Behind ITC's hotels demerger

Why ITC threw down the gauntlet with the demerger of its hotels business

Last month, the board of directors at ITC cleared the demerger of its hotels division, kicking off an important — and long-awaited — transition for the cigarette-to-FMCG diversified conglomerate, and one of the country’s most valuable firms.

On the face of it, the strategic rationale for carving out the hotels division and separating it from the mothership is clear. However, the manner in which the proposed structure has been designed for the new entity — ITC Hotels — and ITC’s decision to retain a sizeable 40 per cent stake in the new entity, has invited critical commentary, with ITC’s share