Sunteck Realty 's board has approved a scheme of arrangement to demerge its wholly owned subsidiary, Satguru Corporate Services Private Limited, and appointed EY as internal auditor.

Board decisions at a glance

The two decisions represent notable corporate governance developments for the real estate company. The approval of the scheme of arrangement with Satguru Corporate Services, a subsidiary of Sunteck Realty, reflects a significant structural change sanctioned at the board level. Alongside this, the appointment of EY as internal auditor signals a formal step in strengthening the company's internal audit framework.

Demerger scheme details

The Board of Directors, in its meeting held on October 1, 2026, approved the Scheme of Arrangement between Sunteck Realty Limited (Resulting Company) and Satguru Corporate Services Private Limited (Demerged Company). The scheme is being executed under Sections 230-232 of the Companies Act, 2013, and other applicable provisions. This move involves the separation of the wholly owned subsidiary from the parent entity, subject to regulatory approvals including the National Company Law Tribunal.

The scheme provides for the demerger and consolidation of the Demerged Business Undertaking of Satguru into Sunteck on a going concern basis. This undertaking comprises the residential real estate project under "Sunteck City 4th Avenue Undertaking". As Satguru is a wholly owned subsidiary, no shares are proposed to be issued pursuant to the scheme, ensuring no change in the shareholding patterns of either entity.

Financial impact of the demerger

The turnover of the Demerged Business Undertaking of Satguru for the year ended March 31, 2026, was ₹869 crore. This figure represents approximately 77% of the total consolidated turnover of Sunteck Realty for the same period. The consolidation is expected to achieve administrative and operational efficiencies, facilitate efficient pooling of financial and managerial resources, and enable project-specific capital allocation strategies.

Auditor appointment

Acting on the recommendations of the Audit Committee, the board appointed M/s. Ernst & Young LLP, Chartered Accountants, as the Internal Auditor of the company. The appointment is valid up to March 31, 2027. EY is described as a global leader in assurance, tax, transaction, and advisory services, recognized for enhancing risk management and governance processes through its internal audit services.

Sunteck Realty received a show cause notice from the Goods and Services Tax department on September 24, 2026, demanding ₹59.44 crore for FY23. The dispute centers on tax liability for Transferable Development Rights (TDR) procured from the open market.

The notice, issued under Section 73 of the GST Act, aggregates tax, interest, and penalty amounts related to TDR originally granted by local bodies. The company stated it is evaluating compliance obligations and filed this disclosure under Regulation 30 of SEBI Listing Regulations.

Company Response and Legal Stance

Sunteck Realty firmly believes the notice lacks merit. The company argues that the transaction in question is neither a supply of goods nor a supply of services, placing it outside the scope of GST. Consequently, no GST is applicable to such transactions.

The company plans to file a reply disputing the demand before the Office of the Deputy Commissioner of State Tax, Mazgaon, Mumbai. Sunteck Realty highlighted two specific errors in the notice:

• The amount is calculated as twice the actual value.
• The notice was raised despite a detailed comprehensive audit already being concluded by tax authorities for the same financial year.

Financial Impact Assessment

The company asserts there is no expected material financial impact from this development. It maintains that the notice will not affect its financial, operational, or other activities. Sunteck Realty intends to take all necessary actions to defend its case before adjudicating authorities.

What the Numbers Show

The demand of ₹59.44 crore includes interest and penalty components alongside the principal tax liability. The company’s explicit claim that the notice considers the amount two times the actual figure suggests a potential overstatement of the base tax demand. Furthermore, the existence of a concluded comprehensive audit for FY23 prior to this notice indicates a procedural conflict between the audit findings and the subsequent demand raised under Section 73.