On 14 July, the Maharashtra government approved the Adani group to redevelop the crowded Dharavi slum—a complex 590-acre cluster of irregular structures, rickety tenements and decrepit buildings sheltering over 900,000 citizens and hundreds of small commercial setups.
A special purpose vehicle (SPV), 80% owned by the Adani group and the rest by the Maharashtra government, was formed in September, following which discussions internally and with the state authorities, including the Mumbai Metropolitan Region Development Authority (MMRDA), have been initiated for the $1.5 billion (nearly ₹12,500 crore) investment, according to the people cited above.
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“Around $8 billion worth of cash is there with Adani group’s books. An additional $2 billion could be raised via sales of equity stakes in certain group firms going forward. So, at this point, Adani group will fund the redevelopment project via internal accruals,” the first person said, requesting anonymity.
An Adani group spokesperson declined to comment on the funding.
“Adani group could utilize 15-20% of its cash to start the redevelopment. In future, external financiers could be considered, depending on the consent of the group and the state government,” said one of the two people.
“$4-5 billion would be required to complete the redevelopment in seven years as planned. To smoothly begin the redevelopment in terms of construction, logistics and other labour-intensive activities, as per the estimate discussed between the Adani group and the government, at least ₹12,000 crore will be pumped into the SPV before the project starts,” the first person said.
This amount will be over and above the ₹1,014 crore that has already been brought in by the Adani group, partly for forming the SPV and partly for the funds required for the redevelopment, according to the people.
“The plan is to have ₹17,000-18,000 crore ready before the first phase begins. As per the Dharavi tender requirement, at least ₹4,500 crore was to be brought in by Adani through convertible debentures before the first phase of the actual redevelopment work commences. The ₹12,000 crore capital infusion is over and above that. All additional investments required for the project will be brought by the Adani group via convertible debentures or convertible preference shares,” said the first person.
A query sent to S.V.R. Srinivas, chief secretary and metropolitan commissioner of MMRDA, remained unanswered.
An authentication survey by the government to verify the authenticity of ownership in the slum buildings is underway, and an internal assessment process for additional funding requirements for the mega-redevelopment project, too, is on and will be completed by 31 December, the first person said.
He added that following these two processes, the master plan for project implementation will be jointly approved (by the state government, MMRDA and the Adani group), and the first tranche of the additional funds could be infused in April-June to begin the mammoth transformation work, which involves construction of a Metro rail project with a station (near “T Junction”) connecting Dharavi to the rest of Mumbai through Mumbai Metro Line 3, leading to Nariman Point.
The other end of this Metro rail from Dharavi will connect the business district Bandra Kurla Complex (BKC) and the Mumbai International Airport.
Additionally, as a part of the vast plan to transform Dharavi into a swanky township, a new road will be developed to introduce a linkage to the Bandra-Worli Sea Link.
A single-window approval system has been created to facilitate the SPV in securing necessary approvals from the Municipal Corporation of Greater Mumbai, the Brihanmumbai Electric Supply and Transport Undertaking (BEST), Tata Power, the police department, civil aviation ministry, the railways, the environment ministry, the Maharashtra Coastal Zone Management Authority and others.
As part of the redevelopment plan, slum residents will first be shifted to new transit tenements that the Adani group will construct on the 90-acre railway land available near the Dadar-Matunga area and another 6.91-hectare land around Dharavi, the people said.
Also, the saltpan land plot at Wadala, with a developable area of about 47 acres, will be leased for up to 10 years for making the temporary shifting arrangements.
Due to its dense mix of diverse communities, the Dharavi slum redevelopment project has sparked several debates and triggered lawsuits in the Bombay high court since Adani group-owned Adani Properties Pvt. Ltd emerged as the highest bidder for the redevelopment in November 2022 with an initial investment commitment of at least ₹5,069 crore.
The Dharavi project follows a significant change in Maharashtra’s political landscape, with Nationalist Congress Party leader Ajit Pawar taking charge as the state’s new deputy chief minister.
Mumbai’s administrators have struggled for decades to modernize the Dharavi neighbourhood.
After several failed attempts by multiple administrators in the past, if the redevelopment plan gets implemented, the Adani group, which runs the country’s busiest airport in the city, will have the task of transforming the vast slum into apartments, offices and malls.
Adani outbid realty developers DLF Ltd and Shri Naman Developers Pvt. Ltd on 15 November 2022 to secure the Dharavi project.
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Updated: 07 Nov 2023, 12:34 AM IST
