ITC Sets a Date To Discuss Hotels Biz Demerger

Shares of The FMCG Giant, ITC Ltd. are going to gain traction as the company has set June 6th at 10:30 AM as the date and time for the shareholders meeting for the approval of the proposed demerger of the hotel business, ITC Hotels which was made last year.

Demerger Proposal

ITC approved the Scheme of Arrangement between ITC Ltd and ITC Hotels on August 14, 2023. The scheme mentions the issuing of equity shares by the resultant entity to the shareholders of the demerged counterpart. In a more specific way, for every 10 shares held in the company ITC Ltd, shareholders would be entitled to receive 1 share of ITC Hotels Ltd.

The main point behind the demerger from the company is that the Hotel Business of ITC has been resilient and matured over the years and has the potential to make its growth path.

What The Company Has Said in the Exchange Filing?

The company in its filing to the exchange has said that “as directed by the Hon’ble National Company Law Tribunal, Kolkata Bench, vide Order dated 22nd April 2024 which was received by us today, a Meeting of the Ordinary Shareholders of the Company will be convened on Thursday, 6th June 2024 at 10.30 a.m. (IST) through electronic mode to consider, and if thought fit, approving the proposed Scheme of Arrangement amongst ITC Limited and ITC Hotels Limited and their respective shareholders and creditors.”

Hotel Business of ITC

The Hotel Business of ITC has made stellar performance through the quarters and the previous Q3 FY 2023-24 had been the best quarter with strong growth in occupancy witnessed across properties driven by retail, MICE segments and marquee events like the ICC Cricket World Cup, Segment EBITDA margin expanded to 470Bps and stood at 36.2%.

A healthy pipeline of management contracts under Mementos, Welcomhotel, Fortune and WelcomHeritage brands was shown, The Welcomhotel Chennai also reopened in January 2024 after a comprehensive renovation.

Conclusion: With this news, Shares of ITC are trading +1% at Rs.433.20 a piece, The upcoming results would be what the investors are looking into, specifically focusing on the performance of the hotel business for the demerger which the proposed meeting is going to take place on 6th June.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.