ITC finalizes preparations for hotels business demerger, seeks shareholder approval on June 6

Kolkata-based cigarettes-to-hotels group ITC said on Thursday that the National Company Law Tribunal has directed it to convene a shareholders' meeting on June 6 to approve the demerger of its hotel business into a separate listed entity.

There will be a meeting of shareholders on June 6

"The scheme of arrangement for the demerger was filed with the National Company Law Tribunal after receiving no-objections from the stock exchanges," ITC said in a regulatory filing. NCLT has directed to convene a meeting of shareholders of ITC on 6 June 2024 to consider and approve the scheme”

Under the demerger plan, ITC shareholders will get one share in the demerged hotel business for every 10 shares held in the parent company. The demerger process is expected to be completed this calendar year after which ITC Hotels will be listed on the stock exchange.

Hotel business revenue rose 15% in March quarter

In the March quarter, the hotel business saw its revenue rise 15% to Rs 898 crore and PBIT, or profit before interest and tax, rose 34% year-on-year to Rs 267 crore. EBITDA margin increased 340 bps YoY to 38.2% driven by higher revpars, structural cost interventions and operating leverage.

As part of the demerger plan, it will not only unlock value for the 36 lakh shareholders but also improve the capital allocation of the parent company. ITC will own 40% of ITC Hotels. The remaining 60% stake will be owned by ITC shareholders in proportion to their ownership in the parent entity.

There will be no change in the shareholding pattern of ITC

There will be no change in the shareholding pattern of ITC following the scheme of arrangement. ITC Hotels will be licensed to use 'ITC' as part of its corporate name and as part of some of its properties or brand name for royalty fees.

The scheme will be demerged through an independent market-based valuation of their shares, ITC said in a statement earlier. This will also unlock the value of the hotel business for the company's existing shareholders. According to the sources, listing will be done under the scheme which has options and flexibility. Invested in pure play hospitality focused listed entities.

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