ITC Limited, a prominent Indian conglomerate, is set to hold a crucial meeting of its ordinary shareholders on June 6, 2024, to seek approval for the demerger of its hotel business into a newly formed, separately listed subsidiary. This decision follows a directive from the National Company Law Tribunal (NCLT) mandating the meeting.

Scheduled for 10:30 AM IST and to be conducted via electronic mode, the meeting aims to finalize the separation of ITC Hotels from its parent company, ITC Limited. This strategic move, previously approved by the board on August 14, proposes that for every 10 shares held in ITC, shareholders will receive 1 share in the demerged hotel entity.

The demerger, subject to approval from shareholders, creditors, and regulatory bodies including stock exchanges and SEBI, is expected to conclude with the listing of the new stock within approximately 15 months post-approval. Under the proposed arrangement, ITC shareholders will hold about 60% of ITC Hotels, with the remaining 40% staying under ITC’s ownership.

This corporate restructuring is designed to enhance shareholder value by allowing independent market valuation of ITC Hotels once it is listed. Shareholders will have the opportunity to invest directly in a focused hospitality entity, while ITC Hotels will gain the ability to independently raise capital for expansion through equity and debt markets.

Additionally, ITC Hotels will continue using the 'ITC' brand name under a royalty agreement, benefiting from the established brand equity and institutional strength of its parent company.

This move is seen as a significant step in enabling ITC Hotels to pursue independent growth in the rapidly expanding hospitality sector, attracting investments and partnerships aligned with industry-specific strategies and risk profiles. The continuity in the shareholding pattern of ITC post-demerger ensures stability and ongoing investor confidence in both entities.

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