Denel moving beyond selling products to reduce state dependency

State-owned aerospace and defence technology company Denel is diversifying its services to reduce its dependency on government funding, the company has said.

“We are not (just) in the business of selling products. The partnerships that we are involved in, for example with Brazil (and the) United Arab Emirates, are testament that these business relations will be based on something more fundamentally sustainable than selling products,” Denel CEO Riaz Saloojee told reporters at a briefing in Irene (south of Pretoria) today.

The company was reducing its dependency on government funding.

“We don’t want to continue to be a burden on the South African taxpayer. But the fact of the matter is that there are certain strategic capabilities that will have to be funded,” he said.

Saloojee would not elaborate on these capabilities, saying it was between the company and the defence department.

“That will be in the public domain when we agree on what are those capabilities,” he said.

The briefing was meant to give an overview of Denel’s growth, after the company made marginal profits in the past few years.

Saloojee attributed previous low profit margins to slow global economic growth and government’s policy on defence spending.

Historically, Denel had sold products and there was a lack of understanding or commitment to life-cycle support and ensuring skills support.

The company was taking a new direction, he said.

An engineering bursary scheme and a Denel academy had been established for internship programmes and producing artisans and technicians.

In the current financial year, Denel had invested R530 million in research and development. Through its hi-tech manufacturing section, Denel brought in more than R1.7 billion into the South African economy.

Saloojee said Denel had also gone beyond providing the SA National Defence Force with technology, and now used its unmanned aerial vehicle systems (UAVS) for border control, detecting veld fires and fighting rhino poaching.

Regarding the latter, UAVS flew above national parks and had the capacity to take video footage and relay information in real time to law-enforcement officials on the ground.

Saloojee said Denel had opened a centre of excellence during the Brics (Brazil, Russia, India, China and SA) summit earlier in the year.

The centre performed maintenance, repair and overhaul services on both military and civilian helicopters manufactured by Russian Helicopters.

“Our strategy is to grow the company’s revenue through diversification, exporting to new markets, and entering into new partnerships – both locally and overseas,” he said.

The Middle East, Africa, South America and the Asia-Pacific regions had been identified as strategic markets for the company.

An order book of R21 billion had been confirmed over the next three to eight years, Saloojee said.

Denel was currently finalising a contract to produce 264 infantry combat vehicles.

The company was also involved in the design and development of a complex missile system in partnership with Brazil and Abu Dhabi.

Saloojee also announced that a Seeker 400 UAVS would soon undergo its final testing phase.

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