ITC Ltd. received approval from the National Company Law Tribunal for the demerger of its hotel business. The company received the order from the Kolkata bench of the NCLT on Friday, according to an exchange filing.
The demerger scheme will be effective on the first day of the following month after filing of certified copy of the NCLT order with the Registrar of Companies, West Bengal, and fulfilling other conditions & matters, ITC said. "The company will advise the effective date to the stock exchanges in due course."
The cigarettes-to-staples company announced its plans to demerge its hotel business in August 2023 into a separate entity. Under this demerger scheme, ITC will maintain 40% ownership of ITC Hotels, with ITC shareholders acquiring the remaining 60% in proportion to their stake in the parent entity.
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ITC shareholders approved the demerger in June. The resolution for the approval of the scheme of arrangement among ITC, ITC Hotels, and their respective shareholders and creditors for the proposed demerger of the hotel business was passed with the requisite majority.
Investors, including the government, participated and voted in favour of the demerger.
The voting comes after the demerger move was opposed by a domestic proxy advisory firm, Institutional Investor Advisory Services. IiAS had advised shareholders of the firm to vote against the proposed demerger, stating that it only partially unlocks value.
The Competition Commission of India also cleared the proposed combination in May.
ITC has said the hotels business has matured over the years and is well poised to chart its own growth path as a separate entity in the fast-growing hospitality industry with sharper focus on the business and an optimal capital structure.
On Friday, shares of ITC closed 1.56% lower at Rs 504.75, compared with 0.93% decline in the benchmark Nifty 50.
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