FMCG sector giant ITC Limited has taken a major decision to demerge its hotel business ITC Hotels Limited (ITCHL). The move is aimed at developing the hotel business as an independent entity. Ahead of the demerger, ITC Limited has announced to infuse cash and cash equivalents of Rs 1,500 crore to ITCHL.
Purpose of Cash Equivalent
This amount includes low-risk investments such as bank deposits, savings accounts, commercial paper, money market funds and short-term government bonds. These will be used to expand the hotel sector and meet emergency financial needs. This fund can be converted into cash within a time frame of 90 days.
The company gave information about this plan in its investor presentation last Monday.
Demerger will be effective from January 1, 2025
The demerger of ITCHL will be effective from January 1, 2025. The company has set the record date for shareholders as 6 January 2025. To avail the benefits of demerger, investors will have to buy shares of ITC Limited by January 3, 2025.
division of shares
After the demerger, the shares of ITCHL will be divided as follows:
- For every 10 shares of ITC Limited, you will get 1 share of ITC Hotels.
- After the demerger, ITC Limited will retain 40% stake in ITCHL.
- The remaining stake will be allotted to the shareholders.
Special opportunity for investors
After the demerger, ITC Hotels will operate as an independent entity, providing better returns to shareholders. This step will also be beneficial for those investors who want to invest in the hotel industry.
Market cap and share price of ITC Limited
Currently the market cap of ITC Limited is Rs 5,99,185.81 crore. On Friday, the company’s shares closed at Rs 478.90 on BSE.
After the demerger, ITC Hotels will have new possibilities for its growth and expansion, which can make it a major player in the Indian hotel industry.
