Business

Adani’s attempt to redesign Mumbai’s slum is fueling residents’ doubts, according to the Nepotism

  • Adani wants to clean up large Indian slums in a ‘colossal’ test
  • The Hindenburg case, the political turmoil and the concerns of the residents weigh on the country
  • Court dispute between Dubai consortium and Adani provide a new twist
  • Adani argues that the SecLink case should be dismissed

MUMBAI, Aug 28 (Reuters) – Indian billionaire Gautam Adani’s plan to relocate a million people living in one of Asia’s largest slums is stoking concerns among residents about his ability to perform in the face of publicized financial setbacks and allegations by allies of Prime Minister Narendra Modi gave him favorable treatment.

The Dharavi slum, about three quarters the size of New York’s Central Park, was featured in Danny Boyle’s Oscar-winning 2008 film Slumdog Millionaire. The open sewers and communal toilets, proximity to Mumbai International Airport and high-rise buildings housing foreign companies contrast with India’s development boom.

Adani is spearheading plans to redevelop Dharavi after the Maharashtra state government approved its $614 million contract offer to redevelop the slum known for leather goods manufacturing in July after years of failed attempts.

The Adani Group aims to demolish what it describes in legal documents as an area with “unsanitary, deplorable” conditions and build new towers on state-owned land to house residents and their businesses. Consulting firm Liases Foras estimates that Adani could invest up to $12 billion in redesigning Dharavi in ​​return for development rights that could generate revenue of up to $24 billion.

Only those who lived in Dharavi before 2000, mostly ground floor residents, will receive free housing as part of the redevelopment. About 700,000 residents of mezzanine and upper floors are deemed ineligible by the government and will be given homes up to 10 kilometers away, which they say could result in paying upfront costs or higher rents.

The overhaul, due to begin around September, comes at a turbulent time for Adani. The tycoon was the third-richest person in the world until, despite his denials, allegations by US short seller Hindenburg of unfair dealings in January eroded his group’s market value by $150 billion.

In interviews with Reuters, some Dharavi residents cited the billionaire’s financial woes as a reason for their concern.

A new threat to Adani’s plans is a legal challenge from rival bidder SecLink Technologies Corporation. The Dubai-based consortium, which says it has the backing of the Bahraini royal family, accuses Maharashtra of wrongly canceling an original 2018 tender for which SecLink had placed the highest bid, and the process with new terms in 2022 restarted to allow Adani to win, according to court documents checked by Reuters.

The current state government, ruled by Modi’s Bharatiya Janata Party (BJP) and its allies, denies the case. Last month, a Mumbai court allowed SecLink to include Adani in its lawsuit, forcing the conglomerate to defend its position before judges.

In an 809-page lawsuit last month, in which Reuters took action against Adani and the state for the first time, the eight-member consortium said Maharashtra’s modified bidding process was “politically motivated” and “tailor-made for the Adani group”.

Those changes included doubling a bidder’s required net worth to $2.4 billion, and limiting consortium members to two instead of the previous eight, according to SecLink.

Adani, in a private submission to the judges ahead of an Aug. 31 hearing, denied SecLink’s allegations, arguing that in the interests of development, the case should be dismissed.

Maharashtra said in a statement that SecLink’s claims were “unfounded” and that officials followed “due procedures” in canceling the earlier tender, according to a Reuters review of non-public records related to the case. It said the process had restarted because it added another lot to the project after the 2018 tender closed.

Adani Group, SecLink, Maharashtra Prime Minister Eknath Shinde and Modi’s office did not respond to Reuters questions for this report.

HINDENBURG FALLOUT

Modi and Adani are both from the western state of Gujarat. Its opponents and critics often claim that the meteoric rise of Adani’s ports-to-energy empire is partly due to its close ties to and favorable treatment from governments led by Modi’s BJP and its allies. The duo have repeatedly denied inappropriateness.

The opposition Congress Party has used the Dharavi dispute to pressure Modi and the BJP ahead of the 2024 national election, accusing the Maharashtra government of giving Adani an advantage.

“The fact that it is associated with Adani will automatically lead to political controversy,” said Sandeep Shastri, scientific director at India’s NITTE Education Trust.

Hindenburg’s report and Adani’s subsequent regulatory scrutiny have raised suspicions among some in Dharavi, according to representatives of thousands of local families and 25 other residents and business owners interviewed by Reuters.

“People have doubts about Adani’s image after the Hindenburg incident. There are trustworthiness issues,” said Rajendra Korde, president of the Dharavi Redevelopment Committee, which calls for public consultation.

In early August, around 300 opposition supporters and residents gathered in Dharavi to object to Adani’s involvement. Some carried banners with Adani’s face and a red cross and shouted, “Remove Adani, save Dharavi.”

Many told Reuters they were concerned about Adani Group’s financial setbacks, including the collapse in its valuations.

“If something like this happens again and he can’t complete the project, where will people like us go,” said Radha Pawar, a 50-year-old airport cleaner.

“COLOSSAL” CHALLENGE

Adani, 61, said in a video address in July that the group had raised funds since Hindenburg’s report and that investors had supported its governance and capital allocation practices.

Still, Adani conceded in a blog post last month that rebuilding Dharavi poses “colossal” challenges – although he hoped the area would produce “millionaires without the Slumdog prefix” in the future.

Under the plan, the tycoon will have to create larger apartments, ranging in area from 300 to 350 square meters, with the state recommending fitting out with foreign glass brands such as the French company Saint-Gobain.

SVR Srinivas, who heads the Dharavi Redevelopment Authority, said efforts were being made to minimize disruption.

But the residents remain nervous.

Mohammad Hasmat Ullah has lived in Dharavi since 1995, but runs an embroidery shop on a rented upper floor, which is why there is no right to a free replacement for his apartment. He earns $145 a month to support his family, which includes seven children.

“We’re afraid that Adani will throw us out of here,” said 44-year-old Ullah, who was sitting in his workshop, which was accessible via a narrow, steep staircase.

“If Adani gives us an opportunity to work and stay, that’s good. Otherwise we will be forced to return to our village.”

Reporting by Dhwani Pandya and Aditya Kalra; Additional reporting by Arpan Chaturvedi and Francis Mascarenhas; Edited by David Crawshaw

Our standards: The Thomson Reuters Trust Principles.

Acquire license rights, opens new tab

Aditya Kalra is Corporate News Editor at Reuters in India, overseeing annual reporting and covering stories from some of the world’s largest companies. He joined Reuters in 2008 and over the past few years has written stories about the challenges and strategies of a variety of companies – from Amazon, Google and Walmart to Xiaomi, Starbucks and Reliance. He also works extensively on insightful and investigative business stories.

Source: www.reuters.com

Show More

Robert Wilson

Business & economics analyst. Breaking down intricate financial trends for informed decision-making.

Read Next

Back to top button