The hotel demerger scheme is subject to many regulatory clearances. Credit: Tarun2 via Shutterstock.com.

Kolkata, India-based conglomerate company ITC’s board of directors has approved the scheme of arrangement involving the demerger of the hotel business, with the listing of the new entity anticipated in a timeline of roughly 15 months, according to Moneycontrol.

The hospitality business will have a licence to use the ITC brand name.

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As per the plan, for each ten shares held in ITC, its shareholders would get one share of ITC Hotels.

After implementation of the scheme, the ITC shareholders will roughly hold a 60% stake in ITC Hotels, proportionate to their shareholding in the conglomerate, with the remaining 40% stake in the new entity being held by ITC.

The demerger scheme is subject to many regulatory clearances, including stock exchanges, the Securities and Exchange Board of India and the National Company Law Tribunal.

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However, no cash consideration is payable under the scheme of demerger.

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Employees associated with the hotel business would be moved to ITC Hotels. ITC, however, has indicated that the employment terms would remain the same as the current employment terms with the company, according to Business Standard.

The company also stated that its financial investments, such as East India Hotels and Hotel Leelaventure and non-operational entities, such as Logix Developers, would not be transferred to the new entity.

Last month, the board gave its in-principle approval to the demerger of the hotels business under a scheme of arrangement.

Earlier this week, ITC posted a net profit of Rs49.03bn ($589.41m) in the June quarter of the 2024 financial year, an increase of 17.5% from the same quarter of the prior year.