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The new entity, ITC Hotels, will have a strong debt-free balance sheet which will help it raise capital of its own through equity and debt after the proposed demerger of the hotels business, ITC Ltd Chairman and Managing Director Sanjiv Puri said on Thursday.
Speaking at ITC Ltd shareholders meeting, convened for the necessary approval for the proposed demerger of the hotels business of the diversified conglomerate into ITC Hotels, Puri said the new entity will have a net worth of nearly ₹10,000 crore. ITC Hotels is presently a wholly-owned subsidiary of ITC Ltd.
“ITC Hotels will have a strong debt-free balance sheet with a net worth of nearly ₹10,000 crore, which it can leverage to raise capital from the debt and/or equity markets going forward should such a need arise,” Puri said.
- Also read: CCI approves de-merger of ITC’s hotel biz
“The proposed demerger would also unlock value of the hotels business for ITC’s existing shareholders through an independent market driven valuation of ITC Hotels, along with the option and flexibility to remain invested in a pure play hospitality focused listed entity. The cross synergies will also create sustained value for ITC’s shareholders,” he pointed out.
According to the scheme, all the equity shares of ITC Hotels will be listed and/ or admitted to trading on the NSE and BSE.
Demerger resolution
The board of directors of the cigarette-to-soap maker on August 14 approved the proposed demerger of the hotel business into a separate entity.
ITC shareholders on Thursday approved the conglomerate’s plan to carve-out its hotels business with an overwhelming majority. According to a stock exchange filing, around 99.6 per cent of the votes were in favour of the demerger resolution.
“ITC Hotels will continue to leverage several institutional strengths of ITC, including its corporate brand reputation, globally acclaimed sustainability credentials, high quality talent pool, digital capabilities, robust governance, systems and processes, sourcing of quality products, etc,” Puri said, adding ITC Ltd will also provide long term stability and strategic support to ITC Hotels, instilling a sense of assurance amongst all stakeholders, including business partners and employees. “This, we believe, will provide a strong foundation to accelerate growth.”
With over 135 properties in over 80 locations across the brands of ITC Hotels, Mementos, WelcomHotels, Storii, Fortune and WelcomHeritage, the hotels business operates over 12,500 keys. In the last 24 months, it has added 24 properties.
On Thursday, ITC Ltd scrip ended the day at ₹435.80 apiece on BSE, which was up by 1.28 per cent compared with previous day’s close.
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