At its meeting held on 25.8.04, the ITC Board approved the amalgamation of its subsidiaries ITC Hotels Ltd. and Ansal Hotels Ltd. with itself. These two companies are presently engaged in owning/ operating / managing five star deluxe hotel properties.

The Board approved the following share exchange ratios:

(1)    3 shares of ITC for every 25 shares of ITC Hotels.
(2)    1 share of ITC for every 150 shares of Ansal Hotels.

In determining the share exchange ratios, the Board was guided by a valuation exercise carried out by M/s. S B Billimoria and Company (SBB), assisted by its former Managing Partner, Mr Y H Malegam. ITC Ltd. holds approximately 72% of the equity share capital of ITC Hotels Ltd., and, together with ITC Hotels Ltd. holds over 90% of the equity share capital of Ansal Hotels Ltd. These holdings will stand extinguished upon amalgamation.

Synergies of the proposed amalgamation will bring strategic benefits to all entities. While it will be EPS-enhancing for ITC, shareholders of ITC Hotels Ltd. and Ansal Hotels Ltd. will be able to participate in a larger growth opportunity, given ITC's diversified portfolio and strong balance sheet.

The proposed date for the merger is 1st April 2004. The scheme is subject to approvals by the High Courts of Calcutta and New Delhi pursuant to the provisions of Sections 391 to 394 of the Companies Act, 1956 and to such other statutory and other approvals as may be necessary.

Nearly 80% of the capital employed in the hotels business is already residing in ITC's Balance Sheet. The amalgamation would facilitate better alignment of investment and incomes, besides promoting fiscal efficiencies, rationalising operating costs and facilitating clear visibility for investors of the totality of the Company's hotels business.

Commenting on the Board decision, Chairman Mr Y C Deveshwar said : " It's a win-win for all stakeholders. The timing of the amalgamation is particularly appropriate as the travel and tourism industry in India is poised for rapid growth."