Phoenix Mills Mumbai's High Street, Phoenix Mills, was born in 1998 when the mill management sought the government's permission to add recreational facilities such as "bowling alleys" for its workers and the workers of other firms based on its premises. Soon, Phoenix Towers (seen in background), two luxury high-rise apartment blocks, appeared, using up the entire Floor Space Index of the mill, and according to a case study entitled The Murder of The Mills by the Girangaon Bachao Andolan, foretelling the demolition of the mill to create vacant land to keep the FSI at the level allowed

In land-strapped Mumbai, 600 acres that can be developed is actually a lot of land (almost 10 times the size of Nariman Point). Then, there is its location, in the strategic centre between Bandra, Navi Mumbai, and Nariman Point. Going by the India Bulls bid for Jupiter Mills' land, these 600 acres are worth over Rs 15,000 crore

High street phoenix is a preferred des- tination, one of several, for Mumbai's smart set. It hosts brands such as Pantaloon and Lifestyle; boasts a bowling alley and a lounge-bar; and is seemingly guarded by two high-rise towers housing luxury apartments that rise, sentinel like into the sky. The view from the towers, especially at night, must be staggering: the curve of the sea-front with a view of the Haji Ali mosque and the Mahalaxmi Race Course across it on one side; the residential sprawl of North-Central Mumbai with the imposing ITC Grand Central Hotel amidst it all on another; and the glittering neon canopy of a retail mini-Mecca down below. In these self-indulgent times, it is as if the atmosphere has been designed to help forget. Forget what? History, for instance.

Had Phoenix Mills, the original tenant of the land where the retail and residential paradise stands, been around, it would have been 100 years old in 2005. The mill was one among the few tens that mushroomed in the Mumbai (it was Bombay then) of the late 19th and early 20th century. The mills, fuelled by the entrepreneurial drive of their Gujarati, Marwari, Sindhi and Parsi owners, made fortunes and transformed Mumbai into India's commercial capital and inspired countless Indians to move to the city in search of fame, fortune and a livelihood. The sub-human work practices at some mills also engendered a strong labour movement.

While history is easily dismissed, the opportunity to make money, the eye on the main chance that distinguishes every resident of Mumbai, isn't. Which is why all Mumbai is talking about the ongoing sale of mill land, the auction of some 300 acres of land in central Mumbai (see The Great Sale Begins). That's just the land associated with the 26 mills that have hitherto received the go-ahead to develop or sell their land under the modified Development Control Rule 58 (DCR 58, and more on this later). On March 24, India Bulls Properties, a 40:60 joint venture between India Bulls, a financial services firm and Farallon Capital, an American fund with an interest in real estate, paid Rs 277 crore for around 11 acres of this land (Jupiter Mills). Using that as a benchmark, the 300 acres should be worth around Rs 7,500 crore and the nearly 300 more acres (almost 30 mills) waiting for permission, another Rs 7,500 crore. Whichever way you look at it, Rs 15,000 crore is a lot of money.

This isn't just a story of mills (most are defunct) being allowed to sell land at their disposal in an effort to overcome their financial woes or increase returns to investors. Most mills are located on land leased from various government entities such as the BrihanMumbai Municipal Corporation (BMC) or the Collectorate of Mumbai at concessional rates. For instance, Simplex Mills occupies around 8,000 sq. mts. of land and pays an annual rent of Rs 48 (according to the terms of a 99-year lease that expired in 1983; see Whose Land Is It Anyway?, as to why these leases were never renewed). And Shree Shakti Mills pays Rs 1,873 a year for 25,000 sq. mts. (its 50-year lease expired in 1985).

That's wholly understandable: the phenomenon of cities leasing out or selling land to companies at concessional rates is universal (it is happening across the country today, with cities vying to woo it and it-enabled services companies).

By the 1980s, most mills were floundering. The owners blame the government's policies and a strident labour movement for their ills; others blame mill owners for not investing in technology; and still others accuse the owners of deliberately allowing their mills go to seed. By then, it was evident to most people that real estate was Mumbai's most profitable industry and land, the city's most fungible currency. Several mills, supporters of the last theory insist, became unprofitable because their owners allowed them to, in the knowledge that they could arm-twist and sweet-talk the government into allowing them to sell the land they were on with part of the money raised being used to compensate workers.

