Sanjiv Puri Let Go of ITC's Hotels. ITC Still Made ₹20,286 Crore.

In July 2023, Sanjiv Puri, chairman and managing director of ITC Limited, made a choice most leaders avoid.

He let go of the hotels.

What ITC Was Giving Up

This was no small side business. ITC had run hotels since 1975, and by 2023 it had more than 120 of them across over 70 locations, including some of India's best-known luxury properties.

So why let them go? Two numbers explain it. Over the decade to 2023, the hotels brought in only about 5% of ITC's revenue and profit, yet took more than 20% of the money ITC spent building its businesses. One brokerage said the hotels guzzled capital.

Who Is Sanjiv Puri?

Sanjiv Puri is the chairman and managing director of ITC. An alumnus of IIT Kanpur and the Wharton School, he has been at ITC since 1986, and became chairman in 2019.

He read the hotel numbers clearly. On 24 July 2023, ITC's board approved, in principle, moving the hotels into a separate company, ITC Hotels.

The Market Pushed Back

ITC's shares fell about 4% the day the plan was announced, and kept falling the next day. Many investors had wanted all of the hotels handed to them. ITC chose to keep about 40% and give the other 60% directly to its shareholders.

Most leaders would have dropped the plan, or given investors everything they asked for. Puri did neither.

ITC, he said, would stay invested in the hotels business. At the company's annual meeting in August 2023, he argued that the 40% holding would help the new company succeed: it could keep using the ITC name and brands, stabilise its operations and attract other investors to grow faster.

Shareholders backed him. The demerger took effect on 1 January 2025, and the hotels went their own way.

What Both Sides Did Next

Without the hotels, ITC became a simpler company, built around what Indians buy every day: Aashirvaad atta, Sunfeast biscuits, Bingo! chips, Classmate notebooks.

In FY26, ITC's everyday brands outside cigarettes brought in ₹24,210 crore, up about 10%. Cigarettes, its oldest business, still brought in ₹37,100 crore net of excise, more than any other part of ITC. Together they helped ITC earn a net profit of ₹20,286 crore from continuing operations.

And the hotels did not suffer. ITC Hotels grew its FY26 profit by about 29% to ₹821 crore, then recommended its first-ever dividend. ITC, as its largest shareholder, was one of those who received it.

The Boardroom Lesson: Knowing When to Let Go

Conglomerates tend to keep businesses because they have always had them. A business with history, prestige and a famous name is the hardest to let go, even when the numbers say it is taking more than it gives.

Holding on looks like strength. Knowing when to let go is the real one.

Puri's call was not to sell the hotels or shut them. It was to give them their own balance sheet and their own investors, while keeping enough of a stake to help them grow.

Common Mistakes Boards Make When Separating a Business

Boards weighing a demerger or spin-off tend to make the same three errors.

They keep a business for its prestige. A famous division can still be the wrong use of capital. Look at its share of capital spending next to its share of profit.

They let the first day's share price decide. ITC's shares fell on the announcement. The fair test was what the two businesses did over the following years.

They cut the separated business loose too fast. A clean break pleases some investors, but a new company often needs the parent's brand, people and backing to stand on its own. The size of the retained stake is a strategic choice, not just a financial one.

A Framework for Leading a Demerger

When we brief boards on a CXO search for a group restructuring its portfolio, we push for three specific checks.

• Find the capital story behind each business. Ask candidates to explain which businesses earn their capital and which consume it. That is where the case for separation starts.
• Look for leaders who can hold a decision under pressure. Investors, analysts and employees will push back. The right leader explains the reasoning and keeps the plan intact.
• Hire a full leadership team for the new company. A demerged business needs its own CEO, CFO and board who can run it as a standalone listed company from day one.

Why This Belongs in the Boardroom, Not Just the Business Pages

This sits alongside the story we told of Puneet Chhatwal at IHCL, who grew the Taj by owning less of it. Both leaders decided that the best way to grow a hotel business was not to keep putting more of the parent's capital into it.

The hardest portfolio call is the one that gives up something famous. Boards that hire well find leaders who can make it.