Public Enterprise Study in South Africa

Introduction
Founded and incorporated as a company in 1992, Denel (Pty) Ltd is South Africa’s largest producer of defence equipment and operates in the military aerospace and landward defence environment. Denel is the main supplier of equipment to the South African National Defence Force (SANDF) as well as being a major supplier to international clients. It operates as both an original equipment manufacturer and for the maintenance, repair and upgrade to the SANDF’s armoury. Denel’s company structure is divided into many different branches operating under the Denel name but involved in different sectors of the defence manufacturing market. Their core business entities include Denel Aviation, Denal SAAB Aerostructures, Denel Land Systems, Overberg Test Range (OTB), Denel Dynamics, Mechem (Pty) LTD, Integrated System Solutions, and Denel PMP. Each entity produces various different defence weaponry or offers services related to the defence industry.
In order to effectively discuss Denel as a state owned enterprise, the criteria used to measure Denel against are its financial position, technological advances which can be used in other fields, and community welfare.
Financial Position
Upon reviewing the company’s published financial statements from 2007 until present, one notices a trend of constant losses posted, with the severity of these loses varying over the course of the years studied. In 2006 - 2007, losses decreased from a rather staggering   R1 310.7 million to just over R549 million, then to R347 million in 2008, R543.9 million in 2009, and finally to R246 million in 2010. 2011 financial statements have not yet been released. These are very disconcerting figures which do not bode well for Denel’s financial position. In a recent audit of the company conducted in 2009, auditing firm Ernst & Young Inc. were quoted as saying that due to the losses incurred in the business as well as other information noted in the director’s statements for the year, there is...