Friday, August 2, 2019


More autonomy for OFB under planned corporatisation but job security to go --

The Centre wishes to restructure the Ordnance Factory Board (OFB) to perform on the lines of global giants like Lockheed Martin and BAE Systems. Amidst growing discontent among employees of the 41 ordnance factories across the country against plans by the government of India to corporatise the Kolkata-based OFB, TOI gets access to a document that outlines the plans for the future. 

While this restructuring will result in greater autonomy and lesser government control for the OFB Corporation, there will be a big question mark on job security. While the government of India (GoI) will pay the salaries and other emoluments for the first five years after corporatisation, the Corporation will have to earn enough to bear these costs thereafter. Those with more than 15 years of service left won’t be entitled to pension and the government will also fund a Voluntary Retirement Scheme (VRS) for employees. 

“All existing employees and officers of OFB will be on deputation for five years to OFB Corporation. Salaries and perks as per existing rules with increase in DA from time to time and 7th CPC recommendations and other emoluments may be given till next five years. All employees will be given 5 years extra benefit for exercising the VRS Option. That means any employee with 15 years of service as on the date of formation of Corporation can get full pensionary benefits. VRS scheme would be funded by GOI,” the document states. 

So far as funds are concerned, working capital for the next five years will be provided by the department of defence production (DDP) as a one-time corpus fund. Capital investment for ongoing and sanctioned projects will also be provided. 

According to the plan, the OFB at the board level will be given the status of a Maharatna Public Sector Undertaking (PSU) and will perform as a holding company with the freedom to reorganise the ordnance factories and other units under its control. This internal restructuring will be examined by a reputed external consultant. OFB will also be allowed to forge partnerships with the private sector as per the ministry of defence’s approved policy. It may also forge joint ventures (JVs) with 49% equity of the government of India. 

“While the OFB chairman will be given suitable representation in defence procurement and the defence procurement board, the corporation shall have the mandate to foray into allied business like Homeland Security and Space-based Warfare. All assets will be owned by OFB Corporation and it shall be free to offer its employees and board of directors an Employee Stock Ownership Plan (ESOP),” it has been stated. 

OFB will continue to receive orders from the country’s security forces on a nomination basis for products it now supplies and for new ones for which it is the designated agency. For make and buy and make category products, OFB will be granted a special preference of 15% above L1 price. In case of losses, the Centre shall support OFB by way of loan for 30% of the total shortfall and by way of equity investment for balance 70% of the amount. The government will also take care of liabilities like pension arising out of the current serving employees. The government will ensure that there is no political interference in the functioning of the OFB and will provide sovereign guarantee for raising of loans. Government orders shall also cease to be applicable to OFB unless the same is considered appropriate by OFB.

“Principle of empowerment requires that OFB should be allowed to take decisions in a business-like manner and is accountable for its performance. At the same time ministry should not interfere with the functioning of OFB,” the document states. 


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