ITC shareholders approve hotel business demerger with 99.6 per cent majority

In a landmark decision, shareholders of ITC convened virtually on Thursday, utilising video conferencing and other audio-visual means, to endorse the resolution for the scheme of arrangement between ITC Ltd and ITC Hotels Ltd. This pivotal move, as reported by the Kolkata-based company in a regulatory filing to the stock exchanges, comes in compliance with the directives of the Kolkata Bench of the National Company Law Tribunal (NCLT) issued on April 22, 2024. This decision sets the stage for the listing of ITC Hotels. The move garnered exceptional support, with a staggering 99.6 per cent of shareholders voting in favour, surpassing the regulatory requirement of a three-fourth majority.

ITC initially announced the demerger plan of its hotel business by establishing ITC Hotels Ltd as a wholly owned subsidiary in July 2023. Subsequently, ITC disclosed that the newly formed entity would tentatively debut on the market within 15 months. In August, the scheme received approval a month later. Operating as a crucial arm of the cigarette-to-hotel conglomerate, ITC Hotels will be entrusted with managing the hotel and hospitality business.

As per the demerger scheme, ITC Hotels will issue equity shares directly to ITC shareholders, with approximately 60 per cent of the stake held directly by them in proportion to their shareholding in ITC, while the remaining 40 per cent will remain with ITC. The investments in hospitality entities constituting part of the hotel business, including Bay Islands Hotels Ltd, Fortune Park Hotels Ltd, Landbase India Ltd, Srinivasa Resorts Ltd, WelcomHotels Lanka Pvt Ltd, Gujarat Hotels Ltd, International Travel House Ltd and Maharaja Heritage Resorts Ltd, will be transferred to ITC Hotels.

Although the hotels business contributed four per cent to ITC’s revenue in fiscal year 2024, its primary consumer staples business accounted for 71 per cent of total revenue. Established in 1975, ITC Hotels, India’s leading luxury hotel chain, boasts over 120 hotels across 70-plus locations. Following the announcement, shares of ITC saw a 1.28 per cent increase, settling at ₹435.80 apiece on the BSE.