ITC Limited — Important, 27-01-2025: General Updates

ITC Limited is undergoing a significant structural change with the demerger of its Hotels Business into a newly formed entity, ITC Hotels Limited (ITCHL). This Scheme has received approval from the National Company Law Tribunal and became effective from January 1, 2025. As part of this demerger, ITCHL has allotted approximately 1251.17 crore Equity Shares at ₹1 each to ITC shareholders in a 1:10 share entitlement ratio.

For shareholders, it's crucial to understand how to apportion the costs of acquisition following the demerger. If, for example, a shareholder had 1,000 ITC shares purchased at ₹400 each, totaling ₹4,00,000, the cost basis would be apportioned such that ₹3,45,960 relates to ITC shares and ₹50,040 pertains to ITCHL shares. Shareholders are advised to seek personal tax advice to assess the implications of these changes fully. The clear separation of businesses is likely to sharpen the focus on operational efficiencies and growth potential, presenting both an opportunity for enhanced shareholder value and considerations for individual tax positions.