ITC to Seprate Hotels Business into New Entity
19 August 2023: Diversified entity ITC Ltd. has recently announced that it will demerge its hotels business by incorporating wholly-owned subsidiary ITC Hotels Ltd. With the companys hotels business maturing over the years, the company said the vertical is ready to chart its own growth path as a separate entity in the fast-growing hospitality industry. Board of Directors of ITC Ltd. at its meeting held on July 24, 2023 evaluated and discussed various alternative structures for the hotels business.
Its board has also approved the incorporation of the wholly-owned subsidiary ITC Hotels Ltd. which will handle its hotels and hospitality business. ITC said it will hold about 40% stake in the new entity and the balance shareholding of about 60% would be held directly by the company’s shareholders proportionate to their shareholding in it. The scheme of arrangement shall be placed for approval of the board at its next meeting to be convened on August 14, 2023.
“Creation of a hospitality focused entity will engender the next horizon of growth and value creation by harnessing the exciting opportunities in the Indian hospitality industry. In the proposed reorganisation, both ITC and the new entity will continue to benefit from institutional synergies,” ITC Ltd. Chairman Sanjiv Puri said.
ITC said, “The demerger will help the new entity in attracting appropriate investors and strategic partners/collaborations whose investment strategies and risk profiles are aligned more sharply with the hospitality industry.” Besides, it said, “The proposed reorganisation would ensure continued interest of the company in the hospitality business, provide long-term stability and strategic support to the new entity in its pursuit of accelerating growth and sustained value creation as also enable leveraging of cross synergies between the company and the new entity.”
It further said, “This move by the company also reinforces the sharper capital allocation strategy put in place in recent years, manifest in the pivot to ‘asset-right’ strategy in the hotels business.” Launched in 1975, ITC Hotels, India’s premier chain of luxury hotels, has 120 hotels and 11,600 keys across 70-plus locations.
