Natco Pharma shares gained over 3% in early trade on March 25 after the company announced a key corporate restructuring plan along with other strategic decisions.
The company informed exchanges that its board has approved a scheme of arrangement involving the demerger of its agrochemicals business into a separate entity, Natco Crop Health Sciences Limited. The move is aimed at segregating its pharmaceutical and agrochemical verticals to enable focused growth and operational efficiency.
As per the approved scheme, the agrochemicals business will be transferred to the resulting company on a going concern basis. Shareholders of Natco Pharma will receive one equity share of the resulting company for every one share held in the parent company.
The agrochemicals division contributed around ₹60.62 crore in turnover for FY25, accounting for approximately 1.48% of the company’s total revenue. Despite its relatively small contribution, the company believes the segment has distinct risk-reward dynamics compared to its core pharmaceutical business.
The demerger is expected to allow both verticals to operate independently with better capital allocation, sharper management focus, and improved operational efficiency. The company also noted that the restructuring could help unlock value for shareholders over the long term.
In addition to the demerger, Natco Pharma’s board approved the incorporation of a wholly owned subsidiary in Nigeria with an investment of up to $100,000. The company also plans to liquidate its Australian subsidiary due to lack of economic viability under the current business model.
The proposed scheme remains subject to approvals from shareholders, creditors, stock exchanges, and the National Company Law Tribunal (NCLT).