ITC Shareholders To Get 1 Hotel Unit Share For Every 10 ITC Ltd Shares

The cigarettes-to-staples conglomerate ITC Ltd is demerging its hotel business and expects the public listing of hotel units to take place in the next 15 months.

ITC Hotel's demerger plan is contingent on receiving the relevant approvals from shareholders, creditors, stock exchanges, SEBI, NCLT, and other regulatory bodies.

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Shareholders of ITC Ltd will receive 1 share in the company's hotel division for every 10 they hold in the demerged unit. The cigarettes-to-staples conglomerate ITC Ltd is demerging its hotel business and expects the public listing of the units to take place in the next 15 months. The company, in an exchange filing on August 14, said that the board meeting held on Monday approved the demerger of ITC Hotels Ltd and fixed the share entitlement ratio at 1:10. 

“For every 10 (Ten) Ordinary Shares of face and paid-up value of Re. 1 each held in the Demerged Company, 1 (One) equity share of face and paid-up value of Re. 1 in the Resulting Company. Post the implementation of the Scheme, the shareholders of ITC will directly hold about 60 per cent in the Resulting Company, proportionate to their shareholding in ITC; the balance stake of about 40 per cent in the Resulting Company will be held by ITC," the exchange filing said. 

It further said that overall, the shareholders of ITC will hold 100 per cent of the ultimate beneficial economic interest in the hotels business. 

According to ITC, the demerger plan is contingent on receiving the relevant approvals from shareholders, creditors, stock exchanges, SEBI, NCLT, and other regulatory bodies. ITC also stated that an approximate timescale for the listing of ITC Hotels is 15 months, or around November 2024.

The company said the new entity will operate as an independent hospitality-focused listed entity, and it will continue to leverage ITC's institutional strengths, strong brand equity, and goodwill. Under the demerger, properties, assets, investments, employees, liabilities and contracts forming part of the hotel business will be transferred along with intellectual property/trademarks exclusively used in the hotel business. ITC Hotels will be given a license to use the 'ITC' name as part of its corporate name and some of its properties and brand names, subject to customary conditions, it added.

According to a PTI report, ITC Hotels launched in 1975 has 120 hotels and 11,600 keys across 70-plus locations. In the year ended March 31, 2023, ITC's hotel business reported a revenue of Rs 2,689.12 crore, up from Rs 1,347.66 crore in FY22, as per the data available on BSE. The company has also revealed that the hotel business clocked its best-ever Q1 at Rs 600 crore.