At 1.10 pm today, the shares of ITC Limited were trading at ₹435.55, showing a decline of ₹4.55 or 1.03 per cent on the NSE.
ITC Limited issued a correction regarding the cost apportionment illustration in its demerger communication with ITC Hotels Limited (ITCHL). In the revised communication dated January 27, the total cost of acquisition for 100 shares of ITCHL was updated to ₹54,040 from the previously stated ₹50,040.
This correction is related to the demerger arrangement approved by the National Company Law Tribunal, Kolkata Bench, on October 4, 2024, which came into effect on January 1, 2025. As per the scheme, ITCHL has allotted around 125.12 crore equity shares of ₹1 each to ITC shareholders, with a share entitlement ratio of one ITCHL equity share for every ten ITC ordinary shares held.
ITC provided revised guidance on cost allocation, specifying that 86.49% of the original acquisition cost should be attributed to ITC shares, while 13.51% should be allocated to ITCHL shares. For example, for 1,000 ITC shares purchased at ₹400 per share (total cost ₹4,00,000), ₹3,45,960 would be allocated to ITC shares and ₹54,040 to the resulting 100 ITCHL shares.
Shareholders were advised by ITC to consult their tax advisors for specific implications, noting that the share allocation under the demerger scheme would not be considered a transfer as per Section 47(vid) of the Income-tax Act, 1961.
This news was originally published on January 28, 2025.