging capability at MSF was ahead in capability and professionalism. When people ask can we manufacture gun barrels, I feel everyone should be shown a video of radial forging of a metal ingot into a raw barrel in one go. Some capability. However I rated Bharat Forge way ahead since it had the dynamic leadership of Baba Kalyani. The difference that leadership makes to having an international reputation of quality is stark. The OFB has some exceptionally good professionals. Masters in the business of arms and ammunition who have contributed immensely to the Armed Forces. However, I have seen very few leaders in the OFB system. There are some. Few and far in-between.

Concomitant Reform

Another aspect which the Government needs to consider simultaneously is the concomitant reform of the MOD itself. After corporatization, the new OFB entity will be akin to a DPSU. What then will be the role and responsibility of the DGQA? That organization will also need a corresponding change. Further the role of the Secretary, Defence Production also needs a relook. There is a strong case for the Department of Defence Production to be a bespoke organization at arm’s length from the MOD. The UK has such a system, I have always felt that the presence of the Secretary, Defence Production on the Defence Acquisition Council is tantamount to insider trading.

Conclusion

I was once discussing the offset options in a case with a foreign OEM. He had chosen OFB as an offset partner. I asked him why? He said, “Sir the capability of OFB is something which nations can only dream of. It is only India which has the luxury of ignoring it and coming to people like us”. That is OFB. We have a treasure trove which has underperformed and underdelivered to the nation. If the efficiency of the OFB is improved by even 50%, Atma Nirbhar Bharat will be 100%. Anything more, India can be a leading arms exporter. However for all this to happen, the OFB needs to be corporatized in a proper manner. Admiral Raman Puri (retd) , ex VCNS had written an excellent report about how to go about corporatization and privatization. I do hope some heed is paid to that. We cannot have the existing Board converted into a corporate structure with the same lot. That is old wine in new bottle. Knowledge-based leadership and professional management is the requirement of the day. Bring in talent from outside. Also, this exercise should not end up as a post retirement sops for good boys being inserted as directors on the Board as is being done for DPSUs. 
         
I have put all these points across since these are especially important for the restructured OFB to contribute towards ‘Atma Nirbharta’ effectively. If OFB is corporatized without a sense of moral integrity, will and determination and without addressing the root causes, the situation will only worsen. If only superficial issues are attended to, we might be better off with the known devil of the existing OFB than the unknown angel of the corporatized version.  
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25 responses to “CORPORATIZATION OF OFB – THE UNKNOWN ANGEL BY LT GEN P R SHANKAR (R)”

  1. As someone who has seen the entire process at close quarters, I can vouch for every point conveyed by the author. Having taken the right decision, it is important that we don’t let its implementation get hijacked

  2. Absolutely endorsed..have had personal experience during early 90s when we had to reject rocket ammunition for not meeting the parameters..in case of 105 mm LFG[LV] guns the pressure was so high that I had to put a noting, “Induction of this equipment in the FF in its present state would be a compromise to national security”..the project was shelved..we are lagging behind by 30 years..let's Wake Up..ajb

  3. Some oft repeated comments of mine :OFB: Difficult to find a more inefficient organization anywhere in the world. Manpower to productivity – the lowest Quality: you have commented.Quite a few of its factories could be wound up/ disinvestedShould be headquartered in Delhi or nearby. Calcutta culture and atmosphere will ensure it remains in the dumpsDDP : must be wound up. It’s outlived it’s purpose. Let the def PSUs operate on a level playing field ; the preference currently accorded contributes to building inefficiencies. All PSUs lack the required “ fire in the belly” a must for industry Set up a national offset agency. The current A man and a dog set up in the DDPS is a joke on the nation.Should oversee all large import contracts; not confined to just defense these comments are from a very senior and cerebral veteran who knows his beans

  4. A very well articulated and to the point article. The aspects of corporatized vs privatised has been brought out in very lucid manner. Sir indeed a good read….regards

  5. You have indeed hit the bull's eye with your succinct arguments sir. My compliments. Hope the powers that be take note.

  6. My endorsement to the view of ammunition quality by OFB has put down the order lot of an equipment.Dhanush is another classic case of OFB work culture.