Jupiter Mills On March 24, India Bulls Properties and Farallon Capital paid Rs 277 crore for around 11 acres of Jupiter Mills' land where India Bulls hopes to develop 900,000 sq. ft. of property

The only issue with this was that in most cases, the land didn't belong to them and you can't really sell something that you do not own. The ideal solution would have been for the city of Mumbai to take control of the land, compensate owners for their assets that stood on it (applying a discounting factor; after all, the owners were willing to exit the business altogether), and sell it to the highest bidder or lease it out, at concessional rates to companies operating in an industry that promised to generate employment and invest more in the local economy.

The Maharashtra government decided to take a more pragmatic approach and, in 1991, said the mill owners could sell the land as long as they adhered to a rule, DCR 58. According to this, a third of the land would go to Brihan-Mumbai Municipal Corporation (BMC), another third to the Maharashtra Housing Area Development Authority (MHADA), and the remainder to the mill owner for commercial development.

Mill owners were horrified at the ratio that would have seen them kiss goodbye to two-third of their land and decided not developing the land was a better option. "Just four mills underwent any kind of development in the period between 1991-1996, and that too it was more or less a refurbishing job," says Rajeev Piramal, Director, Morarjee Realties, the real estate business of the Piramal Group. Given this stalemate, in 1996 the Maharashtra government imposed a complete ban on the sale of mill land.

"Morarjee Mills has liabilities of Rs 450 crore. All development (proceeds) are going into clearing financial dues" RAJEEV PIRAMAL Director/ Morarjee Realties

In 2001, in his first stint as Chief Minister of Maharashtra, Vilasrao Deshmukh removed the ban and amended the law to exclude existing built-up area from the calculations; that allowed mill-owners to keep most, and in some cases, almost all the land (See The DCR 58 Imbroglio). "We were caught napping," rues Jamshed Kanga, former Municipal Commissioner of Mumbai and former Managing Director of Tata Housing, who strongly opposes the 2001 modification. "The city gets a fraction of what was promised under the 1991 provision. Also tell me isn't it surprising how approvals for development that normally take up to two years are happening in less than two months right now?"

With a spurt in efforts to develop mill land, and Deshmukh back in power, a group of concerned citizens, under the aegis of the Bombay Environmental Action Group filed a Public Interest Litigation (PIL) in early 2005 contending that the city had got a raw deal, courtesy the amendment to DCR 58. As Business Today goes to press, the court has asked the government for a detailed list of all development permissions that have been granted to mill owners since 1991, and another of the leased and freehold land involved. The lists are to be provided by April 20, 2005, till which time no sale of mill land can happen.

Mumbai's real estate developers are already licking their chops in anticipation of all that mill land becoming available for development, their industry's favourite fantasy in the 1980s, even 1990s. Already, over the three years (since the amendment), some mill land have been developed and 2005 was begining to look like the year when it all comes together (until the bleeding hearts gatecrashed the party).

Bombay Dyeing and Hindoostan Spinning & Weaving have founded real estate divisions in the past three months. The former's stock has risen smartly, by around 80 per cent, over the past month, just around the time it secured the permission to develop 60 acres of mill land.

And global real estate advisory, Knight Frank, is keeping an eye open on rates in the suburbs; the company's head, Pranay Vakil anticipates a15-20 per cent fall in these and says the development of mill land will result in the availability of 5 million sq. ft. of property. That's a conservative estimate. India Bulls hopes to develop 900,000 sq. ft. of property on the 11-acre Jupiter campus. Going by that calculation, the 300 acres of land awaiting development could see the addition of 25 million sq. ft. of property.

This may surprise people who do not live in Mumbai, but this is a city where blood has been spilt over land. In 1994, Sunit Khatau, a mill owner was shot dead as he waited in his Mercedes at a traffic light; it was alleged that he had ended up on the wrong end of a deal to use the city's notorious underworld to get his workers to agree to the sale of the land the mill was located on. Three years later, Vallabhai Thakkar, owner of Raghuvanshi Mills, was shot dead, again in his car.

There haven't been any land-killings circa 2005, but the price of land in Mumbai, in money terms and otherwise, has only escalated since the 1980s. There is little land to develop schools, hospitals, parks, mass transit systems, and low-cost housing that can help the city make the journey from a part-shanty-town-part-first-world present to a model city-of-the-21st-century.

