Force Automotive – breach of code of

conduct
Tanushree Sharma

Tanushree Sharma is an 3 February 2012. Another long day at office had drawn to a close. Varun Vihan, VP-HR,
Assistant Professor, Force Automotive Pvt. Ltd (FAPL), could feel his head spinning and splitting when he
Human Resource looked at his watch at around 9:30 in the evening.
Management &
Organizational Behavior, As he stepped out of the auto conglomerate FAPL’s headquarters in Noida, the dramatic
College of Management proceedings of the entire day re-ran in his mind.
& Economics Studies,
He had no difficulty whatsoever in recalling what the Chairman of FAPL, Sankalp
University of Petroleum &
Deshmukh, had told him in no uncertain terms:
Energy Studies,
Dehradun, India. Come what may, the commissioning of the new Design Centre must happen by the end of April
2012. Then, whether you fire Amitabh or let the incident pass will be solely your judgment. But,
let me make it VERY CLEAR, this R&D project is very critical for FAPL. I’ll not tolerate any harm
coming to it.

Varun played an instrumental role in bringing Amitabh Ravinderan onboard as VP-R&D.

Amitabh was added primarily to spearhead the commissioning of the much-needed Rs
280-crore Design Centre at Nashik. Little did he know then that in a short span of seven
months, he would have to consider sacking him for a gross violation of the company’s code
of conduct for employees.

Industry background
The Indian automotive industry, one of the key drivers of India’s economy, accounted for
around 4 per cent of India’s GDP and ⬎ 200,000 jobs in 2010 (KPMG, 2010).
The Indian auto component industry is one of the few sectors in the economy that has a distinct
global competitive advantage in terms of cost and quality. It is also one of the fastest growing
industries in India. The Indian auto component industry grew remarkably at 18.7 per cent
Compound Annual Growth Rate (CAGR) during FY09-FY12 and reached Rs. 2,109.75 bn in
FY12. This remarkable growth could be attributed to strong domestic demand, Government
initiatives, additional subsidies, formation of various clusters, providing incentives, increase in
the per capita income, as well as disposable income www.dnb.co.in/BusinessGaurav
SMEAwards2012/PDF/Auto_Component.pdf

As far as the global market for two-wheelers and commercial vehicles goes, India ranks the
Disclaimer. This case is written second and fourth largest, respectively. India is now very close to being ranked among the
solely for educational top three global automotive markets for all vehicle segments, and that ranking is expected
purposes and is not intended
to represent successful or to pertain to passenger cars by 2020 (ATKearney, 2012).
unsuccessful managerial
decision making. The author/s [The] Indian auto component Industry covers a wide spectrum of industries, that is, rubber, iron
may have disguised names; and alloy steel, plastic, oils and grease, fabrication tools, safety gadgets, air conditioning,
financial and other
recognizable information to
radiators, mould making, battery industry, electrical fittings, interior furnishings, music system,
protect confidentiality. sheet metal fabrication, lamps and bulbs, spring manufacturers (Bhasker, 2013 and Exhibit 1).

DOI 10.1108/EEMCS-08-2013-0165 VOL. 4 NO. 2 2014, pp. 1-19, © Emerald Group Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
 The industry has developed the capability to manufacture the entire range of auto parts. 31 per
cent of the auto component industry is dominated by engine parts, 19 per cent by drive
transmission and steering parts and 12 per cent each by suspension and braking parts and
body and chassis, while equipments and electrical parts capture 10 per cent and 9 per cent
respectively (ASA and Associates, 2013; Exhibit 2).

The Indian auto component industry has also gradually transformed from being a domestic
market supplier to becoming one of the essential auto parts suppliers in the world, with the
components being widely demanded by major global automobile companies. Exports of auto
components from India grew at 20.4 per cent CAGR from Rs. 159.6 bn in FY08 to Rs. 334.9 bn
in FY12. Exports constitute about 15.9 per cent of the Indian auto components industry’s total
turnover [www.dnb.co.in/BusinessGauravSMEAwards2012/PDF/Auto_Component.pdf].

It is felt that today Indian auto component suppliers that pace up their product development
capabilities will have improved chances of seizing this growth opportunity. As per the study
conducted by ATKearney, while ⬎ 90 per cent of Indian suppliers keep a budget of about
1 per cent for R&D activities, international manufacturers budget 3-10 per cent for R&D. The
study further mentions two reasons for Indian auto component suppliers to branch out into
new products, namely, India is awash with capacity constraints and the auto component
market needs newer technologies such as tailor-welded blanks and hot forming. Also, it is
expected that the supply landscape will evolve rapidly over the next few years. A host of
international tier-1 component manufacturers already have footprints in India, and a many
more have plans to enter India soon (ATKearney, 2012).
To overcome the weaknesses and threats, Indian auto component suppliers need to be
innovative, and keep appropriate R&D budget. The product specialization and their ability to
integrate operations across several related areas of specialization could be the eventual key of
progress (Borgave and Chaudhari, 2010; Exhibit 3).

