According to sources in the Gujarat government, the Directorate of Sugar had invited tenders for setting up the Daman sugar project in the cooperative sugar sector in the state with a capacity of 2,500 TCD in November 1998. Following which, the state government received bids from seven approved and qualified suppliers for the tender. These included Dhruv Sawhney-owned Triveni Engineering, possibly the biggest private sector player in the arena, Ghaziabad-based Uttam Industries, three Pune-based companies namely WalchandnagarIndustries, NHEC and Krupp, Delhi-based Indian Sugar & General Engineering Corporation and FCB KCP. The Chennai-based company--FCB KCP-- was the highest bidder of the tender.

Thereafter, the suppliers were called for post-tender negotiations in June this year which were conducted by the state-level purchase committee. Following this, the suppliers were once again called for a second round of negotiations later in the month where some terms of reference of the tender were changed in flagrant violation of established norms. It is being alleged that the negotiations were a "mere eyewash" as the purchase committee, under political pressure exerted by a powerful minister of the Keshubhai Patel government, decided to award the project to the highest bidder. A formal letter awarding the contract is likely to be issued shortly, sources said.What raises eye-brows is that even though FCB KCP was the highest bidder, quoting more than Rs 1-2 crore more than the lowest, it has no presence in the state. Where as, allother parties who had bid for the contract have established plants in the Gujarat cooperative sector. It may be mentioned that most of the sugar plants in Gujarat are under the cooperative sector and there are hardly any private sector plants in the state.

While none of the parties who had participated in the bidding was willing to speak for fear of "incurring the wrath of the state government due to projects worth crores of rupees in the pipeline," the deal has shaken private sector players considerably.

An executive of one of the concerned companies who spoke on condition of anonymity said, "earlier we were bullish on states like Maharashtra and Gujarat where business is conducted in a fair and transparent manner"."We kept our hands off major sugar producing states like Uttar Pradesh and Bihar where, even though there are business opportunities, there is rampant corruption as well," the source further added.

He went on to add that this incident "has shaken our faith in the powers-that-be in Gujarat aswell." However, everyone involved in the deal is maintaining a silence since the "stakes involved are very high". Attempts to contact the sugar department too proved futile.