The Maharashtra government has approved the Adani Group’s bid for the Dharavi redevelopment project, which seeks to transform Asia’s second-largest slum cluster.
In a Government Resolution (GR) dated July 13, the Maharashtra Housing Department gave final approval for the appointment of Adani Properties for the redevelopment of Dharavi.
The approval comes eight months after Adani Realty, the real estate arm of the port-power conglomerate, was invited as the highest bidder for the redevelopment project.
In November 2022, the Adani Group emerged as the highest bidder with an initial investment commitment of Rs 5,069 crore for the redevelopment of Mumbai’s Dharavi, one of the country’s largest slum clusters, against a base price of Rs 1,600 crore.
Adani Realty will get seven years to see the work done including rehabilitating more than 56,000 families. The project is expected to cost around Rs 23,000 crore.
The extent of the redevelopment will be 2.8 sq km. 68,000 slum dwellers and commercial establishments will be rehabilitated. As per the terms of the tender, the proposed period for completion of construction of rehabilitation facilities, renovation, facilities and infrastructure is seven years from the date of commencement certificate of the first phase of the project.
Bids for the current tender were first opened on November 16 to reveal the names of the three companies (Adani, DLF and Naman Group) and their bid amounts. The bids were then scrutinized on the basis of technical and financial merit.
Incidentally in 2018, the Adani Group had bid for the project for Rs 4,529 crore while the former BJP-Shiv Sena government project was in full swing, but Dubai-based Seclink Technology Corporation was the highest bidder at Rs 7,200 crore. But the Uddhav Thackeray-led Maharashtra Vikas Aghadi (MVA) government canceled the tender.
Launched in 2010 as a luxury residential and commercial property arm of the company, Adani Realty is developing residential, commercial and social club projects spanning over 64 lakh square meters. (approx. 69 million square feet) in cities like Ahmedabad, Mumbai, Gurgaon, Kochi and Mundra. In 2014, it entered the Mumbai real estate market with the Western Heights project in Andheri.
Adani Realty has three other high-end projects in Mumbai, including an ongoing site in Ghatkopar and one each in the western suburbs and central Mumbai.
A renewed push by the Shinde-Fadnavis government
In October 2022, the Maharashtra government floated a global tender for the redevelopment of Asia’s largest slum, Dharavi, spread over 240 hectares in the heart of the country’s commercial capital Mumbai. The project is expected to cost Rs 20,000 crore.
In September 2022, the Maharashtra Cabinet chaired by Chief Minister Eknath Shinde approved fresh global bids for the Dharavi Redevelopment Plan (DPR) and provided more incentives for the urban renewal project.
Redevelopment Terms
The slum redevelopment project is to be undertaken by a joint venture in which the selected developer is expected to hold 80% equity (around Rs 400 crore and the state government will hold 20% with an equity capital of Rs 100 crore).
Apart from the equity of Rs 400 crore, the lead partner will bring in any investment required for the project in the form of instruments like compulsorily convertible debentures and/or compulsorily convertible preference shares as mandated by the state government.
The tender norms also require bidders to have consolidated assets of Rs 20,000 crore and Rs 2,000 crore respectively.
The state government has so far notified around 240 hectares for Dharavi slum redevelopment.
The state government has approved an additional fungible FSI of four and an available floor space index (FSI) under the existing Development Control Regulations (DCR) for rehabilitation, renewal component and built-up area in the open market.
Each slum owner is entitled to a minimum unit carpet area of 405 square feet.