HomeAatmanirbhar BharatMoD’s course correction helps TCL secure ₹500 cr contract from Army

MoD’s course correction helps TCL secure ₹500 cr contract from Army

‘More orders from IAF and Navy in the offing’, Government sources. Defence Ministry has issued similar directives to IAF, Indian Navy and Indian Coast Guards to award contracts to TCL

Ministry of Defence’s (MoD’s) decision to correct an anomaly overlooked at the time of corporatisation of erstwhile Ordnance Factory Boards (OFBs) into seven defence companies in 2021 has helped Troops Comfort Limited (TCL) to secure contracts worth ₹500 crore for general stores items, special clothing, and ballistic protection gears from Indian Army.

The directives were issued to Army on May 15, after the due approval of Minister of Defence Rajnath Singh, to procure from TCL through single tender basis for a period of five years, from FY2023-24 to FY2027-28.

“This has resulted in a likely annual workload of around ₹800 crore for the TCL from the Army and the Ministry has also issued similar directives to IAF, Indian Navy and Indian Coast Guards to award contracts to the defence PSU,” said government sources.

Contracts worth ₹500 crore are likely to be handed over to TCL in coming two months for items that are part of the annual requirement of of the Army. The TCL could have got a much bigger slice of the Army’s procurement budget, Government sources said, but by the time MoD decided, it had already issued RFPs and placed orders for some items.

On October 15, 2021, the MoD announced that seven defence companies — Munitions India Limited (MIL); Armoured Vehicles Nigam Limited (AVANI); Advanced Weapons and Equipment India Limited (AWE India); Troop Comforts Limited (TCL) (Troop Comfort Items); Yantra India Limited (YIL); India Optel Limited (IOL) and Gliders India Limited (GIL) — have been carved out of the OFBs as part of larger defence reform.

At that time, the government covered a long-term intend of five years for the new PSUs to ensure their transition is smooth. But, it did not occur then that the TCL’s business profile —(It produces items mostly covered by annual purchase requirements of tri-services) uniforms and of general stores — was different from others, said government officials. After much persuasion, the government finally agreed to provide much-needed fiscal relief to the state-owned company.

The MoD’s assistance will give the edge to TCL in not only sustaining itself but also to provide a cushioning period in the successful development of products for the services as well as for the commercial civil market.

In FY23, TCL had a sufficient workload of ₹1065 crore, but the situation became critical in current financial year due to available workload slipping to nearly ₹286 crore as against the breakeven orders of ₹1080 crore. TCL is also looking into reducing the cost of production to remain competitive since it found out that in a few cases despite being declared L1, disparity between their products and market price was observed.

A review of the functioning at the level of the Defence Minister is also due ahead of the second anniversary of the seven new PSUs. The MoD’s move to handhold erstwhile OFBs will also be up for discussion, it’s learnt.




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