January 25, 2019 / 2:45 PM / 6 months ago

South African arms firm eyes Indian deals on Ramaphosa visit

JOHANNESBURG (Reuters) - The chairwoman of South Africa’s state arms firm Denel is accompanying President Cyril Ramaphosa on a state visit to India on Friday, hoping to sign deals or agree new joint ventures which would help it emerge from severe financial difficulties.

Denel has been plagued by years of mismanagement and exposure to a far-reaching influence-peddling scandal that led some lenders to cut off financing. It recorded a $125 million loss in the latest financial year.

A potential savior emerged when Saudi Arabia made a $1 billion bid for a broad partnership with Denel.

But South African officials turned cool on the Saudi offer after the Gulf kingdom drew criticism over the killing of journalist Jamal Khashoggi in the Saudi consulate in Istanbul in October, diplomatic and defense sources have told Reuters.

“The chairperson of Denel is part of the business delegation that is accompanying the president because Denel has an interest in that market,” Denel spokeswoman Vuyelwa Qinga said in response to a question about whether Denel was accompanying Ramaphosa on his trip to India.

Denel was cleared to do business with the Indian government last year after being removed from a blacklist for alleged corruption in negotiations over a previous weapons contract.

Qinga said Denel’s missile and artillery systems were among its strengths and that being cleared from the blacklist “provides the perfect opportunity for us to market our products and even look for joint venture partners”.

South Africa’s presidency said in a separate statement that defense procurement was among areas of future cooperation identified by Ramaphosa and Indian Prime Minister Narendra Modi during their talks.

Ramaphosa said last year that Denel was “ripe” for joint venture partnerships.

Defense analysts say any deals concluded with New Delhi would probably involve a requirement for military equipment to be manufactured in India. But they would still represent an important revenue stream for Denel given that it struggled to deliver on some orders last year because of a liquidity crunch.

Additional reporting by Joe Bavier; Editing by Kirsten Donovan

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