State-owned entity Denel on Wednesday said it was in the process of stabilising the organisation so that it could reposition its business and restore order.
Briefing the public enterprises portfolio committee on Denel’s turnaround plan, acting CEO Mike Kgobe said the SOE had a healthy order book of R23 billion in 2016.
“We are currently sitting with an order book of R8.7bn as of 2023.
“It is an order executable over a number of years,” Kgobe said.
He also said that at its peak, Denel was at about R8.2bn and as at March this year, the order book was at R1.46bn.
“We have seen how revenue has gone down over the years. The task we have at hand is to bring the order book back to where it should be in order to ensure sustainability.”
He noted that they had about 5 000 employees in 2016, but the figure was now standing at 1 670.
“We have seen, over the years, the exiting of people. We are in a process of stabilising the organisation, particularly the human resources side so that we can reposition the business.”
Kgobe said that they had initiated the restructuring to ensure that Denel corrected the skills mix.
He said they had been able to pay the backlog of salaries and money not paid to suppliers.
“The recapitalisation of R3.4bn has gone a long way in terms of stabilising.
We were able to initiate the restructuring process to right size and reposition the business towards a new business model.
“We are moving away from six divisions to four and also optimising the support functions,” he said, adding that they would have shared services in human resources, finance and ICT.
Kgobe told the MPs that Denel had received the R3.4bn recapitalisation funding from the National Treasury with R1.8bn already transferred after they met some of the conditions.
He said Denel was restoring relationships with existing associates in the country to capitalise on their access to global markets and funding for business and technology development.
“In the United Arab Emirates, Denel is also normalising the relations with the Edge Group through its partnership with Barij Dynamics.
“New partnerships are being developed in Türkiye with Aseisan and Turkish Aerospace Industries for access to technology and markets,” Kgobe said.
DA MP Ghaleb Cachalia noted that Denel wanted to right size the revenue, which was decreasing.
Cape Times
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