Natural Capsules makes the shells that hold your medicine and the active ingredients inside them - it is one of the few companies anywhere that does both. Founded in Bangalore in 1993 and listed a year later, it started with three capsule lines and a billion-capsule capacity, then made two bets that shaped everything since: becoming the first Indian company to manufacture vegetarian capsules in 2001, and building a greenfield steroidal-API plant from 2020 onward using technology it developed itself. The recurring idea is to own the manufacturing technology rather than buy it, so that when industry cycles turn, the company’s machines and processes keep it standing while competitors stumble.
Business segments
Two engines at different stages - a capsule-manufacturing cash generator that is India’s second-largest, and a steroidal-API plant that just began commercial sales, built with the parent’s cash flows and external capital.
1. Hard capsules: the steady factory that funds everything else
A high-speed, high-utilisation manufacturing operation that turns gelatin and plant-based polymers into billions of empty medicine shells, selling to over 300 drug formulators across India and 28 countries.
- Two materials, two economics - the company makes traditional gelatin capsules and vegetarian HPMC (hydroxypropyl methylcellulose) capsules, but HPMC is the niche that pays: it sells for roughly 2.75 to 3 times the price of a gelatin capsule and carries higher margins, with realisations around 28 paisa per capsule in FY24.
- Machines that run faster than anyone else’s - through an R&D collaboration with DBDS Robotics, NCL developed capsule machines that run at 4.8-5.0 million capsules per day, consume about 40% less power per unit, and cut rejection rates to 3% from the 8% of older machines, so more saleable capsules come out of the same floor space.
- Capacity that stays nearly full - installed capacity reached 20.25 billion capsules per year in FY26, and utilisation has stayed above 90% for five straight years (92% in FY22, 96% in FY23, 97% in FY24, 94% in FY25, 90% in FY26), meaning the fixed-cost base is spread thin across a very large output.
- A customer base that sticks - 311 customers include names like Abbott, Pfizer, Glenmark, and Aurobindo; 30% have been buying for more than a decade, 58% for more than five years, and repeat business made up 86% of turnover in FY25, so the sales pipeline is replenishment, not constant hunting.
- Exports earn more, but come with friction - capsules sold abroad fetch 15-20% higher margins than domestic sales, and exports were 29% of revenue in FY26, but currency shortages in African markets and aggressive Chinese pricing on HPMC in the US have periodically squeezed the export book.
2. Steroidal APIs: the import-substitution bet that just went live
A fermentation-based manufacturing plant built from scratch to make the active chemical ingredients for steroid drugs, backed by government PLI incentives and a technology partnership that fills its fermenters.
- Molecules India imports heavily - the plant makes Prednisolone, Betamethasone, Dexamethasone, and Hydrocortisone and their derivative salts; India imported roughly 25 tonnes of Dexamethasone, 44 tonnes of Betamethasone, and 63 tonnes of Prednisolone in FY25 alone, and NCL’s stated aim is to replace those imports with domestic supply.
- PLI makes the economics work - under the government’s Production Linked Incentive scheme, three of NCL’s products qualify for incentives at 20% of incremental sales for FY26-FY28, stepping down to 15% for FY29 and 5% for FY30, with the company expecting roughly Rs. 67 crores over six years; for Dexamethasone and Betamethasone, NCL will be the only Indian manufacturer.
- A partner fills the plant - Fermbox Bio has placed up to Rs. 60 crore of fermentation equipment at the Tumkur facility and taken operational control of batch success under a contract manufacturing agreement, bringing confirmed orders including one from the Government of India, so the assets earn revenue while NCL builds its own regulated-market customer base.
- Margins start low and rise with approvals - commercial sales began only in Q4 FY26, and early customers are those that do not require US FDA or EU GMP approvals; margins are thinner at this stage because the higher-value regulated-market customers need certifications that are still in process.
- China sets the price, for now - Chinese manufacturers have been selling below their cost of production, driving steroidal API prices down by 25-30% for major drugs, but NCL believes regulated-market buyers are actively looking for non-Chinese alternatives, which is where the long-term opportunity sits.
R&D and technology backbone
The company’s two DSIR-recognised R&D centres develop both the machines that make capsules and the fermentation processes that make APIs - the intellectual property is in-house, not rented.
- Capsule machines are a proprietary weapon - the new-generation machines running at 4.8-5.0 million capsules per day were co-developed with DBDS Robotics, and the company is already working on next-generation machines targeting 7.5 million capsules per day, which would further widen the productivity gap versus competitors.
- API technology was built, not bought - the fermentation and synthesis chain for steroidal APIs uses patented in-house technology and unique microbes, and the R&D team has developed two of the three key starting materials needed for production, reducing dependence on external suppliers.
- A small team with a growing patent estate - 27 R&D staff hold two granted patents with three more under filing as of FY26, and the pipeline includes 20 API molecules, with production licences received for two and applications filed for another eight.
Group structure and partners
The listed parent runs capsules; a separately capitalised subsidiary runs APIs with external investors alongside - and a renewable-energy SPV cuts the power bill for both.
- Natural Capsules Limited is the BSE-listed parent (since 1994) that operates the Bangalore and Pondicherry capsule plants and has applied for NSE listing.
- Natural Biogenex Private Limited (NBPL) is the API subsidiary, incorporated in 2020 as a wholly owned entity and subsequently opened to external investors - Somerset Indus Healthcare Funds invested roughly Rs. 75 crores via CCPS, and post-conversion NCL’s stake would be about 64%, with Somerset holding roughly 29% combined.
- Fermbox Bio Private Limited is a contract manufacturing partner, not a shareholder - it provides fermentation technology and equipment at NBPL’s Tumkur plant and supervises production, creating a CDMO-style revenue stream inside the API facility.
- O2 Renewable Energy VIII Private Limited is an SPV in which NCL holds a 26% securities interest, contracting 10.66 MW of solar capacity that supplies the Bangalore plant and saves roughly Rs. 1.5 per unit of electricity.