Natco Pharma Spins Off Agrochemicals Unit, Expands Nigeria, Exits Australia

Natco Pharma's Agrochemicals Business reported turnover of ₹60.62 crore for FY25, making up 1.48% of the company's total ₹4,784 crore turnover. The company's Board has approved a significant corporate restructuring.

Today's Filing

Natco Pharma Limited's Board of Directors met on March 24, 2026, and approved a major corporate change. The company will spin off its Agrochemicals Business into a new, independent company called Natco Crop Health Sciences Limited. This new company is planned for listing on stock exchanges, enabling it to pursue its own growth and capital strategies.

Separately, Natco Pharma will establish a wholly-owned subsidiary in Nigeria with an investment of up to USD 100,000 to strengthen its pharmaceutical operations there. At the same time, Natco Pharma will proceed with the liquidation of its Australian subsidiary, Natco Pharma Australia Pty Ltd., by the end of September 2026, citing lack of economic viability and to save administrative costs.

Why This Matters

This spin-off aims to unlock value by separating the distinct risks and rewards of its pharmaceutical and agrochemical businesses.

By creating two separate companies, Natco Pharma expects greater efficiency, more focused management, and stronger market positioning for each. This is expected to allow each business to attract different investors and pursue independent growth opportunities, potentially leading to better valuations.

The new Nigerian subsidiary signals an expansion of its international pharmaceutical reach, while exiting Australia helps streamline global operations.

Background

Founded in 1981, Natco Pharma is a science-driven, integrated pharmaceutical company with a strong R&D focus, operating in over 50 markets globally.

Its agrochemicals division, Crop Health Sciences, was established in 2019, drawing on the company's expertise in chemicals and formulations.

The idea to separate the agro business was first considered in September 2025, when the board gave in-principle approval to explore the move.

In recent years, Natco Pharma has faced regulatory scrutiny from the US FDA, including a warning letter for its Telangana plant in April 2024 and observations at its Chennai and Mekaguda facilities.

Key Changes

• Shareholders of Natco Pharma will receive shares in the new Natco Crop Health Sciences Limited company, based on a 1:1 entitlement ratio.
• The Agrochemicals Business will operate as a standalone, publicly traded company with its own management and strategy.
• Natco Pharma Limited will continue its focus on the core pharmaceutical business, potentially benefiting from increased specialization and resource allocation.
• The company's international presence will be reshaped with expansion in Nigeria and an exit from Australia.
• The face value of equity shares for both the resulting pharmaceutical entity and the demerged agrochemical entity will be INR 2.

Potential Risks

• Regulatory approvals from stock exchanges (BSE, NSE) and the National Company Law Tribunal (NCLT) are crucial for the scheme to be completed.
• The parent company, Natco Pharma, faces potential challenges in its key US market, with estimates of a 20% revenue and 30% profit dip in FY26 due to pricing pressure and increased R&D spending.
• The US FDA has previously issued warning letters and observations at Natco's manufacturing facilities, indicating ongoing compliance issues that could affect product approvals.
• The historical performance and future outlook of the agrochemicals business, which has shown modest revenues and faced impairment charges, will be a key factor for the new demerged entity.

Peer Comparison

Natco Pharma's demerged agrochemicals entity, Natco Crop Health Sciences, will enter a competitive sector with major players like UPL Ltd., PI Industries Ltd., Bayer CropScience Ltd., and Rallis India Ltd.

These competitors often have market capitalizations in the tens of thousands of crores, showing the significant scale and value potential within the Indian agrochemical market.

Companies like Aarti Industries and Excel Industries also use diversified models, combining agrochemicals with pharmaceuticals and specialty chemicals – a strategy Natco Pharma is now splitting.

Key Dates

• The demerger's appointed date is set for October 1, 2026.
• The liquidation of the Australian subsidiary is expected to be completed by the end of September 2026.

Next Steps

• Obtain 'no-objection letters' from BSE Limited and the National Stock Exchange of India Limited.
• Secure approvals from shareholders and creditors of all involved companies.
• Receive final approval from the National Company Law Tribunal.
• The successful listing of Natco Crop Health Sciences Limited's equity shares on the stock exchanges.
• Confirmation of the Australian subsidiary's liquidation completion by end-September 2026.
• Monitoring the company's performance and strategic moves in its newly established Nigerian subsidiary.