  7. Armed forces,since independence had largey relied more on OFBs for indigenous arms, equipment and ammunition.Post 1962 and mainly after 1971, requirement was felt to upgrade our war fighting capabilities to fight a two front war. As OFB could not keep pace with the modernization and capacity enhancement to meet even the annual requirements and shortfall mounted, voids have been filled up to some extent by adopting import route mainly from Russia and few other friendly foreign countries.We also seldom demanded accountability from them for all the lapses mentioned by you. So, the story continued. Our demand for diversification of resource base and participation of Indian Private companies in Defence Manufacturing was never considered seriously till Late Shri Manohar Parikar took over as Defense Minister. I also had the opportunity to visit some important OFs during service and endorse each point you have made. I still feel, simple corporatization of OFs will not serve much purpose where the need is a total overhaul of mindset, leadership, workculture, their modernization, accountability and quality control. Simultaneously,we must continue to encourage and involve more and more private companies in Defence Manufacturing including research and development. Loved reading each point that you have made.

  8. Very informative and valuable

  9. Thank you for an incisive article. Another issue which has plagued OFB is the absorption of Transfer of Technology (ToT) and the supporting process required to be followed. One of the many reasons for the failure of weapons and ammunition has been the lack of correct absorption of ToT and its implementation. Examples of the initial failure of Invar missiles, inability of certain ATGMs to pass the criteria tests, major accidents in T-72 tks have highlighted this issue. So as part of Corporatization, suitable measures need to be implemented to facilitate complete and correct absorption of ToT and process, and above all ADHERENCE to these. In many ways , what has precluded this have been highlighted in the article; lack of accountability, poor quality control and couldnt care less attitude. Sincerely hope all of these will improve. That OFB is to stay is a given – lets make them deliver and make them the Pride of the Nation.

  10. A sleeping giant who doesn't know it's powers (OFB). Despite partial implementation of Admiral Raman Puri committee report. Disinvestment of non-core items , MGO being free to acquire from private players or ex-import finds OFB as a reliant supplier. Suffice to say that OFB just manages to fight off the competitive chalenge in time. It has reformed over a period of time NQDBMS et al . How much, only time will tell.

  11. OFB does not manufacture Invar missiles. So far as accidents in T-72 tanks are concerned, they have taken place in equal proportion with Russian Guns and ammunition. Only with correct application of mind one can understand what are the real reasons for accidents.

  12. Absolutely agree with you sir. One aspect that you have commented upon is right on target.. The hqrs have to be shifted.. Should not be in kolkata..and someone else pointed out.no 0oint in corporatising the Board with the same people.. Drastic changes must but smoothly…

  13. OFB should not be corporatised

  14. Not fully agree with the content. OFB can't be blamed alone. What DGQA's role ? Being AHSP of almost all items, why they also not be blamed equally? Role of DGQA need to be shifted to a third party.

  15. Many things are correct…but fail to see how productivity issues can be sorted out through corporatisation…although blame for poor qualiry..but i feel there are many facets to that eight from faulty TOT to many a times improper o

  16. Many things are correct…but fail to see how productivity issues can be sorted out through corporatisation…although blame for poor quality..but i feel there are many facets to that right from faulty TOT acquired and imposed on OFB to various other problems related to testing,operation and maintenance as well…many of the incidents mentioned as examples of poor quality are due to poor operation/maintenance,storage and handling related…having said.that ..i accept that a lot need to be done in this arena in this country…many a times poor echnology or improper echnology itself is the reason of poor quality…I fail to understand how corporatisation will change the fix overheads of ofb…MANY privae sector vendors having strong lobbies are crying foul over uneven demarnd,unrealistic GSQRs as well…and many other issues..OFB also is mared by these issues…HAS OFB EVER BEEN TOLD THE CRITICAL.TECHNOLOGY AREAS ..IT IS SUPPOSED TO.WORK.IN LONG TERM..??…in case of dhanush ..a synergy between user..producer has done wonders…many agencies although working on behalf.of.user …creating hindwrnace and thus affecting performance of OFB needs to be dealt wih first..unfortunately..EVERY BODY IS PRESCRIBING ..OFB…WHAT IS GOOD FOR THEM AND OFB NEVER BEEN GIVEN THE FREEDOM OR ALLOWED TO FUNCTION 8N HE MANNER OFB WANTS TO..WHILEMAKING STAEMENTS SUCH AS HIGH COST, MORE ACCIDENTS…HAS EVER BEMCHMARK8NG WITH PEERS IS BEING DONE..PEOPLE PRESENT THEIR OPINIONS AS FACTS…ACCIDENTS ..MAY BE AND IN MOSTLY CASES ARE DUE TO NONE OF OFB'Sfault.My only submission.before going for thisdecision..as a country..we must realise people.want to sell the deence produxts and to develop echnologies..countries have to invest heavily.on their own..OFB employees are nit afraid of change but of the ever evolving defence market and strong lobbying by even inyrnational companies to destabilies indigineous suppliersand ensure their market..OFB needs freedom.on the line of DAE/DOS..and give OFB TARGETS WIH TIMELINES..CORPORATISATION MAY HAVE THE COBRA EFFECT..IT MAY FURTHER DETERIORATE THE SITUATION…FIRST COMMITTEE EVEN BEFORE NAIR COMMITTE SUGGESTED THIS…FIRST THEIR ECOMMENATIONS BE IMPLEMENTED..THEN IF OFB FAILS TO DELIVER ..IT CAN BE BLAMED…UNFORTUNATELY..PEOPLE HAVING NO UNDERSTANDING OF TECHNOLGY BUT HAVING ACCESS TO MEDIA ..PRESENT THEIR OPINIONS AS FACTS AND MANY A TIMES AE MOTIVATED BY LOBBIES..