It is a known fact that India has emerged as a key hub for the off-shoring of engineering
services by automotive clients globally. The global clients seek faster product development
cycles and engineering capabilities at lower cost (KPMG, 2012) – India helps them meet
both these conditions.
This is due to the fact that India possesses of a relatively large base of well-educated engineers,
a comparably low language barrier and the country’s positioning as the leading business
process outsourcing location (Bernhart et al., 2010).

While the world market for engineering services is expected to grow at a rate of 25 per cent,
India is expected to increase its share of the global pie at a higher pace of 35 per cent over
the next three years.
TechNavio’s analyst forecast the automotive engineering service market in India to grow at a
CAGR of 18.22 per cent to 2016. One of the key factors contributing to this market growth is the
cost effectiveness of the Indian Automotive Engineering Service industry (TechNavio, 2013).

However, over the next few years, established European Engineering Service Outsourcing
(ESO) providers are likely to become more cost competitive and will probably continue to build
up capacities in low-cost countries. Once they complete this task, Indian companies will find it
more difficult to compete as their cost advantage deteriorates. If Indian companies are not able
to expand their domain expertise fast enough, there will be little reason for original equipment
manufacturers (OEMs) and suppliers to cooperate with them instead of European companies
who would then be technologically more advanced at a similar cost level (Bernhart et al., 2010).

The competition from other upcoming outsourcing destinations too could pose a challenge to
the growth of this market (TechNavio, 2013). India is facing competition from other locations
including places such as Mexico, Eastern Europe and China (KPMG, 2012).

Indian Government is aware of the fact and to promote technology innovation in this sector, in
the Union Budget for the Financial Year 2012-13 an increase in the weighted tax deduction is

PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 2 2014

 extended with respect to in-house R&D expenses from 150 per cent to 200 per cent in the five
year period till 2017 (Bhasker, 2013).

Business ethics in India

There is a growing realization among Indian companies that business ethics and
compliance form the next frontier for them as they become increasingly involved and
connected with global markets. In such a global business environment, Indian companies
need to have sound ethics and governance policies. Global business partners, whether
customers or suppliers, are increasingly demanding concrete evidence that such ethics
and governance policies do exist in the companies they associate with in any manner. Yet,
the awareness of the magnitude of this issue is still at a very nascent stage. Indian
companies have a tendency to look at ethics initiatives in a vague manner, often thinking
that things will fall into place on their own, and that they will somehow magically escape any
negative implications of vagueness on the ethics front. (Seshadri et al., 2007).
Companies in India are often challenged to develop ethical standards because the culture
makes it difficult for employees to discuss sensitive matters with their management (KPMG,
2010; LeFebvre, 2011). When it comes to ethical behaviour in business, Indians tend to rely
on relationships and are generally less explicit (Jakubowski et al., 2002). Indian business
managers take a more intuitive approach to ethical decision-making relying on the context
of situations to guide behaviour, which often creates a conflict between their personal and
professional lives that is not easily resolved (Christie et al., 2003).
The fact that no industry in India, regardless of its size or whether it is regulated or
unregulated, is immune to fraud (PwC, 2005) highlights the need to take an analytical and
serious view of ethics policies.
Lax ethical standards have hurt India in many ways. The Corruption Perceptions Index and
the World Bank has ranked India at 134 out of 183 countries for “ease of doing business”.
It is widely believed that these factors have contributed to shaky investor confidence in
India, as foreign direct investment fell 31 per cent in 2010 (Knowledge@Wharton, 2012).
As per the annual global fraud survey, the number of frauds perpetrated was on the rise in
India. The number of companies with growing exposure to fraud (85 per cent) was the
highest for any country or region. The average percentage of revenue lost to fraud in India
was 2.2 per cent (Kroll, 2011). India had a higher prevalence than the overall average for
eight of the types of frauds covered by the survey. In particular, India had one of the highest
rates of management conflict of interest (19 per cent). The survey also highlighted that
management conflict of interest, in particular, was one of India’s growing forms of fraud
(Kroll, 2011).
In the words of Dennis Thompson:
A conflict of interest in a corporate setting can be understood as a set of circumstances that are
reasonably believed to create a substantial risk that an executive’s Judgment of a primary
interest (say, the long-term profitability of the corporation) will be unduly influenced by
secondary interests (say, personal compensation, personal ambition, short termism) (Salter,
2010).

