ITC shareholders approve the demerger of the hotel sector with a majority of 99.6%
ITC Sonar Bangla in Kolkata. The hotels division contributed 4% of ITC’s revenue in fiscal 2024, while its core consumer goods businesses accounted for 71% of revenue.
ITC shareholders on Thursday approved the Indian consumer goods maker’s plan to spin off its hotel business, in line with the recommendation of key proxy advisors.
About 99.6% of the tobacco-to-soap company’s minority shareholders voted in favor of the proposal, exceeding the legal requirement of a three-quarters majority.
The company’s shares closed 1.2% higher after the vote results. Earlier in the session they were up 1%.
According to media reports, proxy advisory firms Stakeholders Empowerment Services (SES) and InGovern Research Services last month asked shareholders to support the demerger proposal, while Institutional Investor Advisory Services (IiAS) opposed the move.
“ITC should provide greater clarity on the extent of the synergies it expects to achieve by retaining its 40% equity in the hotel sector,” IiAS said in a voting advisory, referring to the stake the company will retain in ITC Hotels. the newly formed entity. ITC shareholders will own the remaining stake.
The company, known for its Goldflake cigarette brand, announced the demerger plan in July last year and later said the new entity would provisionally list on the stock exchange within 15 months.
As an independent entity, ITC Hotels will compete with rivals such as Tata-owned Indian Hotels Company, which operates Taj Hotels, and EIH Associated Hotels, which operates the Oberoi hotel brand.
The hotel business contributed 4% of ITC’s revenue in fiscal 2024, while its core consumer goods business accounted for 71% of revenue.
First print: June 6, 2024 | 4:04 PM IST