Defense Industry General News and Updates

CAG slams OFB for critical deficiency in supply of ammunition

New Delhi, Jul 21 (PTI) The Comptroller and Auditor General has slammed the state-run Ordnance Factory Board (OFB) for critical deficiency in availability of ammunition to the Army.
In a scathing report, which was tabled in the Parliament today, the CAG also criticised the OFB for inadequate quality of ammunition supplied to the Army since March 2013.
The CAG said despite serious concerns highlighted in a high-level report on Ammunition management in Army in 2015, no significant improvement took place in the critical deficiency in availability of ammunition and quality of ammunition supplied by the OFB.
"Shortfall in meeting the production target by OFB continued. Further, majority of the procurement cases from other than OFB which were initiated by Army headquarters during 2009-13 were pending as of January 2017," the CAG said in the report.
The federal auditor also lambasted defence research and development organisation (DRDO) for import a balloon costing Rs 6.20 crore under a project for development of aerostat surveillance system, saying it lacked rationale.
"Further, the project itself did not achieve its objective despite an expenditure of Rs 49.50 crore," the CAG observed.
Talking about safety aspects, the federal auditor said ammunition depots with shortage of fire-fighting staff and equipment remained accident prone.
The report also highlighted alleged irregularities and inefficiencies by various other entities relating to defence services.
The CAG also criticised the heavy vehicle factory in Avadi in Tamil Nadu for delays in supply of T-72 bridge laying tanks (BLT) which were scheduled to be delivered in a phased manner during 2012-2017.
The auditor blamed frequent changes in the design of T-72 BLT for delay in the project.
The heavy vehicles factory (HVF) also faced criticism from the CAG for placing an order for radiators to be fitted in T-90 tanks on a firm which had no prior experience of manufacturing them.
"The Factory accepted Radiators worth Rs 2.78 crore which did not conform to the stipulated technical requirements and rendered T-90 tanks fitted with such Radiators unacceptable to Army," the CAG said.
The report also said the Director General, National Cadet Corps gave contracts to overhaul 34 engines of microlite aircraft at a cost exceeding 50 per cent of the cost of a new engine, in deviation from the laid down procedure.
"Further, additional 110 microlite aircraft were procured at a cost of Rs 52.91 crore despite low utilisation of the existing fleet," it said.
The auditor also took strong note of the Combat Vehicles Research and Development Establishment (CVRDE), Avadi procuring 20 LAHAT missiles in spite of reservation of the foreign supplier due to technical constraints.
"During demonstration trials, the missiles failed to achieve the stipulated criteria/range of 1200M to 1500M. Army refused to accept the missile, thereby the payment of Rs 19.53 crore made to the supplier was rendered infructuous," it said.
In another finding, the CAG came down hard on the Armys Director General Military Intelligence for alleged violations of procedure in procurement of 20 numbers of Photowrite Systems and said 11 of them became non-functional within 3 to 22 months of procurement resulting in loss of Rs 21.28 crore.

 

Kalyani Rafael facility opens in Hyderabad to manufacture missiles

Kalyani Rafael Advanced Systems ( KRAS), a joint venture between Kalyani Strategic Systems Ltd, and Israel'sRafael Advanced Defence Systems on Thursday inaugurated its facility here for manufacturing the Spike anti-tank guided missile (ATGM) Spike and other defence products.

The facility, the first in the private sector to manufacture missiles, plans to start production in few weeks.

Baba N. Kalyani, chairman, Kalyani Group told reporters that they were waiting for orders from the Indian Army, which he said would be in thousands.


He said they so far invested Rs 60 crore to Rs 70 crore and would be adding a similar additional amount once orders start coming in.

Rafael President and CEO Yoav Har-Even said the company has so far invested $70 million.

Termed as the largest yet FDI in defence, Kalyani holds 51 per cent in the JV while Rafael holds 49 per cent.

Kalyani said the product would have 90 per cent localisation as they developed sub-contractors and supply system.

The facility will provide direct employment to 500 people and indirect employment through vendors and suppliers to 2,000 to 3,000 people.


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Now this is interesting, Israeli companies are taking a different approach to US and Russian companies, they aren't simply waiting around for a large defence deal from India to set up production in India, they are going ahead with the expectation of future orders but also fitting India into their production chain anyway so as to streamline their business as a whole. Another example of this is the Punj Lloyd-IWI tie up.

The Americans and Russians will only offer one-off local production/assembly deals tied to specific defence deals ie "you buy the F-16 first then we'll see about setting up assembly plants in India".


@PARIKRAMA @Ankit Kumar 001 @Sancho @nair @Agent_47 @Gessler @Sathya @randomradio @Grevion @Blackjay @bharathp @MilSpec @Hellfire @GuardianRED @Levina @Lion of Rajputana

 

First of all, the SPIKE was already selected for procurement, so it's not that much of a leap to form a JV for the production.
Compare that to the JV of TATA and LM, that is aimed at the same, although none of them was selected so far and you see a much higher leap of faith and commitment to the tender and the local production.

But at the end of the day, one has to know the details of the deal, to see the worth of it. The 90% localisation sounds good, but hardly has a meaning if the critical parts like the guidance system for example would be produced abroad and just integrated in India.
The same goes for the F16, which as I said in the SE thread could offer the same, production of the fighter in India, production of the radar abroad and send to India for integration.

 

IA doesn't seem to be able or interested in signing ANY deal, the "mega deals" it has had over the past few years (FICV, FINSAS, VSHORAD, ATGM etc etc) have all fallen into trouble.

 

Of course it's not an assurance of selection, I even think the JV has no meaning in the context of the SPM. But it was a JV for the production of F16, on top of the JV they already had and is far ahead of any selection of the product, contrary to the Spike case.

 

K9 and M777 howitzers?

 

Only after political intervention was this possible and really these aren't "mega deals", they are $1b apeice.

 

Again, the recent JV was specifically for the production of the F16 and I already said that it's on top of the older one.
And far ahead compared to the Kalyani JV, that came only after selecting Spike. So LM shows commitment to production in India before their product got selected. If that pans out is another issue, but there is certainly not an advantage that Israeli companies have in teaming up with Indian counterparts. They only can offer more ToT, approved by their government, which US companies can't.

 

http://www.tata.com/article/inside/lockheed-martin-tata-f-16-india-partnership

You pic only shows the JV partner companies, not the products and as I said, this adds another product on top of the available once.

 

Wrong, because I said that it's a JV

so I did distinguished the different products and the leap of faith is that they want to produce the F16 in India, before it even was selected.

You can keep arguing about semantics, but that doesn't change the fact, that they specifically showed their intend with that and did not wait for a decision of the MoD, which at least is a good marketing move, one has to give them that.