ITC, under the leadership of Sanjiv Puri, has recently proposed the demerger of its hotel business into a separate company, a significant move that comes 19 years after the hotel division was established. The company’s board has approved this long-discussed demerger, with ITC holding a 40% stake in the new hotel company, while the remaining 60% will be distributed among ITC’s shareholders on a proportionate basis. Read More Business News on our website.
ITC Hotels originally started as a separate company in the 1980s, and later in August 2004, it was merged back with the main ITC company. However, during the AGM in 2021, Puri hinted at the possibility of restructuring the hotel business. The details of the proposed reorganization that includes everything will be present on 14th Aug.
Furthermore, the board has also given the green light for the establishment of a wholly-owned subsidiary named ITC Hotels. The hotels division has shown remarkable growth in recent times, achieving a 101% increase in segment revenue, reaching Rs 2,585 crore in 2022-23 from Rs 1,285 crore in the previous year. The segment’s profit for 2022-23 was an impressive Rs 542 crore, a significant improvement compared to a loss of Rs 183 crore in the previous year. Presently, the hotels division operates over 120 hotels with 11,600 keys.
During Monday’s trading session, ITC briefly became the most valued FMCG company in India, surpassing HUL. However, following the announcement of the hotel business demerger, the stock experienced a sharp decline of almost 4%. Market analysts attribute this to a “buy on rumor, sell on news” strategy. As a result, HUL regained its position as the fifth most valued company in India, with a market capitalization of Rs 6.11 lakh crore, followed closely by ITC at Rs 6.10 lakh crore, according to BSE data.