Arms manufacturer Denel is to be "realigned" and brought back under control of the defence force, Defence Minister Lindiwe Sisulu told MPs on Friday.

"We have to serve notice... that we intend to negotiate Denel back into the ambit of the defence force," she said, opening debate on her department's budget vote in the National Assembly.

Sisulu said she had held discussions on this matter with Public Enterprises Minister Barbara Hogan.

"[I have] indicated that, at the very least, we need to immediately embark on a strategic realignment of Denel.

"Denel is a strategic security manufacturing asset for defence, and we would like to retain it as such," she said, to applause from members.

The defence industry in South Africa required exhaustive interrogation.

"I am aware that the defence industry requires an exhaustive interrogation -- both Armscor and Denel will be part of this, which must extend to every sector of the industry.

"This should be conducted in a way that will subsequently produce effective command and control measures and effective turn-around."

Sisulu said she was aware the defence industry, both Denel and Armscor, had not delivered outstanding performance.

On Armscor, the procurement arm of the defence department, she said her department -- following "strong recommendations" by Parliament's defence portfolio committee last year -- was paying particular attention to the corporation's management and governance.