Adani’s Bigger Picture: Mumbai’s Dharavi Redevelopment Saga Continues

The state government of Maharashtra approved Indian billionaire Gautam Adani’s $614 million contract bid to redevelop the slum into a modern city hub (1). Adani also acknowledged that resettling the existing 1 million residents to be a challenge (2).

Let’s uncover the Dharavi Redevelopment Saga!

Dharavi is one of Asia’s largest active slums ranging three-quarters the size of New York’s Central Park. Dharavi is popularly known worldwide as it featured in the Oscar-winning film “Slumdog Millionaire” in 2008 by Danny Boyle (3).

Dharavi’s exposed open sewers and communal bathrooms are adjacently visible to Mumbai’s international airport and the high-top foreign firms and residential buildings indicating India’s rapid development and delayed development.

Image Source: MagicBricks (4)

Indian billionaire Gautam Adani plans to redevelop the city within a city of millions Dharavi. However, ever since the news broke of the Maharashtra state government approving his $614 million contract proposal, it stirred concern among the citizens. 

Dharavi famously known for making leather goods, has been through several redevelopment plans that ultimately ended up in failure. Adani is firmly stable on the contract while many are shading the government for accepting PM Modi-favored Adani’s contract (5).

According to a source, Adani plans on investing $12 billion in the project in exchange for obtaining development rights worth $24 billion. 

According to the contract, Adani plans to redevelop the entire scenario of the city boldly mentioned in the legal documents as, “unsanitary, deplorable” conditions and construct a new town on state-owned land to house inhabitants and their shops/companies.

The contract mentions, that only the people living in Dharavi before 2000, specifically indicated the bottom floor is legible for free housing as part of the reconstruction. According to this statement, the government considers 700,000 residents on the mezzanine. 

The government mentions the upper levels are not eligible for obtaining a free flat in redeveloped Dharavi and will offer them flats 10 km away and with extra expenditures or higher rental requirements (6). 

Adani’s Bigger Obstacles

The Dharavi makeover is anticipated to commence in September but the challenging part is yet to begin for Adani. Adani was involved in suspicion of unethical dealings by the U.S. short-seller Hindenburg which wiped off $150 billion from his company’s market valuation and untitled him from being the third-richest person (7).

Residents of Dharavi are expressing their concerns about the billionaire’s financial problems which are not domestic but international. Meanwhile, another challenge arose from a rival bidder SecLink Technologies Corporation (8). 

The Dubai-based consortium backed by Bahrain’s royal family, claimed in a complaint that the Maharashtra government played a foul game by terminating an original 2018 procurement which SecLink bid highest and relaunched the process with new terms in 2022 in Adani’s favor (9).

The case is currently fought by the ruling state government party which is PM Modi’s Bhartiya Janata Party (BJP) and its allies with current CM Eknath Shinde (10). A Mumbai court permitted last month to include Adani in the complaint which forced the company to defend its position in front of judges.

A Political Agenda

According to the Reuters report 6’, the eight-member consortium stated in the 809-page file that sued Adani and the state mentioned, that Maharashtra’s government modified the bidding procedure and made a “politically motivated,” and “tailor-made to suit” Adani Group.

SecLink claimed these modifications include tripling the bidder’s needed net worth to $2.4 billion and limiting consortium members to two instead of eight of the previous. However, Adani refuted the allegations and urged the case to be dismissed before the next hearing on August 31.

It was back in October 2022, that the Maharashtra government floated a global tender for the redevelopment of Asia’s biggest slum of an estimated INR 20,000 crores. Chief Minister Eknath Shinde approved fresh global bids for the project along with offered benefits. 

It mentioned the redevelopment project shall be given to a joint venture. The selected developer will receive 80% equity capital which is INR 400 crore and the state government shall hold 20% equity capital which is INR 100 crore.

The government mandated that any investment required for the project shall only be accepted if brought in by the lead partner in the form of instruments such as “Compulsorily Convertible Debentures” and/or “Compulsorily Convertible Preference Shares.

The tender criteria also required the bidders to have a consolidated net worth of INR 20,000 crore and INR 2,000 crore. The government also approved the FSI (Floor Space Index) of four additional fungible FSI as per the prevailing “Development Control Regulations (DCR)” for rehabilitation:

• Free sale of built-up areas in the open market
• Renewal Component

Each slum owner in Dharavi, eligible for a free home via redevelopment will be entitled to a minimum of 405 sq. ft. unit of carpet area (11). Here’s how the overall development of the slum is distributed (12): 

Adani’s Potential

Gautam Adani addressed the Hindenburg case deeply affected the market valuation but his company managed to address the problems and raised funds as investors supported its governance and capital allocation practices.

Adani later in a blog post mentioned that the reconstruction project offered “colossal” obstacles but believed in transforming Dharavi and hoped the neighborhood to generate “millionaires without the slumdog prefix” in the future (13). 

According to the plan, the tycoon will be constructing 405 sq. ft. minimum flats and the state has showcased a preference to imply fittings from international glass manufacturers such as France Saint-Gobain, despite the leading party’s “Atmanirbhar Bharat” campaign still being active.

According to the Dharavi Redevelopment Authority’s CEO SVR Srinivas, the efforts taken in the redevelopment project are focused on minimizing inconvenience. 

Dharavi Redevelopment Timeline