(Yicai Global) Aug. 11 -- Chinese pesticide producer Zhejiang Huge Leaf Co. [SHA:600226] has decided to sell its pharmaceutical and chemical subsidiary, Huzhou Xinaote Pharmaceutical & Chemical Co. for CNY57.1 million (USD8.5 million) in order to replenish working capital.

The company expects limited future development prospects as the Chinese government ratchets up environmental regulation and brings in new policies.

Local regulators had already called on the company to replace coal-fired boilers with natural gas ones by the end of the year, which would require significant financial input, Huge Leaf said.

The firm's board passed a resolution to divest a 100 percent stake to two natural-person investors, Li Qiugen and Chen Yongming, it said in a press briefing on Aug. 9.

The pharmaceutical subsidiary, located near Huzhou city in eastern Zhejiang province, offers products including acetylacetone, acetylacetonate salt and several other drug intermediates.