 "GVK-led Mumbai airport ends slum redevelopment pact with HDIL")
Realty major Housing Development & Infrastructure has received a termination notice from Mumbai International Airport Limited (MIAL) for its slum rehabilitation project, citing non-completion of the project on time.
The project, which involves rehabilitating a million people living near the city’s international airport, is one of the biggest for the Mumbai-based developer. GVK Infra-led MIAL had planned to start a new terminal - the third at the airport - and to expand the existing runway in a couple of years. The encroached airport land is holding up MIAL’s plan to build aircraft parking lots, taxiways too. However, with the slums unlikely to be cleared any time soon , a new terminal and a longer runway could take many more years.
The company had in 2007 won the bid to carry out the rehabilitation work on 276 acres of Mumbai airport land encroached by slum dwellers. The deadline for clearing the land was October 2010 but the company failed to do so.
“MIAL entered into Slum Rehabilitation Agreement with HDIL in October, 2007, and, as per the said agreement, HDIL had to complete the slum rehabilitation within four years, that is, by 2011. However, HDIL continuously failed to perform, and MIAL issued a Cure Notice in June 2011. Because of non-performance of HDIL, MIAL board took a decision to terminate the agreement, and, accordingly, in February, 2013, MIAL terminated the said agreement. Prior to termination, MIAL invoked performance securities,” MIAL said in a statement.
Struggling with mounting debt and slow sales, the MIAL project, where it is rehabilitating slum dwellers and getting transferable development rights (TDR) had been stuck forever. Companies get TDRs in lieu of rehabilitation and redevelopment of slums, which they are free to use for development or sell in the market. HDIL was hoping to get additional 30-40 million sq ft of TDR from this project.
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HDIL has not accepted the notice and has initiated legal remedies available to it. “We have initiated legal remedies against MIAL’s termination notice and have written off unrealised cost of Rs 442 crore on MIAL project,” vice chairman & MD, Sarang Wadhawan said.
He said, however, no current project would be affected by MIAL termination. “We will monetise balance TDR of 1 m sq ft of airport project,” he added.
MIAL sources told CNBC-TV18 that HDIL was supposed to finish the rehabilitation project by October 2011 but failed to rehabilitate the eligible slum dwellers by then. After failing to provide possession of land to MIAL, the realty major was served a notice of non-performance. However, HDIL failed to not only reply to the notice but also did not reimburse the Rs 25 crore cost incurred by MIAL for the project.
In October 2012, MIAL sought to encash the bank guarantee for breach of various conditions including not evicting any of the 28,000 slum dwellers. HDIL contested the guarantee in court but lost the case, MIAL sources told CNBC-TV18.
Moreover, it posted a net loss of Rs 280 crore against a Rs 316 crore profit a year ago in the fourth quarter, while total income decreased to Rs 176.43 crore for the quarter as against Rs 208.82 crore in year-ago period.
Out of the four land/FSI deals that HDIL concluded in the last one year, 40% of the proceeds have been received, including Popular Car Bazaar at Rs 800 crore, Goregaon land parcel at Rs 650 crore, Vasai Virar at Rs 650 crore and Eveready land parcel at Rs 86 crore, said media reports.
HDIL closed 6.8 percent down at Rs 47.95 on the BSE. The stock has lost over 50 percent in the last six months over fears of bankruptcy and default by the company.
Meanwhile, the government of Maharashtra is still to finalise an eligibility criterion for slum dwellers to get apartments.
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