Believed to be the largest slum in Asia, Dharavi is a crowded area that houses thousands of poor families in cramped quarters in the center of India's financial capital. Many residents have no access to running water or clean toilets.
The redevelopment was first mooted in the 1980s as a way to develop valuable land while providing proper housing to those living there.
Adani's winning bid of 50 billion rupees was more than double that of real estate group DLF, which bid 20 billion rupees($244.87 million), said SVR Srinivas, CEO of the Dharavi Redevelopment Project, a government enterprise in the western state of Maharashtra.
"It will be a township - a city within a city, with mixed land use, both commercial and residential," Srinivas told Reuters, describing the redevelopment, which will cover 625 acres (253 hectares) as "the world's largest urban renewal scheme." It is the latest mega-project taken on by ports-to-energy conglomerate Adani Enterprises, which already supplies electricity in Mumbai through listed unit Adani Transmission Ltd.
Another group project, a $900 million port redevelopment in Kerala state, has been stalled for months by protesters. There have been no major protests to date against the Dharavi redevelopment.
Adani Enterprises last week said it would raise 200 billion Indian rupees ($2.45 billion) in India's largest follow-on public offering of new shares as it aggressively expands into sectors such as cement and healthcare, amid some concerns about its elevated debt levels.
The redevelopment of Dharavi will be the fourth project Adani Realty has taken on in Mumbai and the 24th across four cities, according to its website. Earlier this year, chairman Gautam Adani had said that the Adani Group would invest more than $100 billion over the next decade, most of it as part of a bid to transition to renewable energy.
A spokesperson for the Adani group did not respond to a request for comment on the Dharavi bid.
($1 = 81.6750 Indian rupees)
(Reporting by Shilpa Jamkhandikar in Mumbai and Nandan Mandayam in Bengaluru; Editing by Conor Humphries)
By Shilpa Jamkhandikar and Nandan Mandayam