Bangalore: Six of the 14 teams in the fray to bid for a Rs15,000 crore Dharavi makeover project have opted out, jeopardizing the scheme.
Five consortia have to be chosen to develop one sector each of the 535-acre shanty town in Mumbai, to make it a part of the growing residential and commercial development within Mumbai.
Some lead members of teams that are not a part of the project any more are Unitech Ltd, K Raheja Universal Pvt. Ltd, Lanco Infrastructure Ltd, RNA-Videocon, Runwal group and Kalpataru group.
On Friday, the Dharavi Development Authority asked the 14 short-listed groups to submit to it the memoranda of understanding among the team members. This was asked after rumours that many of the international and local companies wanted to opt out of the project in the wake of the global economic downturn.
“I am going to raise this issue with the committee of government secretaries that the number of participants does not give scope for adequate competition,” said Gautam Chatterjee, chief executive of the authority. “The committee will take a final call on what should be done with the bidding process.”
Lacking expertise: A file photo of the Dharavi slum area in Mumbai. Property consultants who have tracked the makeover project say that most of the existing bidders don’t have the experience of redeveloping slums. Madhu Kapparath/Mint
Among the remaining teams are Lodha Developers Pvt. Ltd and DB Realty Pvt. Ltd. The two firms recently filed their draft red herring prospectuses to raise money through initial public offerings. Lodha has tied up with a Malaysian construction firm, LBS Bina Group Berhad, as its technical partner, and DB Realty has teamed up with its subsidiary, Conwood Agencies Pvt. Ltd.
In March, following a harrowing six months of liquidity crunch and slow property sales, five out of 19 teams had opted out, leaving only 14 in the fray. Some the prominent firms that exited were Housing Development and Infrastructure Ltd (HDIL), and Reliance Engineering Associates Pvt. Ltd and Urban Infrastructure Venture Capital Ltd.
HDIL, one of the country’s biggest slum redevelopers, was forced to opt out after its US-based partner Lehman Brothers Holdings Inc. went bankrupt in September 2008.
“We had been getting a little jittery about the project and don’t want to be a part of the project anymore,” Sandeep Runwal, director of Mumbai-based Runwal group, had said in September.
Property consultants who have tracked the Dharavi project closely said the biggest problem with the participants now is that none of them really has experience in redeveloping slums.
“Developing slums in Mumbai needs expertise because such projects have serious socio-political complications,” said an analyst with an international property consultancy, who didn’t want to be identified. “Besides DB Realty, no other team is equipped for that.”