Six of the seven new defence companies, which earlier were under the Ordnance Factory Boards (OFBs), and were corporatised, have reported provisional profits during the initial six months ending on March 31.

Except Yantra India Limited (YIL), six 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 for the six months from October 1, 2021 to March 31, 2022, said the Defence Ministry in an official statement.

According to the official performance statistics, none of the seven companies were making profit. MIL had incurred loss of ₹677 crore in a six month average over the last three years but in the last six months it earned profit of ₹28 crore.

Similarly, YIL's loss in the same average period was ₹348 crore and it has reported a loss of ₹111 crore for the six months period.

AWEIL was another huge loss making OFB ( ₹398 crore). After corporatisation, it earned ₹4.84 crore profit. IOL which had least loss of ₹5.67 crore has now made the highest comparitive profit of ₹60 crore. The GIL has also bounced back to make profit of ₹1.32 crore to overcome loss of ₹43.67 crore.

Product development

These companies, which are taking measures for developing new products through in-house as well as collaborative efforts, have managed to secure over ₹3,000 crore worth of domestic contracts and ₹600 crore export orders, said the ministry. MIL has bagged one of the biggest ever export orders of ammunition for ₹500 crore. The YIL has bagged orders of about ₹251 crore from Indian railways for axles.

The firms had started functioning in their new avatar from October 15 following intense negotiations between the unions of OFB and the Defence Minister Rajnath Singh, who assured them that the employees interests would be taken care off in the governments' modernisation bid to explore potential of the government companies, said Ministry sources.

Deemed contracts

The Ministry stated that the outstanding indents with erstwhile OFB were converted into deemed contracts valued at about ₹70,776 crore. Against the targets for last financial year, ₹7,765 crore were credited to the new defence companies as 60 per cent mobilisation advance before the commencement of business date, it added. An amount of ₹2,765.95 crore has been released to the seven new companies during the current financial year for capital expenditure and equity.

The turn around, according to the Ministry, was possible due to the government's handholding and providing functional and financial autonomy to OFB post corporatisation. "Within the first six months, these new companies have achieved the turnover of more than ₹8,400 crore, which is significant considering the value of issue of erstwhile OFB during the previous financial years," stressed the ministry.

On June 16, last year, the Centre took a major decision to bring in a long-awaited reform in defence manufacturing by converting Ordnance Factory Board, a subordinate office of the Ministry of Defence, into seven government-owned corporate entities with professional management.