Cape Town - Denel has formulated a turnaround strategy that will include selling off noncore assets, recapitalising its balance sheet and achieving internal efficiencies.

The parastatal predicts this will allow it to produce a small profit by 2005-06.

A further reduction of 1000 jobs is projected and the achievement of greater efficiencies and cost reductions. Denel has already cut 5000 jobs.

Denel CEO Victor Moche told Parliament's public enterprises committee yesterday that he hoped the cabinet would release the R640m in approved funding to allow production of the Rooivalk combat helicopter to begin. Denel has asked government to recapitalise its business, and grant it preferential treatment in South African National Defence Force acquisitions.

Denel chairman Sandile Zungu said yesterday the parastatal had bid for a contract with the Indian government in partnership with Indian company Bhim for the supply of artillery equipment. It would contribute parts worth $200m.

In the six months to end September, Denel fell short of its R1,7bn revenue target, only notching R1,5bn.

A reduced loss of R103,5m against the previous R192,3m was forecast for the year to end next March on projected revenue of R4,2bn (R4,4bn).

With acknowledgements to Linda Ensor and the Business Day.