Denel seeking to diversify business

"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 testimony to the fact that these business relations will be based on something more fundamentally sustainable than selling products," Denel chief executive Riaz Saloojee told reporters at a briefing in Irene (south of Pretoria).

The company says it is reducing its reliance 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 what these capabilities are other than 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 are," he said.

The briefing was meant to give an overview of Denel's growth, after the company made marginal profits over 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 that was needed or to ensuring skills were available to support these products.

Bursary scheme

An engineering bursary scheme and a Denel academy has been established for internship programmes that will produce qualified artisans and technicians.

In the current financial year, Denel had invested R530m in research and development. Through its high-tech manufacturing section, Denel earned more than R1.7bn for the South African economy.

Saloojee said Denel had 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.

"Denel has an order book worth R21bn for the next three to eight years and is finalising a contract to produce 264 infantry combat vehicles," Saloojee said.

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