Cipla Quality Chemicals yesterday appointed Grant Thornton Uganda to replace Ernst & Young as the company’s new auditors.
The appointment was confirmed by shareholders during the company’s annual general meeting in Luzira, Kampala.
Thornton’s contract will be reviewed at the end of Cipla’s current financial year in March 2020.
The directors agreed that external auditors be rotated to ensure independence.
Mr Emmanuel Katongole, the Cipla Quality Chemicals executive director, during the meeting noted that Ernst & Young had done a commendable job, saying if it wasn’t for his fellow directors’ decision, he would have wanted the company to continue.
In the meeting, Cipla also told its shareholders that the company’s revenue reduced significantly because Global Fund, their biggest client for malarial and antiretroviral drugs, resorted to preventive measures and cut its consumption from $25m (Shs92.3b) to just $2.5m (Shs9b) in the previous financial year.
However, Cipla chief executive officer Nevin Bradford, assured the shareholders of a better year because in 2019, Global Fund had already made orders worth $8m (Shs29.2m).
In results published in March, Cipla reported a substantial fall in profits to Shs6.8b for the year ended March 30, 2018 from Shs44.6b.
The drug maker, however, informed shareholders yesterday that the company would reinvest all the profits, which means that there will be no dividends for 2018.
Mr Nevien said the company had so far invested Shs12b in buying raw materials, noting that they are seeking to increase product portfolio through new medicines for the treatment of marginalised diseases such as malaria, HIV Aids and hepatitis.
The company also told shareholders that plans to register in 22 countries across Africa by 2020 were in advanced stages, adding that they had completed a Shs12b expansion plan to establish a 4,500 pallet storage facility, distribution centre and warehouse.
According to the March results operational costs increased by Shs7.9b due to aggressive marketing and sales costs related to the September, 2018 initial public offering.
Mr Katongole told shareholders that as a company newly listed on USE they would seek more avenues through which they would create regular and constructive dialogue with shareholders to align their interest with the business objectives.
Share price: Cipla has had a rough start on the Uganda Securities Exchange with the company’s stock price falling to Shs145 from Shs256.5 during the initial public offering in September.
In the meeting, shareholders demanded that the company devises ways through which it can cut down on costs as well as adopting an aggressive marketing strategy in the local drugs market.