3.2 Challenges facing the entity The Committee was informed that the major challenge remained the loss making DSA. The debt was at R1.85 billion at end of March 2011 and the entity required recapitalisation of R2 billion. The solvency of R400 million was too low for an organisation the size of Denel and the entity was experiencing low funding levels. Recapitalisation discussions were underway with the Department to strengthen the balance sheet. Denel had presented to the Defence Review Committee to ensure that there was certainty with regard to orders and defence needs of the country. Denel needed political and diplomatic support in order to secure bi-lateral defence cooperation agreements and proactive promotion of Denel business.