ITC Hotels Will Get Royalty-Like Access To ITC: Sanjiv Puri 

Puri said that ITC Hotels will have full access to ITC’s goodwill, brand assets, and more for its success

Puri stated that ITC has no intention to exit the hotel brand in its entirety

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ITC Hotels will get access to its parent company ITC’s brands in a royalty-like arrangement, said Chairman and Managing Director Sanjiv Puri, while talking about the demerger details and interacting with analysts. 

The new arrangement will be in line with industry standards and will not be a huge amount, Puri noted, according to a report by Moneycontrol. Puri and the top management of ITC Ltd. answered analysts' questions about the new company’s asset strategy and ITC’s plans for its holding in the hotel company, among others. 

ITC holding a 40 per cent stake in the hotel company will enable the new company to grow faster than it did in the past, noted Puri. He said that the new entity will have full access to ITC’s goodwill, brand assets, and more for its success. 

He further added that the holding was intended to give some room for development for the hotel firm by bringing in some strategic investors. He stated that ITC has no intention to exit the hotel brand in its entirety and it is “never to completely move out of it”.

With regards to investors’ exit, Puri said that the decision completely lies with each investor and the company has “no arrangement with anyone” to facilitate this move.

“Tourism industry is in good shape and the (investor) interest in this (the new company) will be equal (to that in ITC) if not more… anybody who does not wish to be with it (ITC Hotels), market dynamics will give an exit. We won’t participate in that,” he said.

Puri clarified his statement about the company’s balance sheet. When he said that ITC Hotels has access to a strong balance sheet, he didn’t mean that the firm has access to ITC’s balance sheet. He clarified, “It is that ITC Hotels has a strong balance sheet, starting out with Rs 6,000 crore in net assets and with no debt.” He further added that this gave the new firm the advantage of leveraging its balance sheet to raise capital in the market. 

Providing clarity on the investments, Puri said that he cannot go into full details but stated that all operating investments will move to the new company. 

He further added that the ITC Hotels will continue with the asset-right strategy (not asset-zero or asset-light strategies) and “If a trophy property comes up, then the board will decide at that point.”