Diversified business conglomerate ITC has indicated that the long-standing proposal for demerging its hotels business, which had been shelved during the pandemic, is now “very much on the table”.

In a conversation with the journalists of businessline and The Hindu here today, ITC Chairman, Sanjiv Puri, said that the company is thinking of an “alternative business structure” for its hotel business, because with a strong recovery in the hotel industry, the proposal to demerge is “back on the table”.

“In the 2019-20 annual report, we had said that we would be creating an alternative structure for our hotels business. But we had to put the decision on hold due to the pandemic as the industry was not doing well. We will be taking the plan forward in line with the industry recovery dynamic,” Puri said.

The company’s hotel business recorded a 101 per cent increase in its revenues (₹782 crore) in the fourth quarter of 2022-23. The business’ EBIDTA stood at ₹272 crore compared with ₹32 crore in the corresponding quarter of the previous year.

Puri said that “in the last 12 months we have opened almost a hotel a month”. In line with its strategy of going “asset right” the company has an optimal mix of owned and managed hotels. In the past few years, ITC had built many own hotels, which “impacted capital productivity”; as such the company decided that it had the “market standing” to have hotels on management contracts.

On hotels’ carbon emissions, he said “the world’s first 12 hotels to be net-zero carbon are ITC’s hotels; the world’s first two hotels to be net-zero water are ITC’s hotels.”

IPO of infotech arm

On taking ITC Infotech public, Puri said, “it is a possibility that will be evaluated at the right time.” He pointed out that taking a business public meant assuming “onerous responsibilities” to fulfill the expectations of stakeholders.

He further said that ITC has a lot of domain knowledge and today’s digital technologies are directly related to creating business values. Integration of strong domain knowledge and technology should lead to creating a differentiated positioning. “We are not going into everything, There are select areas where we are trying to go very deep. We are making good progress with some large deals.”

On ITC’s FMCG business’ potential to reach ₹1-lakh crore by 2030, Puri said it was an aspirational target that was put on the table — more for envisioning and creating the approach for the business.

Upbeat on FMCG biz

“It is ₹20,000 crore business now. It was ₹10,000 crore in 2017. Probably, ITC was the only company that created an ₹20,000-crore FMCG business in such a short time. We are proud of the scale we have achieved. So, ₹1-lakh crore will happen. But may not be in 2030, some years later.”

“This business has been very diligently crafted to create a large addressable market, which is now estimated at ₹5-lakh crore. Analysts say that we have efficiently created this topline. We have taken 1.7-2x of the topline, whereas if we had gone inorganic, this would have taken 4-5x. Margin expansion will happen once the capacities get filled up and brands scale up to generate surpluses. Today, it is a combination of categories that have the scale and that we incubate,” he added.