Himachal

Fertilizer
Corporation: An
Ethical Conundrum
A CASE ANALYSIS

Presented to
Mrs. Rose Mae S. Langot-Mapeso, CPA, MSA
College of Business and Management
Central Mindanao University
Background of the Case
This case series provides a forum for discussing a wide
range of interconnected topics relating to corporate
governance, ethical reasoning, and giving values a
voice in real-world decisionmaking.

It demonstrates the ethical concerns that individuals

encounter and presents difficulty in navigating a maze
of issues without jeopardizing personal values while
safeguarding the organization's objectives.

Himachal Fertilizer Corporation was a big publicly traded Indian

company that produced and sold urea. Urea is a chemical molecule
Background of the Case
that is most widely employed in the agricultural and polymer
industries as a nitrogen fertilizer. It is the cheapest form of
fertilizer to transport and the least likely to “cake,” as it comes as
free-flowing prills (granules).

Given this sizeable naphtha to be handled, the corporation had

invited bids in March 2012 for its upcoming plant requiring
significant additional investments expected to be US$ 120 million,
including facilities and equipment to store and transport this
flammable liquid, naphtha.
Background of the Case
Neil raises concerns about HFC's process without revealing that he
had met with a general manager from IPL to discuss the change.
The situation is corrected as a result of Neil's interrogation. IPL
not only participates in the bidding process but also wins the HFC
contract.

However, Neil's delight in putting things right is fleeting, yet, he

had decided to let the matter rest since no harm had been done to
HFC's interest in spite of all his considerations of unethical
behavior violating his role as the chair of the ethics committee.
Background of the Case
Months had passed, Neil got a call from Mr. Paul asking for a brief
meeting. It was to offer the request from Mr. Advani, the promoter
of the IPL, to provide the certificate for 5000 shares, and a transfer
deed to Neil as a token of appreciation.

After some hesitation, Neil agreed to keep the documents and will
take time to look for them and get back to Mr. Paul. At the time,
he was becoming anxious to reach home as he thought this would
be unfair vis-à-vis, other investors.
 Statement of the Problem
The case focuses on the independent director Mr. Neil Shah, who is
also one of the board of directors of Himachal Fertilizer Corporation.
There are several ethical issues has arisen in this case. Which leads
this study’s aim to determine and assesses the associated problems as
follows in
that regard;
01 02
Compromised Questionable
Decision- Response
.
making to the
Ethical
Dilemma
 Analysis
Noting that the prior breach had already been committed, what is left to
evaluate are the following alternatives as basis for his subsequent
decision regarding the shares offered to him;

Yes, Neil Shah should accept the shares.

01
Yes, Neil Shah should accept the shares
by paying INR 100,000.
02
No, Neil should decline the offered
shares.
03
In the courses of the strategy presented in our analysis, providing the
alternatives as to the basis for Niel's subsequent decision-making regardless of
the shares offered to him. On behalf of the decision-making, Niel already
ruptures to comply with the code of ethics of the company, and the questionable
response to the unethical situations.

As observed, he already involved his self in an unethical scene when he agreed to

meet Paul. Providing this dilemma, Niel’s option stood, to decline the offer. It
might look like a bribe considering the scenario, even though Paul says that it
was a token of gratitude from Mr. Advani.

CONCLUSION
 To solve the
problem, Neil
should not accept
the offer to avoid
any more conflicts
that may possibly
arise in the future
and that Neil should
cut all his ties with
Paul or much better
to avoid Paul or
future negotiations
with him that might
affect his
relationship and
work in the
company because
for as long as he still
has connections
with Paul especially regarding the bid, he will always put his
 professionalism
at stake for still
failing to comply
with the entity’s
code of conduct.

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