Key Points
The chairman and managing director, Sanjiv Puri, explained the reason why the company chose to retain 40% stake in the demerged ITC Hotels...
Puri said, the demerged entity to have a 'royalty-like' arrangement for use of the other ITC brands and assets..
ITC will stay invested in the hotels business with this holding and also draw synergies for its foods vertical from the demerged entity..
He further said, the new entity (ITC Hotels) will be able to raise capital from strategic investors when required, adding, it will work on a asset-light model requiring modest amount..
ITC has over 120 hotels and 11,600 keys across more than 70 locations and competes with Tata Group's Indian Hotels Co. While the business has contributed less than 5% to ITC's revenue and earnings before interest and taxes over the last decade, analysts at Jefferies recently noted that it accounted for over 20% of capital expenditure..
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Demerger of hotel biz will boost capital efficiency ratios of ITC : Analysts
25, Jul, 23ITC Limited's board has given approval to demerge its hotels business into a separate entity, boosting capital efficiency and giving shareholders direct stake in the new business. Under the arrangement, ITC will retain 40% of the shares, with the remainder held directly by investors proportionate to their holdings.