Ammo deal graft probe casts shadow on top-performing defence PSU, clean-up on cards

The Central Bureau of Investigation (CBI) probe into an alleged corruption case linked to a ₹500-crore ammunition contract has cast a shadow over Munitions India Limited (MIL), one of the defence ministry’s best-performing ordnance units which has also strengthened its presence in overseas markets.

MIL is set to face a clean-up and a renewed push for accountability following the corruption allegations, officials familiar with the matter said. The department of defence production is tracking the case closely, the officials added.

MIL executive director Anil Kumar, his brother B Harshavardhan and SMPP Limited CEO Ashish Kansal were arrested on Wednesday.

Also Read: CBI to examine all recent contracts awarded by arrested official amid ₹500 crore ammunition deal bribery case

According to official data, MIL posted a profit after tax of ₹1,250 crore in 2025-26, the highest among the seven defence companies carved out of the erstwhile Ordnance Factory Board (OFB) five years ago.

The seven firms, including Advanced Weapons and Equipment India Limited, Troop Comforts Limited, India Optel Limited, Avani Armoured Vehicles, Gliders India Limited and Yantra India Limited, together posted a profit of ₹2,801 crore, the data shows.

MIL reported record revenue of ₹10,954 crore in 2025-26, up 33% from the previous year. The Pune-headquartered company manufactures a wide range of ammunition, including tank ammunition, bombs and rockets. It has secured export orders worth ₹1,500 crore for 28 products across nine countries.

The OFB’s corporatisation was aimed at boosting its efficiency and competitiveness in a long-awaited reform in the country’s defence manufacturing sector.

SMPP Limited could face suspension or a ban on government business dealings under the Centre’s rules for procuring weapons and systems following the graft charges, as HT first reported. The department of defence production is expected to decide on possible action against the firm. SMPP manufactures ammunition, loitering munitions, bullet-proof jackets and helmets.

The Defence Procurement Manual states that the competent authority may impose financial penalties and/or suspend or ban business dealings with an entity if it resorts to corrupt practices, unfair means, or illegal activities at any stage to secure a contract, even when a PCIP (pre-contract integrity pact) is not mandated.

Violation of the PCIP is also a key ground for initiating action.

The manual adds that the competent authority may suspend business dealings with an entity pending a full inquiry into allegations or facts relating to any ground for punitive action. The government may suspend business dealings with an entity when it refers any complaint against it to the CBI or any investigating agency or when it receives intimation regarding the initiation of a criminal investigation or inquiry against any entity.

The period of suspension ordinarily does not exceed one year. In exceptional cases and those involving national security, the government may order a longer ban.