  17. The article is one side of views,like when many blinds people see a elephant by touching there hand and describe the elephant. OFB is the only manufacturing agency AHSP is army, inspection done by DGQA. Quality of OFB is very good. But it's blame game started by some greedy people. For poor quality DGQA the inspection agency is the only responsible not OFB. DGQA is not doing its work properly and blame goes to OFB. All the people who does not know anything about the OFB are blaming OFB to increase the number in eyes of some financially interested people.

  18. OFB is the organisation which has been responsible for many War victories against neighbouring countries. It has been appreciated by late president of India Shri K.R.Narayanan. on several occasions the then chief of the army has appreciated about quality of the products of ordnance factories and warned to not depend upon private players. Some greedy people like the author likes to support the decision of the government blindly without understanding the repurcussions. The country knows that the effort of Corporatization is nothing but your backdoor entry of privatisation which would be a threat to the national security and integration. Hence we strongly rejects the proposal of the government to convert the 219 years old prestigious indigenius ordnance factories in to a corporation. When an high level official committee was appointed it has demanded that OFB should increase its capacity to reach the production target of 30,000 crores within another 5 years. The federation representatives have accepted to motivate the employees to achieve this set goal. We fail to understand why the government tries to run away to meet the challenge and coveredly announce the corporation decision in the shadow of covid-19? We wonder weather we are living in a democratic country or not and if the government believes that it is on the right path then why don't the issue be discussed at parliament which is the highest decision making authority in India. We challenge the author of the article weather he is ready to be in a platform where we can make a debate on this issue it is a open challenge for him.V.VeluswamyGeneral Secretary National Progressive Defence Employees Federation ( NPDEF).

  19. Biased opinion largely.OFB has stood the test of time during all four wars .in fact,during kargil war,OFB's supply of ammunition increased 100%.There were no. of flaws in indenting of ammunition and sub assemblies and OFB had to correct the indenting procedure at MGO.Awful storage conditions in depots,casual and time consuming attitude of proof ranges,negative attitude in giving bulk production clearance of new products affect OFB's performance.Still OFB could develop many new products in hours of need and proved the most reliable wing of MOD.in hour of need. What's required is to makeO F B,DRDO and D G Q A work more closely for which Defence Production deptt needs total change. Corportisation of OFB is no solution.

  20. Lt.Gen P R Shankar (Rtd.)Sir, post retirement have you joined any private firm or not ?Regards General Secretary Bharatiya Pratiraksha Mazdoor Sangh

  21. Everyone have theirs vested interest to describe the things according to their benefit. Rarely, we get people who says right without hidden agenda. Every stakeholder have lacuna and all round efforts are required to earn more profit/make business profitable. Corporitasation will not overhaul the Organization. Lobbying have agenda behind the seen. There are two facets. Character is simple, as the elephant have. Thinking should be country oriented not personal. Reform should be gradual, nothing is impossible, confidence should be within us. System can be improved, task oriented, only runaway from doing efforts is the Corporatisation as solution. Game is different from the picture in environment.

  22. Corporatisation of all army cantonments,depots,base workshop,non combat post and all cantonments boards,military station which are not at border should also be done…army strength should be reduced to 50 percent….the budget saved should be spend on the real defender such as paramilitary forces

  23. When 80 percent of borders are defending 80 percent of border,why there is a need of such big army…its cost should be used to acquiring more advanced weapons and pension of para military forces

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