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Informist, Friday, Jul 26, 2024

By Avishek Rakshit

KOLKATA – The planned demerger of the hotels business of ITC Ltd and its listing on the bourses is likely to happen in the next few months, its Chairman and Managing Director Sanjiv Puri said today.

“It should be done in the next few months,” Puri told media in an online interaction. ITC had earlier indicated a timeline to complete the demerger process by November 2024.

The cigarettes to hotels major is now awaiting approval from the National Company Law Tribunal to effect the demerger. Last month, ITC’s shareholders unanimously approved the company’s proposal to demerge its hotel business into a separate entity and list it on the bourses. The Competition Commission of India gave its nod for the demerger in May.

ITC’s board in August 2023 gave its approval to demerge the hotel business. The hotel business accounts for around 4-5% of the company’s annual revenue.

In April, the Kolkata Bench of the NCLT asked ITC to convene a meeting to seek shareholders’ approval for the demerger and then proceed with the requisite legalities. The unanimous decision of its shareholders is despite one out of three proxy advisory firms asking ITC’s shareholders to vote against the proposal. During the voting, 99.6% of shareholders participating in the meeting voted in favour of the resolution.

Earlier today, during ITC's annual general meeting, Puri told shareholders that ITC is considering expanding the hotel business in proximal countries. The hotel business is on an expansion spree and is expected to open 60 more hotels in the coming few years, Puri said. In the past two years, it opened 24 new hotels.

ITC – the country’s largest cigarette maker – had earlier said the demerger would help the company to focus on its core operations in the consumer goods, agricultural trading, and paper and paperboard segment.

Launched in 1975 as a standalone company, ITC merged the hotel business with itself in 2004, reasoning that the amalgamation would bring strategic benefits to all entities of ITC and would help increase earnings per share for shareholders.

Apart from growing the hotel business to over 140 properties across 80 destinations, ITC used its hotels strategically for other ventures. It piloted chocolate and coffee products in its hotels and also came up with chocolate boutiques in key hotels. Eventually, after years of testing these two products, ITC launched chocolates and coffee at premium price points. ITC hotel chefs also work on flavours for food products like snacks, biscuits and cakes.

Today, shares of ITC closed 2.5% up at 502.20 rupees on the National Stock Exchange. End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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