New Delhi: Six of the seven new defence companies, inaugurated by Prime Minister Narendra Modi on Vijayadashmi on October 15, 2021, have reported provisional profits during the initial six months of their business, i.e., October 01, 2021, to March 31, 2022. "Except Yantra India Limited (YIL), all other 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", the Ministry said in an official statement on Friday. According to govt data, MIL had accumulated an average loss of Rs 677.33 crore (average six-monthly) during the last three years, and has reported a profit of Rs 28 crore in the period from Oct 01, 2021, to Mar 31, 2022.
Similarly, AVNL had accumulated a loss of Rs 164.33 crore and in the past six months reported a profit of Rs 33.09 crore. IOL's Rs 5.67 loss has been turned into Rs 60.44 crore profit in the said period. AWEIL cut down heavily on the loss of Rs 398.5 crore and reported a profit of Rs 4.84 crore. GIL reported a profit of Rs 1.32 crore while the company's loss had accumulated to Rs 43.67 crore over the period of the last 3 years (average of six monthly). TCL reported a profit of Rs 26 crore overturning a loss of Rs 138.17 crore.
"Following their dedication to the Nation, the Government has taken various steps to initial handhold and support these new defence companies in starting their business as corporate entities. Outstanding indents with erstwhile OFB were grandfathered and converted into deemed contracts valuing about Rs 70,776 crore. Against the targets for Financial Year 2021-22, Rs 7,765 crore was credited to the new defence companies as 60% mobilisation advance before the commencement of business date", the Ministry said in the statement.
"An amount of Rs 2,765.95 crore has been released to the seven new companies during the current financial year for capital expenditure and equity", it added.
With the functional and financial autonomy provided to these new corporate entities, coupled with handholding by the Government, a turnaround has been brought in the functioning of the Ordnance Factories. Within the first six months, these new companies have achieved a turnover of more than Rs 8,400 crore, which is significant considering the Value of Issue of erstwhile OFB during the previous financial years.
"From day one itself, these companies have started exploring new markets and expanding their business, including exports. Within a short time since their inception, these companies have been able to secure domestic contracts and export orders valuing more than Rs 3,000 crore and Rs 600 crore respectively. The MIL has bagged one of the biggest ever export orders of ammunition of Rs 500 crore. These companies are also taking measures for developing new products through in-house as well as collaborative efforts. The YIL has bagged orders of about Rs 251 crore from Indian Railways for Axles", the Ministry said.
The new defence companies have also initiated various measures toward optimal utilisation of their resources and cost reduction. With focused attention on cost reduction, these companies have been able to make cumulative savings of about 9.48% in the areas like overtime and non-production activities during the initial six months itself.
"The performance of the new companies is being monitored regularly by the Department for timely interventions if any so that the objectives of the corporatisation of OFB are fully met", the statement added.
It is important to mention that the Government had, on June 16, 2021, taking a major decision to bring in a long-awaited and major reform in defence manufacturing by converting the Ordnance Factory Board, a subordinate office of the Ministry of Defence, into seven Government-owned new defence companies with professional management.