Over the past six months, Africa’s leading defence company, Denel, has announced a number of new partnerships that will see the company grow into new sectors and new geographical markets.
In November last year, after Denel’s Vehicle Systems division concluded a deal that will see the company supply advanced mine-protected vehicles to NIMR in the United Arab Emirates, it became clear that despite the gloomy economic situation in the country, South Africa still remains a leader in technology and defence solutions.
The R900 million contract has been welcomed by Denel which says that the deal will provide work for two of its divisions for two years and confirms its leadership role in landward mobility and mine-protected vehicles.
“We are delighted to work with NIMR, one of world’s leading manufacturers of wheeled armoured vehicles,” said Zwelakhe Ntshepe, Acting CEO at Denel.
“There is a strong synergy between our companies and products and we are confident that we can, together, develop and improve the N35 to be among the best in its class,” Ntshepe said.
Denel will work with NIMR on the N35 model and variations of the design. Formerly known as the RG-35, the N35 is an armoured vehicle with superior mine protection and combat capabilities and can be used in command, ambulance and recovery roles.
In other Denel news from the Middle East, the company was in Dubai in November, promoting the Rooivalk helicopter, the jewel in the crown of South Africa’s leading supplier of defence products and solutions.
The Rooivalk has been deployed in numerous peacekeeping missions in Africa and Ntshepe explained that this experience proved that SA defence tech can mix with the world’s best.
“The helicopter is designed to operate in harsh environments and can be deployed for lengthy periods without sophisticated support. It has a cruise speed of 280 km/h and a range of more than 700 kilometres,” he said.
“The Rooivalk programme has underscored the capabilities of the South African defence industry to design and manufacture world-class products and systems. It has further promoted Denel’s growth into a high-technology powerhouse that contributes greatly to South Africa’s defence and security needs, with the capacity to provide international clients with tailor-made solutions,” he added.
The Rooivalk was a game-changer in the Democratic Republic of the Congo when it was deployed in support of the United Nations Intervention Brigade in November 2013. It provided a real boost for UN forces that had been locked in battle with M23 guerrilla groups in the eastern part of the DRC, firing multiple rockets against rebel bunkers and destroying targets within minutes of entering the combat zone.
CASSPIR RECOVERY VEHICLE
In January, Denel announced that it was ready to expand range of its recovery vehicles based on the well-known Casspir mine resistant system in response to increasing demand from customers on the African continent.
Denel’s Mechem division launched a new 6×6 armoured and mine-protected recovery vehicle based on its Casspir NG armoured personnel carrier (APC).
This is yet another example of product innovation that is keeping Denel at the forefront of defence in Africa and further afield.
In its basic configuration the Eland has an operational weight of 18.5 tonnes. It is 8.802 m long, 2.588 m wide, and 3.121 m high
The Casspir Eland complements the existing Casspir range, which includes a basic APC, a flatbed variant with a mine-protected cab, the Gemsbok 4×4 mine-protected recovery vehicle, an ambulance configuration, and a command vehicle. The 6×6 layout is also available on other variants, not just the new recovery vehicle.
Denel stated that the two Gemsboks had recently been ordered by the Angolan military.
All Casspirs have monocoque hulls that protect their crews against small arms fire and up to 14 kg of explosive under any wheel.
INTO THE DEEP
In a move that solidifies Denel’s position as a company that is constantly pushing the boundaries, an announcement was made at the end of 2015 stating that Denel would launch its new maritime division, with the aim of becoming a strategic partner to the South African Navy, at the Maritime Africa conference in Cape Town.
“Maritime Africa is a fantastic opportunity for Denel to launch our maritime division in public and articulate our aspirations within the sector,” said Ismail Dockrat, chief executive officer, Denel Integrated Systems and Maritime
“Our key objective in the next year is to become a strategic partner to the South African Navy and from that foundation to play a broader role in terms of supporting other navies in the region, as well as working with the South African shipbuilding and ship repair industry to grow the industry to the benefit of everybody in that sector.
“We have very strong systems integration, programme management and integrated logistics support capabilities and we think there is a gap in the market in this context. Denel is not going into the business of building ships. We know that there are strong players in the industry that we can partner with, both locally but also importantly, globally. So we are there to form partnerships with others and to offer our value proposition,” he added.
Denel already has a longstanding and fruitful relationship with the SA Air Force and the SA Army and it was said in parliament earlier in 2015, in the defence review, that Denel should bolster its involvement with the Navy and maritime industry.
NAVIGATING TURBULENCE
At corporate level, even with the successes that the company has witnessed over the past few months, Denel still has a cloud hanging over it following the suspension of three high-ranking employees in 2015.
CEO, Riaz Saloojee, CFO Fikile Mhlonto and Denel group company secretary, Elizabeth Africa were all placed on special leave in October pending an investigation into a variety of issues which reportedly include recent business acquisitions.
Public Enterprises Minister, Lynne Brown is reviewing the situation in partnership with the Denel board and will make an announcement on the situation in the near future.
This situation came as a shock to many as the company is often regarded as a benchmark for how state-run companies should be organised.
More uneasy questions were forwarded to Denel soon after the high-profile suspensions when it was reported that it had failed to pay suppliers and this bought about worry of financial trouble.
“How Denel has gone from boasting R1.9bn in cash reserves in its recently released annual report, to now declaring that it cannot pay its own employees, if it pays contractors for their products and services. How did Denel get itself wrangled in financial malfeasance after it has kept a clean track record for so long?” asked Democratic Alliance spokeswoman for public enterprises Natasha Mazzone, in a statement.
“I will be writing to the auditor-general to commission an investigation into Denel’s financial disarray,” she added.
In the year ended March 2015, the company’s profit rose 39% to R270m on the back of a 28% rise in revenue to R5.9bn.
ASIA-PACIFIC EXPANSION
Despite the uncertainty in the leadership ranks, Denel has been vocal about its plans for the future and its strategy for 2016. The ambitious organisation has its sights on growth, and not just in South Africa. In January, Ntshepe announced that the company would extend its footprint into the Asia-Pacific defence markets with the establishment of a joint-venture company in Hong Kong.
The arms producer announced the establishment of Denel Asia, saying it has partnered with VR Laser, another South African defence and technology company.
“This is a vitally important region for Denel to expand its business and find new markets for our world-class products, especially in the fields of artillery, armoured vehicles, missiles and unmanned aerial vehicles,” Ntshepe said.
“We need a firm foothold in this region and the establishment of Denel Asia with its headquarters in Hong Kong will give us a strong presence and the ability to pursue opportunities that will soon arise,” he added.
Denel Asia will focus its marketing attention on countries such as India, Singapore, Cambodia, Indonesia, Pakistan, Vietnam and the Philippines, which have all announced their intentions to embark on major new defence acquisitions and grow their research and development budgets in the next four years.
This venture is just another stand-out point in what has been a productive time for Denel. The company, which is now ranked as one of the world’s top 100 defence companies (and the second largest in the southern hemisphere), is driving the entire industry in southern Africa, even in times where the economy is not making business easy.
Keep an eye on Denel as 2016 looks to be yet another prosperous year for this all-round industry leader.