Indian Ordnance Factories - Long Journey, Longer Road Ahead

New Delhi, May 17 (UNI) The Indian Ordnance Factories Organisation began its illustrious journey more than two centuries ago when in 1802 the British established a factory on the banks of the Hooghly near Kolkata to repair wooden gun carriages.

Today, the organisation is a conglomeration of 39 Ordnance Factories manufacturing a wide range of products -- from small arms and ammunitions to field artillery guns, trucks to armoured vehicles, and precision optical equipment required by the Artillery, Infantry, Air Defence and Mechanised Forces to troop-comfort items.

Producing land-based military hardware exclusively for Defence use, the Indian Ordnance Factories have seen expansion which was need-based concentrating in the years immediately after World War II on manufacture of products whose need was felt during the war.

Since Indian Industry was in its infancy when most of the Ordnance Factories came up, inhouse manufacture of military products was planned from virgin metal.

This fully integrative production approach was subsequently dispensed with when the Indian Industry matured and today creation of capacity in Ordnance Factories was restricted either in strategic area or for the inputs that Indian trade can not meet qualitatively and quantitatively -- the share of Indian trade now has risen to 46 per cent of turnover.

The indigenous content in Ordnance factories products is about 98 per cent for established items. Even when new items under production are counted, the import content varies at best between five to six per cent.

This high order of indigenisation has helped Ordnance Factories to exploit surge-capacity at a very short notice to meet the increased requirement during war despite sanctions imposed by overseas states.

Today the Ordnance Factories are placed at among the first 20 of Defence Industry contractors globally with an annual turnover of around 1.5 billion US dollars.

The production capacity in Ordnance Factories was created to meet the war-time requirement. The exploitation of installed capacity in full always poses a challenge with requirement during peacetime being less.

Notwithstanding the limitation of product-centric manufacturing capacity, constant endeavours made to assess and develop products for the non-Defence sector has led to the development of a market for almost 20 per cent of turnover in the non-Defence sector.

Though the Ordnance Factories supply to Defence Forces most of their requirements -- except products manufactured in the unorganised sector -- at a price less than market price, the Ordnance Factories do not have any scope to make profit from the Defence sector as supply to this sector, as per policy, is on cost.

However, the price for products meant for non-Defence sector is market-driven. As such, Ordnance Factories earn profit from supply to the civil sector, including exports, and pass on the benefit to the Defence sector by calibrating price.

Modernisation of infrastructure is yet another thrust area pursued continuously to upgrade technology to undertake manufacture of futuristic products in minimum response time.

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