With a forward order book of R21 billion and an award for the best State-owned company safely in hand, top management of the Denel Group is quietly confident it will not be absorbed into a government department.
This is the potential fate of state-owned enterprises (SOEs) that do not perform, in terms of a Presidential Review Committee that recently submitted its report on state-owned entities.
Denel Group chief executive Riaz Salojee said in Centurion today that the decision on the future of SOEs, including Denel, is “at the end of the day, a political one,” adding he did not see the state ever relinquishing ownership of the defence industry conglomerate.
“Our vision is to be the credible state-owned South African strategic partner for innovative security and related technology solutions. We are proud of our role as a state-owned company and our contribution towards government’s broader developmental objectives, especially in the fields of job creation, skills development and the building of a sustainable manufacturing industry.
“We are happy in the place we are currently in and are contributing so we would like to stay here,” he said at the company’s first media briefing of the year.
Salojee said that in the 18 months since he was appointed chief executive, Denel had successfully completed an internal restructuring process as well as had a long hard look at where the company should be in terms of international markets.
“We have come through some difficult times but are now in the position where we are well on the way to becoming sustainable. We are a credible company and do not want to be a millstone around government’s neck,” he said in reference to years of posting multi-million Rand losses and having to be bailed out by National Treasury.
“Denel is on a concerted drive to grow its share of the defence business in strategic markets, notably Africa, the Middle East, South America and the Asia-Pacific region.
“Additionally Denel is looking at a healthy order pipeline and pursuing opportunities in our key target markets we expect to be realised within the next 12 months,” he said.
Top of the list in this regard is confirmation of the long-awaited contract to supply the SA Army with 264 Badger infantry combat vehicles. They will replace the ageing Ratels in five variants featuring state-of-the-art technology according to Denel Land Systems chief executive Stephan Burger.
This includes the home-grown CI-30 (30 mm camgun) and a 60 mm breech-loading long range mortar system, also a proudly South African product.
The Badger is based on the Finnish Patria platform and is, according to Burger, is “the most complex land system” the local defence industry has ever attempted.
Both Salojee and Burger are confident the contract for the manufacture of the new infantry combat vehicles will happen soon. This follows Defence and Military Veterans Minister Nosiviwe Mapisa-Nqakula making specific reference to the need for new equipment for the SA National Defence Force’s (SANDF) landward arm in her recent budget speech.
While the new infantry fighting vehicle project, codenamed Hoefyster, has been stalled, this has not deterred Denel Land Systems from continuing development work. This saw a successful contract concluded with Malaysia for turrets and weapons to be integrated on the 8×8 armoured vehicles used by that country’s military.
The contract, signed almost a year ago, would not have been possible without Project Hoefyster, Burger said, in emphasising the importance of the 264 Badger vehicle contract to the continued financial wellbeing of particularly Denel Land Systems and its parent, Denel Group.
Salojee said Denel would also be actively working on opportunities in the Middle East for the provision of missiles, artillery systems and ammunition while increasing its presence in South American markets, especially in the fields of missiles and aircraft maintenance.
“We will also continue to build on our track record as a world leader in humanitarian demining and as a valued partner of the UN in its efforts to combat the scourge of landmines.”