CASE ANALYSIS

HIMACHAL FERTILIZER CORPORATION

(A) : AN ETHICAL CONUNDRUM

Group Name : Q1_Sec 3

•Rohit Paravada - 18F347

•Rajib Upadhyay - 18F345
•Shubham Kabre - 18F351
•Shivram S - 18F349
•Jasmine Kaur - 18F329
Problem I
• Should Neil have agreed to meet Paul Joseph, IPL’s
representative? What are the implications of Neil’s
decision?
Solution I
• No, Mr. Neil Shah should not have agreed to meet Paul
Joseph. As soon as the words “irregularity in the
tender process” raised his antenna, he should have
thanked Paul for the information and replied that HFC
would look into the matter.
• Having met Paul, he has violated The Code of Conduct
of HFC which is in compliance with the Corporate
Governance Clause 49 sections (b) and (c).
• The high stakes involved also creates significant
incentive for unethical behavior.
Problem II
• What would you recommend Neil to do regarding
the information obtained from his meeting with
Paul? What are the implications of your
recommendation?
Solution II
• We recommend that Mr. Neil Shah immediately calls for
a board meeting, disclose to the board members his
actions and the information that he has obtained from
Paul.
• He should also recommend the board members to set
up an independent team to investigate the irregularities
in the bidding process.
• The above recommendations would result in the board
members deciding to remove him from his incumbent
position in HFC until the investigation gets over.
Himachal Fertilizer Corporation
• Publicly listed corporation

• Production and Marketing of urea

• Revenue > US$ 9 billion

• Net income > US$ 500 million

Contract Process Summary
East Asia Storage
Large tankers SBM Pipeline
(raw tanks (on
(Offshore)
materials) shore)

Bidder’s responsibility

Pipeline

HFC Plant
 Timeline
5:30 PM April 14,
2012 Submission April 20, Mr. George
Deadline Mathew gives presentation
to Investment committee

April 15 , Issue
March 2012 happens
Tender floated
Characters / Positions
• Mr. George Mathew
1. Technically Competent
2. Strict and tough
3. Self –Assertive

• Mr. Anil Nair

1. Chairs Investment Committee
2. Non-Executive
3. Board Member for 6 Years
Characters / Positions
• Mr. Neil Shah(Protagonist)
1. Non- executive independent director(Finance)
2. On HFC board for 6 years
3. Chartered Accountant
4. 20 years of Corporate Board experience
5. Righteous
6. Company Loyalist
Characters / Positions
• Mr. Paul Joseph
1. Identifies as General Manager of IPL
2. Effective Manager
3. Unfounded claims
4. Desperate

• Mr. Surendra Rawat

1. Director (Finance) of HFC
Summary
The importance of business ethics reaches far beyond
employee loyalty and morale or the strength of a
management team bond. As with the all business
initiatives, the ethical operation of a company is
directly related to profitability both in short and long
term.
Thank You