6 of 7 defence companies carved out of OFB report provisional profits in initial 6 months of operation

All the seven new defence companies carved out of erstwhile Ordnance Factory Board (OFB) have improved their performances and six of them have reported provisional profits in their first six months of business, numbers released by the defence ministry show.

The seventh company has greatly cut down its losses accumulated over several years. All the companies were in the red before they were hived off last year.

“It is heartening to note that six out of the seven new defence companies have reported provisional profits during the initial six months of their business growth,” defence minister Rajnath Singh tweeted on Friday. “These companies are scaling new heights and contributing to India’s defence manufacturing.”


The companies have achieved a combined turnover of more than Rs 8,400 cr and have also managed to bag some export contracts – a key priority area for the government that is looking at accelerating weapon sales abroad as part of a strategy to boost indigenous production of arms.

The biggest turnaround story has been Khadki-based Munitions India Ltd, which was created by merging a dozen ordnance factories around the country for a consolidated entity that produces ammunition and explosives for the armed forces.

As per numbers shared by the ministry, in its past avatar these factories were showing losses of Rs 677.33 crore over an average six monthly period. However, after their merger, In the six months ended March 2022, Munitions India has shown a provisional profit of Rs 28 crore, with the expectation that it would increase substantially in the next three years.

The company has also bagged a significant export order for ammunition worth Rs 500 crore. While the customer has not been revealed, in the past such orders have been placed by armed forces from the Gulf nations.

“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,” a defence ministry official said. Corporatisation of the entities has changed their structure of approaching contracts and ensured operational efficiency.

In the past, ordnance factories were given nominated contracts and would deliver the goods based on their cost of production, instead of a competitive pricing. Under the new structure, factories need to compete with private players and cut down on wasteful expenditure that would get passed on to the customer in the past.

“These new entities have also initiated various measures towards optimal utilisation of their resources and cost reduction,” the official said. “With focused attention on cost reduction, these companies have been able to make cumulative savings of about 9.48% in areas like overtime and non-production activities during the initial six months itself.”

Only Nagpur-based Yantra India Ltd (YIL), which has been tasked to make ancillary equipment for the other factories, is currently in the red. The company that represents eight former ordnance factories has posted a loss of Rs 111.49 crore for the six months ended March. This is significantly lesser that the average losses of Rs 348.17 crore in a six month period in the past.