Parliament, Thursday, 18 February 2021 – The Select Committee on Public Enterprises and Communication heard that Denel is structurally and operationally inefficient, revenue generation and programme and cash management need to be reformed, while costs must be reduced. Denel appeared before the committee yesterday to brief it on the entity’s financial and legal challenges relating a court order to pay employees’ salaries. The delegation was led by the Deputy Minister of Public Enterprises, Mr Phumulo Masualle.
Briefing the committee, Denel’s Acting Chief Executive Officer, Mr Talib Sadik, told the committee that, despite the turnaround strategy, Denel has a liquidity crisis and its order book is exposed to significant risk. Furthermore, ratings agency Fitch downgraded Denel to a CC(zaf) rating, because of delay and insufficient support from the stakeholder, resulting in a weakened standalone credit profile.
Denel’s debt profile has worsened, Mr Sadik said, and while the government guarantee is extended to September 2023, lenders have invested short-term. Audited financial loss of R1.9 billion in the 2019/20 financial year due to significant decline in revenue has contributed to the current liquidity challenges.
Denel has been unable to manufacture world-class products and systems, and Covid-19 has exacerbated its problems, according to Mr Sadik. From May to July 2020, Denel was unable to pay full salaries and statutory obligations due to a decline to productivity.
The Chairperson of the committee, Mr Tshitereke Matibe, told Denel’s delegation that management must also experience the pain of salary interruptions and cuts. “It can’t be just the general employees who feel the consequences of the decline of productivity at Denel in the form of salary cuts or no salaries. The management must also feel the crisis,” he said.
The committee told Denel it must return to brief the committee on the turnaround strategy’s performance, and plans to restore its reputation and workers’ morale.
ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE SELECT COMMITTEE ON PUBLIC ENTERPRISES AND COMMUNICATION, MR TSHITEREKE MATIBE
For media enquiries or interviews with the Chairperson, please contact the Committee’s Media Officer:
Name: Yoliswa Landu (Ms)
Parliamentary Communication Services
Tel: 021 403 2239
Cell: 081 497 4694
- Our Parliament
- About Parliament
- What Parliament does
- National Assembly
- National Council of Provinces
- Constituency Work
- Ethics and Member's Interests
- Role of Parliamentary Committees
- Parliament Art
- Visiting Parliament
- Contact Us
- Our People
- Presiding Officers
- Members of Parliament
- Business Of Parliament
- Parliament Programme
- Questions and Replies
- Parliamentary Papers
- Parliamentary Budget Office
- Office on Institutions Supporting Democracy
- Have Your Say