ITC to seek shareholder approval on June 6 for hotels biz demerger

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

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In the March quarter, the hotel business saw its going up by 15% to Rs 898 crore and (profit before interest and tax) by 34% YoY to Rs 267 crore on a high base. The margin improved 340 bps YoY to 38.2% and was driven by higher RevPars, structural cost interventions, and operating leverage.

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

Following the scheme of arrangement, there would be no change in the shareholding pattern of ITC. ITC Hotels would be given a licence to use ‘ITC’ prefix as part of its corporate name and also as part of some of its properties or brand name for a royalty fee.

"The scheme would unlock the value of the hotels business for existing shareholders of the demerged company through an independent market-driven valuation of their shares in the resulting company, which will be listed pursuant to the scheme, along with the option and flexibility to remain invested in a pure play hospitality focused listed entity," ITC had said earlier.