Maharashtra Government Officially Awards Rs 23,000 Crore Dharavi Slum Redevelopment Project To Adani Realty 8 Months After Winning Bid

Maharashtra government has approved the Adani Group’s bid for the Dharavi redevelopment project that seeks to transform Asia’s second-largest slum cluster.

In a government resolution (GR) dated July 13, the Maharashtra Housing Department granted final approval for the appointment of Adani Properties for the redevelopment of Dharavi.

The approval comes eight months since Adani Realty, the real estate arm of the ports-to-power conglomerate, was declared the highest bidder for the ambitious redevelopment project.

 In November 2022, the Adani group had emerged as the highest bidder for the redevelopment of Mumbai’s Dharavi, one of the largest slum clusters in the country, with an initial investment commitment of Rs 5,069 crore, against a base price of Rs 1,600 crore. 

Adani Realty will get seven years to see the work through, including rehabilitating more than 56,000 families. The project is estimated to cost around Rs 23,000 crores.

The scope of the redevelopment will span 2.8 sq.km. and about 68,000 slum dwellers and those running commercial enterprises will be resettled. According to the terms of the tender, the proposed completion period for construction of the rehabilitation facilities, renewal, amenities and infrastructure is seven years from the date of the commencement certificate for the first phase of the project.

The bids for the current tender were first opened on Nov 16 to reveal the names of the three firms (Adani, DLF and Naman Group) and their bidding amounts. The bids were then be scrutinised based on technical and financial eligibility.

Incidentally in 2018, the Adani Group had placed a Rs 4,529 crore bid for the project when the previous BJP-Shiv Sena government was pursuing the project aggressively but it was Dubai-based Seclink Technology Corporation that emerged as the highest bidder at Rs 7,200 crore. The tender was however cancelled by the Uddhav Thackrey-led Maharashtra Vikas Aghadi (MVA) government.

Started as a luxury residential and commercial property arm of the conglomerate in 2010, Adani Realty have been developing residential, commercial and social club projects of over 64 lac sq. mtrs. (69 million sq. ft. approx) in cities like Ahmedabad, Mumbai, Gurgaon, Kochi and Mundra. It forayed in to Mumbai real estate market in 2014 with Western Heights project in Andheri.

Adani Realty has three other high end projects in Mumbai, which include an ongoing site at Ghatkopar, one each in the westerns suburbs and in central Mumbai.

On Oct 2022, the Maharashtra government floated a global tender for the redevelopment of Asia's biggest slum, Dharavi, spread over 240 hectares of prime land in the heart of the country's commercial capital Mumbai. The project is estimated to cost Rs 20,000 crores.

In September 2022, the Maharashtra cabinet headed by Chief Minister Eknath Shinde approved fresh global bids for the Dharavi Redevelopment Project (DPR) and offered additional benefits for the ambitious urban renewal project.

Terms Of Redevelopment

The slum redevelopment project needs to be undertaken by a joint venture in which the selected developer is expected to hold 80% equity (estimated to be Rs 400 crore, while the state government will hold 20% with Rs 100 crore equity capital).

Apart from the equity of Rs 400 crore, any investment required for the project shall be brought by the lead partner in the form of instruments such as Compulsorily Convertible Debentures and/or Compulsorily Convertible Preference Shares, as the state government has mandated.

The tender criteria also require that bidders should have a consolidated net worth of Rs 20,000 crore and Rs 2,000 crore, respectively.

The state government has so far notified about 240 hectares for the Dharavi slum redevelopment.

The state government has also approved a floor space index (FSI) of four and an additional fungible FSI available as per the prevailing development control regulations (DCR) for rehabilitation, renewal component, and free sale built-up area in the open market.

Each slum owner will be entitled to a minimum of 405 sq. ft. unit of carpet area.