Code of conduct in Indian business organizations

If the instances of conflict of interest have grown, so have the measures introduced to
check them. Most of the Indian companies design codes of conduct to anticipate and
prevent conflicts of interest and other similar types of behaviour, e.g. self-dealing, bribery,
inappropriate action, etc. The code of conduct is “a set of conventional principles and
expectations that are considered binding on any person who is a member of a particular
group” [http://wordnetweb.princeton.edu/perl/webwn?s⫽code%20of%20conduct].

VOL. 4 NO. 2 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3

 Clause 49 of the listing agreement for stock exchanges in India requires the board to
develop a code of conduct for all members and senior management of the company and
that this code of conduct is posted on the website of the company. It also requires that all
board members and senior management personnel affirm compliance with the code on an
annual basis [www.corpgov.deloitte.com/site/in/board-of-directors/ethics-compliance/].
In one of the surveys conducted in 2010, the codes of conduct of all 50 surveyed Indian
companies were found to cover conflicts of interest. The survey also highlighted the fact
that, in India, companies did not often provide mechanisms for anonymous reporting of
violations of codes of conduct (LeFebvre, 2011). Another survey suggested that companies
in India were not investing in correct anti-fraud measures. The results indicated that ⬍ 50
per cent of respondents invested in employee background screening and partner or
third-party due diligence (Kroll, 2011).
In India, the violation or breach of a code of conduct is dealt with differently by different
companies; the intensity of the disciplinary action varies from minor punishment to
dismissal. In Tata Steels, any proven violation of the code is taken seriously. In fact, one of
the employees was dismissed from the company for violation of its code of conduct
(Maheshwari and Ganesh, 2006).
The main problem lies with the small- and medium-sized enterprises in India; these are
often family-owned enterprises managed by family members, which creates challenges for
reporting unethical conduct and managing conflicts of interest (Lather, 2009).
Nonetheless, the Indian market scams, the recent global financial meltdown and the
relatively recently discovered corporate fraud at Satyam have made people think about
governance practices in India. As a result, both regulators and corporations have paid
increasing attention to corporate governance structures and mechanisms (Srinivasan and
Srinivasan, 2011).
Furthermore, companies are focusing on their human resources (HR) systems and
practices, such as training, to institutionalize organizational values and beliefs. More
careful selection and employee background screening ensure value congruence between
employees and their companies. The companies are increasingly testing honesty and other
values in employee selection (Maheshwari and Ganesh, 2006). When adopting suitable
selection processes, an enhanced understanding of personality and other causal factors
that affect ethics adversely is gaining ground too.

Company background
FAPL is a Noida-headquartered diversified conglomerate with a presence in automotive
and engineering services. It came into being as a joint venture with one of the automobile
OEMs, primarily for manufacturing sheet metal components and subassemblies. The group
pioneered and revolutionized the industry with state-of-the-art technology in the field
of automotive engineering and design. It has 35 plants across four locations pan India
(Exhibit 4). With an annual turnover of USD1.25 billion (FY 2010-2011), FAPL group is
known for its quality-focused leadership, fast development processes and flexible
manufacturing systems. The group has created new benchmarks in the manufacturing of
variety of auto components.
To be always consistent with technological enhancements and to keep pace with the
fast-changing world of technology, FAPL had taken up initiatives to continuously upgrade
processes, update existing engineering skills and adopt emerging technologies.
One such technology was the advanced forming technology which was said to replace the
sheet metal used in the body of a car with plastic (Exhibit 5). The competitors of FAPL had
pretty much all begun working in that area. To ensure its continuance as a pioneer of
advanced forming technology and to secure its business prospects, FAPL decided to
commission a new Design Centre at Nashik.

PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 2 2014

FAPL values high touch as much as high-tech, if not more. It’s reflected in one of its value
statements, “Relationships of trust amongst people through well defined responsibility and
authority”.
It believes that an organization is only as strong as its human resources and having the
right people determines the difference in how the organization progresses. FAPL not
only emphasizes getting the right people, it also encourages them to demonstrate
correct conduct. Hence, following FAPL’s code of conduct is mandatory for its
employees (Exhibit 6).

