Tough times for Denel supplier


Denel is not in a good space financially and the same can be said for some of its sub-contractors and suppliers.

The owner of a Centurion-based small business, specialising in milling, told defenceWeb his account with Denel Land Systems (DLS), currently stands at more than 200 days in arrears. He has met all government requirements on the BBBEE front to ensure business with government-owned companies can come his way.
“I have tapped into personal funds to keep the business going and – thankfully – also have other work but it’s not looking good,” the owner, who preferred anonymity for obvious reasons, told defenceWeb. He added there were a number of other small companies in a similar situation to him and he knew of others who had already closed.
“There seems to be no action plan or deadline for resolution and I’m pretty sure there is nothing to gain from communicating with Denel,” he said.

Last month, Parliament’s Portfolio Committee on Public Enterprises expressed concern about State-owned entities, including Denel, apparently relying on government for continued financial sustainability.

The committee said it expected to see plans to make entities, including Denel, profitable and questioned the defence and technology conglomerate’s ability to meet its financial obligations, considering the current liquidity challenges it is facing.

Also in August, Denel said a board priority was to normalise the company’s capital structure and inject sufficient liquidity. It has requested government to extend its current guarantee of R3.3 billion which expires at the end of September and provide an additional R1 billion guarantee to pay creditors and unlock operations.

The committee was of the opinion that tough decisions needed to be taken but ruled out selling Denel or other loss-making State-owned compan