ITC sets January 1 as date for hotel business demerger, shares trade in green

ITC Limited—an Indian conglomerate with various business segments including FMCG, hotels, paperboards and packaging, agribusiness and IT—informed its shareholders on Tuesday that the company has received approval from NCLT for the demerger.

“The Company has received a certified copy of the Order dated October 4, 2024, issued by the Hon’ble National Company Law Tribunal, Kolkata Bench, sanctioning the Scheme of Arrangement amongst ITC Limited and ITC Hotels Limited and their respective shareholders and creditors under Sections 230 to 232 read with the other applicable provisions of the Companies Act, 2013 (Scheme); copy of the said order was received by the Company on December 16, 2024, at 5.26 pm,” ITC said in an exchange filing dated December 17, 2024.

The stock of the company opened in red but recovered quickly in the morning trade. The shares are currently trading 0.69% up at ₹473.35 apiece on the NSE on Tuesday, December 12.

More about the demerger

The FMCG major announced in August 2023 that it is planning to demerge its hotel vertical into a separate body. The company’s shareholders voted in favour of the demerger in June this year, with only 0.4% voting against it.

Interestingly, the proxy advisory firm Institutional Investor Advisory Services (IiAS) advised the shareholders of the company to vote against the demerger saying that it will only unlock partial value. ITC maintained that its hotel arm has grown over the years and is well-set to thrive while functioning independently.

With the demerger, ITC plans to maintain 40% ownership of ITC Hotels and ITC shareholders will acquire the remaining 60% in proportion to their stake in ITC Limited.

Eligible shareholders will receive one share of the new company, ITC Hotels Ltd., for every 10 shares they hold in the parent company. According to the scheme of arrangement, ITC Hotels Ltd. will have an equity of 207.84 crore shares with a face value of Re 1 face value. Meaning, the equity capital of the hotel vertical would be ₹207.84 crore.