ITC's Long-Awaited Demerger

ITC has finally received approvals to demerge its hotel business, a decision that shareholders have anticipated for years. The hotel division has been a financial burden, consuming a significant share of capital but contributing minimally to profits, which frustrated many investors. For instance, while ITC's hotels accounted for 22% of capital investment, they generated only 3% of operational profits, contrasting sharply with the cigarette segment that made up just 8% of capital but yielded 80% of profits. The shift towards a managed hotel model is expected to enhance profitability, reflecting an evolving strategy that could lead to further business separations in the future.