NATCO Pharma Limited announced the Board’s approval for a Scheme of Arrangement to demerge its Agrochemicals Business into a wholly-owned subsidiary, Natco Crop Health Sciences Limited, effective October 1, 2026. This move aims to unlock value and facilitate focused growth for both the Pharmaceutical and Agrochemical divisions. Shareholders will receive one equity share in the Resulting Company for every one share held in NATCO Pharma.
Approval for Scheme of Arrangement
The Board of Directors of NATCO Pharma Limited (the “Demerged Company”) has formally approved a Scheme of Arrangement concerning the demerger of its Agrochemicals Business. This undertaking will be transferred on a going concern basis into Natco Crop Health Sciences Limited (the “Resulting Company”). The Board’s decision was made following reviews by the Audit Committee and the Committee of Independent Directors.
Key Transaction Details
The designated Appointed Date for the Scheme is set as October 1, 2026. The existing Resulting Company is currently a wholly owned subsidiary of the Demerged Company.
Share Exchange Ratio
Consideration for the demerger will be discharged entirely through the issuance of equity shares in the Resulting Company. The ratio dictates that “1 (One) fully paid up Equity Share of INR 2/- (Rupee Two only) each of the Resulting Company shall be issued and allotted for every 1 (One) fully paid up equity share of INR 2/- (Rupee Two only) each held in the Demerged Company.”
Post-Demerger Shareholding
Upon implementation, the shareholders of the Demerged Company will directly hold approximately 80% in the Resulting Company. The balance stake of about 20% in the Resulting Company will be held by the Demerged Company itself. This structure ensures that the Demerged Company retains indirect economic interest of about 20% in the Agrochemicals Undertaking.
Business Vertical Analysis
The Demerged Company currently operates two primary verticals:
- Pharmaceutical: Focuses on Finished Dosage Formulations (FDFs) and Active Pharmaceutical Ingredients (APIs), specializing in oncology, cardiology, and other niche therapeutic areas.
- Agrochemicals: Engaged in research, development, manufacturing, and marketing of products like pesticides, insecticides, and bio-stimulants, aimed at increasing crop yields.
Financial Contribution of Demerged Unit
The turnover for the Agrochemicals Business division as of March 31, 2025, stood at ₹60,62,03,918/-. This represented approximately 1.48% of the Demerged Company’s total turnover for the financial year ending March 31, 2025.
Rationale for Segregation
The Board believes that the risk and reward profiles for the Pharmaceutical and Agrochemicals verticals are distinct. Segregation is intended to:
- Facilitate focused growth, operational efficiencies, and synergy within each specialized entity.
- Provide a platform for concentrated development of the respective business verticals.
- Enable each business to pursue independent capital allocation strategies and attract distinct sets of investors and stakeholders.
- The Demerged Company intends to retain its 20% shareholding to offer ongoing strategic support to the Agrochemicals Business, which is still in its early growth stages.
Listing Plans and Consideration
No cash consideration is payable under the Scheme. The Resulting Company is proposed to be listed on both the BSE Limited and the National Stock Exchange of India Limited subsequent to the Scheme becoming effective.
Other Board Decisions
In addition to the demerger, the Board approved two other corporate actions:
- The incorporation of a wholly owned subsidiary in Nigeria, named NATCO Pharma Nigeria Limited, with a proposed investment not exceeding USD 100,000.
- The liquidation of M/s. Natco Pharma Australia Pty Ltd., a Wholly Owned Subsidiary in Australia, with the closure estimated by the end of September 2026. This decision is driven by a change in business model and the desire to avoid administrative costs, as the subsidiary is no longer economically viable.
Source: BSE
