Financial Investments
ITC Hotels to get INR 15 bln cash equivalent from parent ITC after demerger
This story was originally published at 16:34 IST on 30 December 2024
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KOLKATA – ITC Hotels Ltd., the hotel business of ITC Ltd. which will be demerged with effect on Jan. 1, will get cash and its equivalent of INR 15 billion for its growth trajectory and contingency requirements from its parent, ITC informed exchanges.
ITC will transfer key trademarks for restaurants like 'Bukhara', 'Dum Pukht', and 'Dakshin', to ITC Hotels, but will continue to own ITC Grand Central in Mumbai. ITC Hotels will run the operations of the hotel in Mumbai under an operating service agreement, according to an investor presentation by ITC.
Other entities of ITC's hotels division, including Bay Islands Hotels Ltd., Fortune Park Hotels Ltd., Landbase India Ltd., Srinivasa Resorts Ltd., WelcomHotels Lanka Pvt. Ltd., Gujarat Hotels Ltd., International Travel House Ltd., and Maharaja Heritage Resorts Ltd. will be taken over by ITC Hotels.
However, financial investments in hotels made by ITC, like its shareholding in EIH Ltd. and HLV Ltd., will not be transferred to ITC Hotels.
According to the terms of the demerger, existing ITC shareholders will hold 100% of ITC Hotels – 60% direct and the balance 40% will be held via the holding in the parent company. ITC will hold 40% of ITC Hotels, making it the single-largest shareholder in the demerged entity. ITC Hotels will be listed on the bourses after the demerger.
Earlier, ITC said that ITC Hotels is targeting a portfolio of more than 200 hotels with 18,000 rooms in the next five years, with two-thirds of the portfolio being managed hotels. Managed hotels are hospitality properties where the owner only owns the hotel, but the property will be managed and run by another entity. While managed properties help reduce asset costs and depreciation, it is usually less margin accretive than properties which are directly owned.
ITC Hotels, after it comes into effect on the first day of 2025, will also leverage its strategic land bank, the parent said.
On Monday, shares of ITC closed 0.3% lower at INR 477.00 on the National Stock Exchange. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Reported by Avishek Rakshit
Edited by Saji George Titus
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