Natco Pharma, a generic drugmaker, is considering spinning off its agro business into a separate entity. The company’s board of directors has given in-principle approval for the demerger, which is expected to unlock value in the core pharmaceuticals business and Drive long-term growth. The move is also anticipated to bring operational flexibility, allow for focused management, and enable distinct brand positioning for each entity.
As part of the proposed reorganization, Natco Pharma may retain a small minority stake in the resulting company to provide support in areas such as research and development, and patents. The board has authorized the management to conduct a detailed evaluation of the demerger, including determining the optimal capital and shareholding structure.
The decision to demerge the agro business comes nearly six years after Natco Pharma announced plans to diversify into agrichemicals in January 2019. At the time, the company had announced plans to set up a manufacturing plant in Nellore, Andhra Pradesh, with an investment of ₹100 crore.
The proposed demerger is expected to have several benefits for Natco Pharma, including enhanced focus on its core pharmaceuticals business, improved operational efficiency, and increased flexibility to pursue growth opportunities. The company’s management believes that the demerger will ultimately benefit shareholders by unlocking value and driving long-term growth.
The next steps for the proposed demerger will involve a detailed evaluation of the company’s agro business and the determination of the optimal structure for the spin-off. The management will need to consider various factors, including the capital and shareholding structure of the new entity, as well as the potential impact on the company’s operations and finances. Overall, the proposed demerger of Natco Pharma’s agro business is a significant development that could have far-reaching implications for the company’s growth and profitability.