Once upon a time, there was an Ordnance Factory Board
Dussehra was an appropriate occasion for formally inaugurating the seven new defence PSUs in place of the erstwhile Ordnance Factory Board (OFB) and its 41 constituent factories. The Kolkata-based OFB, once synonymous with sluggish defence production activities in India and slow-expanding domestic military industrial complex (MIC), became part of archival history. No tears were shed since OFB’s demise was on cards for last fifteen to twenty years. In greeting the new defence PSUs, an appropriate obituary to the OFB is warranted since its continuous downfall and consequential demise may have business lessons for the new PSUs.
Kolkata may have been the hub of industrial location in British days when the East India Company started its political journey in India. With the political shift of power to Delhi, however, the city metamorphosed into a necropolis with little innovation in industrial production and work culture. The Ayudh Bhawan building on Hooghly River banks in Kolkata, housing the OFB headquarters, represented colonial industrial work culture in post-colonial period. Soaked in brutal power arrogance, the OFB refused to see the changing industrial environment and appropriated to itself all policy privileges – be it the production targets for individual factories or even the costing of weapons being produced in different factories. It hardly mattered to OFB if one of the said factories was far way in Arvankadu in Tamil Nadu. Further, the mandarins in Ayudh Bhawan had absolutely no clues and rather no interests in national expectations about weapons requirements. Two centuries of overall existence and massive proliferation in its numbers since independence notwithstanding, the OFB simply failed to come anywhere near expectational benchmarks in weapons production. Its share in domestic weapons production along with export figures always remained insignificant!
The malaise was rather well-institutionalised and ubiquitous across the spectrum amongst all factories. Every factory was an ‘estate within the state’. Therein lived the general managers as kings in those seven-to-eight acres bungalows inherited from colonial masters along with their mindset. The presence of six to seven servant quarters in these bungalows further escalated the high sense of self-esteem amongst these post-colonial lords. It did not matter if the maintenance of these bungalows ate up a substantial portion of office contingency year after year. It also did not matter if the residential premises of workers remained in depleted condition in almost every factory, becoming instead a den for cobras, pythons and even leopards. Within the factory, fossilised bureaucrats masqueraded as production managers even if actual production never increased. The production lines, i.e. plant and machinery, in many cases, were old and outdated. The departmental nature of factories meant lack of commercial approach to production. The research and development (R&D) section in these factories, for example, was heavily bureaucratised with major portion of money being spent on temporary duties. Assured system of procurement by the armed forces through ‘indent system’, irrespective of quality, cost and temporal delays, made ‘innovation and its diffusion’ a redundant exercise. Complacency had crept in and there was hardly any factory that was bang up to the expectations of the armed forces.
But were these factories alone to blame? Perhaps not. Even the most sincere general managers often found themselves helpless against the commands and demands of OFB that used to call all the shots! Within the factory, they had to cope up with many stakeholders such as representatives of Directorate General of Quality Assurance (DGQA), audit, finance, and even the security (consisting of former servicemen). In most cases, these stakeholders were obstructionists than facilitators to production targets. The factories were also subjected to recurrent whims and fancies of labour unions preventing corporate work ethics in premises. The poor general managers did not even had the powers of suspending a junior works manager (JWM), a lower-level employee, since even this power was wrested by the Ayudh Bhawan for itself!
The OFB and its constituent units, therefore, suffered from continuous organic decay in due course. The different clusters of ordnance factories in the country that were once supposed to proliferate ancillary industries around them, failed rather miserably in their endeavours. The opening up of defence sector to private enterprise along with continuous liberalisation of FDI norms meant that the OFB was no more assured of age-old indent system and was to compete in the new environment. With high production costs in almost all cases, the OFB-led ordnance factories were simply not in competing position and were bound to be eliminated sooner than later! Corporatisation was a timely medicine to induce fresh lease of life and another opportunity to get into competitive mood. Most importantly, it gives the new defence PSUs more functional autonomy something that OFB was unwilling to give in past!
The OFB may be dead but its ghost would haunt the new working environment for long. To give one example, these defence PSUs are being led by the same old general managers who helmed different factories until recently and were partly responsible for shoddy performance in those individual factories. Many of them may find it difficult to adjust to the new work culture. It remains to be seen if they would be able to develop business hunger, competitive attitude and work ethics found in the corporate world. Probably, it would take some years and generational change in leadership in these PSUs for a meaningful impact of corporatisation.
The demise of the OFB and disintegration of its old empire notwithstanding, economists and public policy experts would need to study OFB’s death process in more detail. Did it die because it was a departmental undertaking not being run on commercial principles? Did it die because it was too old fashioned to survive? Or did it die simply because it was not in a position to compete? Whatever be the reasons, OFB’s post-mortem would carry valuable lessons for the new defence PSUs if they are to survive.
Note: The author is in the Indian Defence Accounts Service. Views are personal.
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Views expressed above are the author's own.