ITC Chalks Out Rs 1500 Crore Plan to Fuel Growth in Demerged Hotels Biz

ITC Ltd is set to transfer funds worth Rs 1500 crore to its demerged hotel company, ITC Hotels, to fuel growth and meet contingency-related requirements. The Kolkata-based conglomerate made the announcement of the cash transfer during a shareholder presentation on December 30. 

The cigarettes-to-hotels conglomerate also mentioned that it will continue to hold the trademarks of the demerged hotel company, including Bukhara, Dum Pukht, and Dakshin. ITC Hotels will be provided with the trademarks under a trademark license agreement. 

“Cash & cash equivalents of Rs. 1500 cr. to cater to planned growth & contingency requirements,” said the conglomerate in a statement. “ITC and ITC Hotels to execute a Trademarks License Agreement under which ITC Hotels, would be given a license to use the ‘ITC’ trademark/logo/label/wording, along with any copyrights derived from such trademark,” the company added. 

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During the presentation on Monday, the conglomerate also pointed out that the assets like offices, managerial and staff related to the hotel company will be transferred to ITC Hotels. 

The announcement by the Kolkata-based conglomerate comes just days before the planned demerger will take effect on January 1, 2025. ITC Hotels from January 2025 will compete as an independent entity from Indian giants like Taj Hotels and Oberoi. 

ITC Ltd ventured into the hotel business in 1975 with its wholly owned subsidiary ITC Hotels and went on to become the third largest luxury hotel chain in India with over 100 hotels. The hotels business contributed 4 per cent to cigarettes-to-hotels conglomerate’s FY24 revenue. 

The company initiated the move to separate its hotel and hospitality business, from other ventures last year. The move was welcomed by 99.6 per cent of the company’s minority shareholders, which was way more than the regulatory requirement of a three-fourth majority. Additionally, the newly separated entity is supposedly going to be listed in 15 months from the demerger announcement. 

ITC Ltd will retain a 40 per cent stake in the newly demerged business whereas the remaining 60 per cent will be held by its shareholders. ITC Hotels demerger ratio is 1:10 i.e., 1 share of ITC Hotels for every 10 shares of ITC Ltd. 

Moreover, to strengthen its position in the Indian hotel business segment, ITC announced that it had acquired an additional 2.44 per cent stake in Oberoi Hotel’s parent company. 

“The company today has acquired 2.44 per cent of the share capital of EIH Ltd and 0.53 per cent share capital of HLV Ltd, from Russell Credit Ltd,” the company said in a statement on NSE on December 18. 

Post the acquisition, the company’s shareholding in EIH and HLV totals 16.13 per cent and 8.11 per cent, of their paid-up share capital, respectively.