NCLT Mumbai clears first motion for L&T Realty business demerger into wholly owned subsidiary L&T Realty Properties
NCLT Mumbai Advances L&T Realty Demerger to Standalone Structure
The Mumbai Bench of the National Company Law Tribunal (NCLT) has allowed a first-motion application in the proposed demerger of Larsen & Toubro Ltd's (L&T) realty business into its wholly owned subsidiary, L&T Realty Properties Ltd. The order was passed on June 12, 2026, moving forward a strategic corporate restructuring announced in December 2025.
What the First Motion Approval Means
The tribunal also directed the convening of a meeting of L&T's equity shareholders to consider the scheme. The Tribunal directed L&T to convene a meeting of its 17.31 lakh equity shareholders within 60 days. The shareholders will consider and, if thought fit, approve the scheme.
The appointed date for the scheme is April 1, 2026. This retroactive date means the transfer of assets, liabilities, contracts, and employees pertaining to the realty business is treated as occurring from that date.
Structure of the Transfer
The scheme proposes the transfer and vesting of L&T's Realty Undertaking into L&T Realty Properties on a going-concern slump-sale basis. The undertaking includes assets, liabilities, contracts, and employees pertaining to the realty business.
As consideration for the transfer, L&T Realty Properties will issue 393.53 crore fully paid-up equity shares of ₹10 each to Larsen & Toubro Ltd. The shares will be issued at a premium of ₹6 per share.
Regulatory Pathway Forward
Meetings of L&T Realty Properties' equity shareholders and unsecured creditors were dispensed with. No meeting of its secured creditors was required, as the company had no secured creditors. This streamlined approach reflects the nature of a transfer between a parent company and its wholly owned subsidiary.
Allowing the first-motion application, the Tribunal also directed issuance of notices to the Regional Director, Registrar of Companies, Income Tax Department, and GST authorities. Notices will also be sent to the Reserve Bank of India, Securities and Exchange Board of India, National Stock Exchange, BSE, the concerned Real Estate Regulatory Authority, and other relevant sectoral regulators. The regulatory authorities have been granted 30 days from receipt of the notice to submit representations, if any, on the proposed demerger.
L&T Realty's Business Scale and Portfolio
In 2011, the company founded L&T Realty as a wholly-owned subsidiary with a mandate to develop both L&T land holdings and joint-venture opportunities with partners. Over the years, L&T Realty has delivered residential, commercial and mixed-use developments across Mumbai, Navi Mumbai, Bengaluru, NCR, Chennai and Hyderabad.
The company's portfolio holds a development potential of 65 million sq ft spanning residential, commercial spaces and high-street retail developments. The standalone revenue from operations for the business unit was ₹640.57 crore, with a net worth of ₹2,148.86 crore for the half-year ending September 30, 2025.
Strategic Rationale for Independence
According to L&T, the restructuring is intended to create a focused management structure for the realty business. S N Subrahmanyan, Chairman & Managing Director, L&T, said, "L&T Realty needs to perform independently. It has to continuously expand its project pipeline through proactive land bank growth and joint developments. This requires periodic capital infusion, and therefore, it is essential to bring all our real estate operations under a singular corporate structure and bolster L&T Realty's position as a unified brand for real estate. The proposed transfer is the first step in creating a consolidated powerhouse that can redefine the future of urban development in India."
The demerger is expected to enable L&T Realty to access capital markets more flexibly, pursue selective land acquisitions, and strengthen partnerships with institutional investors—capabilities that have become central to competing in India's premium real estate sector.
Next Steps in the Process
The first-motion approval is a procedural milestone. The scheme must now proceed through shareholder approval and a second-motion hearing before the NCLT, at which point the tribunal will assess whether the demerger meets statutory requirements and serves the interests of all stakeholders. Following full NCLT sanction, the transfer will be registered with the Registrar of Companies.
With the appointed date set to April 1, 2026, and the first motion cleared in June, the remainder of 2026 will determine whether the restructuring achieves final approval and implementation.