The Comptroller and Auditor General (CAG) has said in a report that the Ministry of Defence-owned public sector undertakings and ordnance factories wasted, or caused a loss of hundreds of crores.

The report was tabled in Parliament during the session that ended on April 7.

Forty-one ordnance factories were closed down and their working re-cast into seven PSUs in 2021.

Lapses In Quality Control

The M&C group of ordnance factories had lapses in quality control, leading to rejection of 11 products valued at Rs175 cr

The ordnance equipment factories reduced the issue price of 11 items in 2018-19, resulting in a loss of Rs190 crore

Inefficient execution of a contract by Hindustan Shipyard Limited, Vishakhapatnam, resulted in a loss of Rs200.43 crore.

The report said the Materials and Components (M&C) Group of ordnance factories (OFs) had “lapses in quality control checks which led to rejection of 11 products valued at Rs 175 crore between 2014 and 2019”.

“In all, 584 accidents involving ammunition items were reported by the armed forces,” the report said, adding that the nature of defects observed in the accidents indicated mainly the quality problem with various components and malfunctioning of ammunition.

The ordnance equipment factories engaged in the production of general stores and clothing reduced the issue price in 2018-19 for 11 items and “it resulted in a loss of Rs 190 crore for these factories”.

The Ordnance Factory, Kanpur, procured steel billets for a requirement of four years at one go without any target allocation and adequate demand. It led to a stock hold of 1,099 tonne.

On PSUs, the CAG said Hindustan Shipyard Limited, Vishakhapatnam, had a contract with Indian Coast Guard for the construction and delivery of five patrol vessels at a total cost of Rs 231.19 crore in March 2006.

The vessels were to be delivered between March 2008 and March 2009, however, these were delivered between January 2012 and May 2018. The shipyard did not monitor the weight of the construction material, resulting in increase in the weight of vessels, which had a negative impact on the speed of the vessels and undermined their utility as high-speed patrol vessels.

“Inefficient execution of the contract resulted in increase in material cost, labour cost, direct expenses and overheads, resulting in a total loss of Rs 200.43 crore,” the report said.

In March 2011, Bharat Electronics Limited (BEL) entered into a contract with the MoD for upgrading 48 tanks for Rs 748.19 crore. “Poor planning delayed the upgrade, resulting in avoidable expenditure of Rs 201.50 crore towards overhauling,” the reports said.