Cipla Quality Chemicals Industries (Uganda) local sales up 47.6% to UShs 77.7 billion in H1 FY22

By Published On: November 24th, 2021Categories: Corporate announcement, Earnings

Cipla Quality Chemicals Industries Limited ( HY2022 Interim Report

Operational Performance

It is more than a year since the COVID-19 pandemic disrupted our lives and tested us in many ways. Management and staff continue to work with passion to deliver lifesaving medicines to patients. The support from the health workers and our customers during the pandemic is greatly appreciated.

Update on key priority areas

The private market business segment that commenced last year continued to deliver encouraging growth and margins. The product offering in this segment is being expanded to respond to Ugandan patients’ demands in line with our purpose of ‘Caring for Life’. Expansion into new markets continued. We received new orders for DRC which will be serviced in Q3 FY22. Furthermore, we received approval of our first line treatment, TLD, in Kenya.As published earlier, the Board of Directors approved an entry into the oncology space in response to the growing demand for cancer and sickle cell anemia medicines in Uganda.

The Company will construct a new factory focused on oncology products targeting both the Uganda and African markets. Management is progressing with the relevant activities aimed at having the facility commissioned.


Despite the increased pension costs and market development costs after entry into the private market space, management are pleased to report the return to profitability and the significant improvement in performance compared to H1 FY21. Management expects to sustain this performance in H2 FY22.


We continue to work towards recovering the outstanding dues from GoZ and during H1 FY22 we received UShs 2.5 billion. We do not have a firm commitment as to when the entire balance will be settled but the GoZ continues to recognize the outstanding dues and we continue to work with them to receive the unpaid balance.

A big portion of local sales are contractual, predictable and are subject to minimum credit risk. Payments for the local sales are effected within 30 to 60 days. Sales to new customers are made after receipt of confirmed letters of credit or advance payments. The Company maintained near normal operations during the second COVID-19 lockdown. Provision of transport to workers and rigorous COVID-19 safety procedures enabled the Company to achieve a greater than 95% staff attendance. 68% of our staff have received their first dose of the vaccine and 43% are fully vaccinated. The factory capacity utilization exceeded 80% and we are proud to report that our On-Timein-Full (OTIF) was 100%.

Portfolio expansion

Activities to expand the locally manufactured product portfolio continued in H1 FY22. Technology transfer of Azithromycin 500mg was completed, and the product will be launched in Q3 FY22. Technology transfer of two other products; Q-TIB (for prophylaxis of TB) and Cipladon+ (for pain management) will be completed in Q3 FY22.

Governance and compliance

As part of our commitment to governance and compliance with regulations, the Company concluded a quality and compliance audit by the ZAZIBONA, thereby retaining approval of the Company’s products in these South African countries. In line with sustainability objectives, initiatives to reduce water consumption yielded a 4% reduction compared to H1 FY21. Solid waste reduced by 15% while liquid waste reduced by 58% after implementing manufacturing excellence initiatives.
The health and safety of staff remains our top priority. During H1 FY22, we had no fatality and no lost time injury (LTI).

Financial Performance

Revenues remained stable at UShs 124.3 billion compared to UShs 122.6 billion in H1 FY21. Local sales increased by 47.6% from UShs 52.7 billion in H1 FY21 to UShs 77.7 billion in H1 FY22 due to a faster draw down of confirmed local contracts. Exports declined by 33.4% from UShs 69.9 billion H1 FY21 to UShs 46.6 billion due to the non-recurrence of emergency orders received at the peak of the COVID-19 pandemic in H1 FY21. Gross margins increased from 8.5% in H1 FY21 to 23.3% partly due to a change in product mix and reduced input costs after successful negotiation with key suppliers.

Impairment allowance on financial assets

In H1 FY22, the Company collected UShs. 2.5 billion from the GoZ. In line with IFRS 9, this resulted in a net release in our provision of UShs 1.9 billion (as the full GoZ amount has been fully provided for in prior years) after providing for some potential risks on existing receivables. General and administrative costs increased by 17% from UShs 20.6 billion in H1 FY21 to UShs 24.0 billion in FY22. 12% of the increase was due to new retirement contracts between the founding directors and the Company concluded at the beginning of FY22. Costs associated with expanding into the private market contributed 2% of the increase with the balance being associated with depreciation and amortisation resulting from capitalisation of items in Capital Work in Progress.

Finance costs reduced by 12.9% from UShs 1.7 billion in H1 FY21 to UShs 1.5 billion due to better management of overdraft facilities and reduced interest rates. Total comprehensive income/(loss) improved by UShs. 19.1 billion from a loss of UShs 16.3 billion in H1 FY21 to a profit of UShs 2.8 billion.

Cash flow

Net cash used in operating activities increased from a defi cit of UShs 4.3 billion in H1 FY21 to a defi cit of UShs 15.5 billion partly due to increase in stock holding to support continuous manufacturing and reduce risk of global supply chain disruption. Furthermore, overdue amounts to key suppliers were reduced by approximately UShs 12.4 billion. The impact of these transactions was reduced by improved profitability, collections from customers and lower financing costs.

Net cash used in investing activities reduced from UShs 8.1 billion to UShs 2.5 billion after completion of acquisition of the human pharmaceutical business from QCL and equipping the new quality control laboratory in FY21.

The increase in the overdraft position at end of H1 FY22 was for a short period to manage payables. At the time of this report, the overdraft position had reversed. The liquidity position is monitored daily to manage commitments and optimize financing costs. Term loans are mainly used to fund capital expenditure while overdrafts are used for working capital management.

A copy of the summary unaudited financial statements can be obtained from CiplaQCIL’s registrars; M/s Uganda Securities Exchange Nominees Ltd located at 4th Floor, Block A, UAP Nakawa Business Park, Plot 3-4 New Port Bell Road and website:

The summary interim financial statements were approved by the Board of Directors on XX November 2021.

Emmanuel Katongole
Chairman, Board of Directors

Ajay Kumar Pal
Chief Executive Officer


The contents of the post above were obtained from third parties, which We, AfricanFinancials, believe to be reliable. However, We do not guarantee their accuracy and the above information may be in condensed form. The reader is encouraged to refer to the original source of the information, which, in most cases, is in PDF format and on the originating company's letterhead. While We endeavour to replicate the original content accurately, We cannot guarantee the absence of errors in the above article and We disclaim any liability regarding reliance on information provided in this article.