The mill land is especially crucial from the point of view of creating a mass transit network. The area already boasts three intersecting nodes or junctions involving Mumbai's Central and Western suburban rail lines. A road network with dedicated bus routes at these nodes, point out urban planners, could ease commuter agony. Then, there's the thing about the land belonging to the Bombay Port Trust (BPT) that adjoins mill land; the proposed sea-link from Sewree to Nhava Sheva in Navi Mumbai (New Bombay) renders this land even more valuable (see map on Mill Lands). It is likely that such considerations played a role in the drafting of the original DCR 58. In 1996, Charles Correa, a well-known architect and urban designer submitted an integrated plan on the city's development to the government at its request. In it, he speaks of "a grid of horizontal east-west arteries that would for the first time in the history of the city connect the Western edge of the island to the Eastern waterfront." This project, if it ever sees light of day will involve extensive use of mill land.

"How can anybody usurp the land I own? I am not prepared to give up any of it." SUDHIR THACKERSEY Chairman & MD/ Hindoostan Spinning & Weaving

The Maharashtra Government denies that there is anything peculiar about the amendment to DCR 58 with Ramanand Tiwari, the Principal Secretary in the Urban Planning Department insisting that all notifications regarding this were giving on time and according to procedure. And Deshmukh has sought to clear the government's name by setting up a committee, headed by HDFC Chairman, Deepak Parekh, to look into all commercial development on mill land. The government's official position is summed up by Tiwari who says, "People are pushing for the 1991 policy, but that wasn't the best in our opinion since it resulted in haphazard development and no one wanted to sell." He adds that 30 mills have been given permission to sell land under the 2001 policy and is personally not in favour of approaching the courts for a solution. "If I have to be defensive on all my policies it takes away all flexibility," he complains. Tiwari goes on to rubbish the view that the entire chunk of mill land must be developed in an integrated way, calling it "impractical".

The Chief Minister's moves are cutting no ice with the people behind the PIL and workers; the choice of Parekh, say reports in the media, is being questioned by Deshmukh's critics who allege that HDFC has loaned money to builders and developers involved in the affair.

Meanwhile, the PIL has attracted some of the best legal brains in the country with former Union Law Minister Arun Jaitley and former Attorney General Soli Sorabjee representing Bombay Dyeing and Morarjee Mills respectively and Iqbal Chagla, the Bombay Environmental Action Group.

The mill owners are convinced that they are in the right. "How can anybody usurp the land I own?" thunders Sudhir Thackersey, Chairman and Managing Director, Hindoostan Spinning & Weaving, who recently signed a deal with real estate developer K. Raheja Corp. for the development of 110,000 sq. mts. of property (on mill land). "I am not prepared to give up any of it."

Deshmukh is under fire for his original amendment that favoured the mills

Thackersey believes the textile industry is getting an unfair deal (the original DCR 58 was meant only for the textile industry; other industries do not have to follow the one-third-one-third-one-third formula) but architect Arvind Adarkar (he doubles up as an activist and has studied the mill land issue closely) points out that the industry had been allowed the privilege of continuing to occupy landin central Mumbai even when all other industries moved to the suburbs in keeping with the Industries Dispersal Policy of the 1970s."They were happy then," he says. "Why are they questioning the exception now?"

The mill owners paint a picture of penury-"We have total commitments of Rs 900 crore towards the textile business and every bit of this has to be met from the sale of land," says one-and insist that they will be unable to pay what they owe workers if they are not allowed to go ahead with their plans. "Please tell the people behind the PIL that the more they delay the process, (the more the delay) in workers getting paid," says Thackersey, adding that his total liabilities are to the tune of Rs 440 crore. Piramal adds that the company will, if it manages to sell the land, end up with a small margin with everything else going into wiping off its liabilities.

Talk like this amuses Datta Iswalkar, Secretary of the Girni Kamgar Sangharsh Samiti, a worker's union opposed to the sale of land under the amended DCR 58. His calculation is that a mere 14 per cent of the proceeds from the sale of mill land will be adequate to pay worker-dues. "Let them not cite this (worker dues) to take over the land," he says. Then, with put-on incredulousness, "Do they actually expect people to believe they are earning no margin whatsoever on these deals?" Do they, indeed?