Amitabh Ravinderan and FAPL’s new design centre

Amitabh Ravinderan was primarily brought on-board to add impetus to FAPL’s
much-needed R&D initiatives and to set-up its ambitious Design Centre at Nashik. An
alumnus of India’s premier management and engineering institutes, he was one of the
world’s renowned heat-process treatment experts. He had ⬎ 35 years of rich work
experience to his credit. His knowledge and prowess was unmatched in the industry.
Given his credentials, Amitabh was bestowed with the overall responsibility for the Centre
and was given a free hand in recruiting the entire team for the Centre by his immediate
supervisor, the Chairman of FAPL. After having planned the Centre’s organizational
structure, his next major task was to fill the senior positions. He began with recruitment for
the senior positions like Head of the Design Centre, Function Heads for Design,
Homologation, Validation, Testing, etc.
Varun remembered having been approached by Amitabh on 22 February 2012, by which
time he had finalized the candidates for the Centre’s Head and other Function Head
positions.
February 22, 2012
Amitabh: Hey, Varun! I am done with the task you gave me. Here is the list of selected
persons for the senior positions at the Design Centre. Would you like to meet them?”
Varun: Come on, Amitabh, I trust your judgment. We will go by your decision but there is a
procedure we need to follow. We would have to carry out the antecedent verification before
we release any Letter of Intent (LOI).
Amitabh: Don’t you think it is a complete waste of time! The deadline is approaching fast;
you can complete these formalities later.
Varun: You know how critical this Centre is to us. Any wrong hiring decision has the
potential to thwart the entire endeavour. My conscience doesn’t allow me to disregard the
process, which we all know is important.
Amitabh (in raised voice): That’s the problem with HR, your processes are more important
to you than the business urgency. I own this project; any failure will impact me the most.
Then, when I have no problem in recruiting them, why should you be bothered. Since, I
have been given the full authority of selecting my own team, I insist LOIs be released
without any delay.
Because Varun had to attend another important meeting with the Chairman; he had to leave
the conversation unconcluded. But, the conversation left a sneaking suspicion in his mind
that Amitabh was trying to conceal something.
The meeting with the Chairman ran late into the evening, so Varun left the office to revisit
the issue in detail the next day.
On the next day, February 23, 2012
10:00 A.M.: Meeting with HR colleagues

VOL. 4 NO. 2 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5

 Varun called for a confidential meeting with two of his immediate subordinates Swati and
Lily. He closed the doors and advised the attendant to ensure that they were not disturbed
at all. He briefed them of his conversation with Amitabh and expressed his apprehension
about a possible deceit. He advised them to carry out an informal and a highly secret
investigation of the matter. He closed the meeting with the instruction to meet again after a
couple of hours.
12:00 A.M.: Second meeting with HR colleagues
Varun, Swati and Lily assembled again to share their respective findings. Varun had been
silently praying for his apprehension to be unfounded, but something totally unimaginable
was about to unfold. He asked Swati to apprise the group of her findings.
Swati: Sir, it seems your apprehension about Amitabh Sir’s intention was right. As advised
by you, I studied his personal files meticulously and observed a strange coincidence.
Amitabh Sir’s wife and the recommended person for the position of Head of the Design
Centre share a common first name. Both are Bharti. Maybe, I am reading a little too much
into that, but that’s how it stands. And in Form 2-R of Provident Fund (PF Nomination and
Declaration Form), Amitabh had written Bharti Amitabh as the full name of his wife.
Lily: Great! The CV submitted for the position of Head of the Design Centre carries Bharti
A. as the full name of the applicant. Well, that’s not all; the contact number provided in her
CV is also Amitabh Sir’s.
Varun: GOOD LORD! Amitabh has recommended HIS WIFE for the position of Design
Centre Head. She doesn’t even come close to the competencies needed for the position.
Lily: That’s not all! While investigating I found that Amitabh Sir had recommended his
maternal and paternal cousins for the positions of Function Heads. Seems, Amitabh Sir
wants to bring his entire clan here.
Varun: No wonder Amitabh got infuriated when I mentioned the need to carry out
antecedent verification prior to offering LOIs. Never in my dreams did I ever imagine a
person of Amitabh’s stature doing this. Thanks, guys! Keep looking for more information
and do ensure things remain totally confidential. I’ll call for a meeting again when
appropriate.
1:45 P.M.: Talking to people over phone
Varun used all possible channels to collect as much information as possible about the
people selected by Amitabh. To his surprise, he found out that Bharti had worked as an
independent freelancer only. The other recommended relatives too fell far short of the
requisite qualifications and experience. In the process of talking to people, Varun came
across enough clues pointing towards a deliberate attempt by Amitabh to conceal critical
information that should have been disclosed in the normal course of recruitment.
Withholding substantial information was not only morally wrong and against the values held
dear by FAPL but it also amounted to the gross violation of the code of conduct for
employees. The enormity of the violation necessitated firm appropriate action should be
taken against Amitabh. Strict action against him was also warranted to ensure that the code
of conduct was taken seriously by all employees in future. Recognizing the sensitivity and
urgency of the situation, Varun sought an immediate appointment with Sankalp Deshmukh,
the Chairman of FAPL.
3:00 P.M.: First meeting with the Chairman
Varun apprised Sankalp Deshmukh of the developments which had been bothering him so
deeply. He further explained and emphasized the need for immediate strong action.
Sankalp: Do you have any idea of what you are saying? Do you know how critical Amitabh
is to us? He is one of the few experts on the heat process treatment not only in India but
globally. Do you know replacing him is not only difficult but almost impossible? The

PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 2 2014

 deadline for the Centre is staring us in our faces. Our entire project will come crumbling
down. You must be kidding me.
Varun: Sooner or later our employees will come to know about this incident, they will lose
trust in the values of the Company, its code of conduct, and in us.
Sankalp: Amitabh has been meeting clients all over the country and beyond, delivering
presentations, engaging with them on different platforms. He was the one who represented
us in the international Auto Expo in Jan 2012 (Exhibit 7). He has been leading it all
single-handedly. Varun, Amitabh is our face to all our customers the world over. They know
us through him. Try and understand. You need to explore more, I am sure there must be
some other way available to deal with this.
Varun: Are you suggesting we should turn a blind eye to this incident? Given the fact that
he is holding a leadership position; it becomes all the more important for us to deal with it
firmly. Otherwise, we would be telling our employees that they can get away with anything
and everything. I am afraid; we would be setting a very bad precedent, which we might
come to regret later.
Sankalp: Well, I said explore the other possibilities, See if we can rope him in as an external
consultant. Varun, this project is very crucial. Our prestige is at stake [. . .]
Varun: Sir, what I am saying is [. . .].
Sankalp: What do you want from me? This migraine is taking the life out of me [. . .] Varun,
do whatever you feel is in the best interest of the company. But, I will not tolerate any
deviation in the commissioning of the Centre because of your decision.
4:00-6:00 P.M.: One-on-one meeting with the vertical heads of FAPL
Without revealing the person involved, Varun described the situation and sought
feedback from all the heads. Everybody supported taking a firm decision against the
errant person.
6:15 P.M.: Second meeting with the Chairman
Varun met Sankalp again with the inputs from all the heads. Instead of taking any call,
Sankalp expressed his keenness to meet all the heads together straightaway.
6:40 P.M.: A joint meeting with all the heads
Despite the short notice, Varun was able to bring all the heads except one to the meeting
table. Sankalp asked Varun to share with the heads the details of the entire incident the way
it unfolded and the persons involved. Sankalp then asked the heads to present their
opinions about the way to deal with Amitabh.
The meeting became a fiery brainstorming session. To the surprise of Varun, the heads
appeared not only divided in their opinions but also non-committal. At the end of the
hour-long meeting, Sankalp reiterated the importance of the Design Centre to FAPL and
dropped the ball in Varun’s court.

Varun’s next move

Varun returned to his cabin to be greeted by the lifeless objects only. If only those objects
Keywords: could understand how difficult making a choice between a deep sea and a devil was. Varun
Organizational behaviour, started to contemplate all possible alternatives, to ask Amitabh to put in his papers, to rope
Employee code of conduct,
him in as an external consultant or to letting the incident go unnoticed.
Ethical dilemma,
Institutionalization of shared He knew that sooner or later the news would spread in the company and he didn’t have
values, much time to react. What was beating him hollow was whether to take the action and, if so,
Shared organizational values how.

VOL. 4 NO. 2 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7

 References
ASA and Associates (2013), “Auto and Auto Ancilaries in India”, available at: www.asa.in/pdfs/surveys-
reports/Auto-and-Auto-Ancillaries-Sector-in-India.pdf (accessed May 2013).

ATKearney (2012), “India’s auto component suppliers: new frontiers in growth”, available at: www.atkearney.
com/paper/-/asset_publisher/dVxv4Hz2h8bS/content/india-s-auto-component-suppliers-new-frontiers-in-
growth/10192 (accessed December 2012).
Bernhart, W., Dressler, N. and Tóth, A. (2010), “Mastering engineering service outsourcing. germany:
roland berger strategy consultants”, available at: www.rolandberger.com/media/pdf/Roland_Berger_
Mastering_Engineering_Service_Outsourcing_20110215.pdf (accessed April 2012).

Bhasker, V.V. (2013), “Indian auto component industry: a decade of growth and way forward”,
Research Journal of Management Sciences, Vol. 2 No. 3, pp. 19-27.

Borgave, S. and Chaudhari, J. (2010), “Indian auto component industry: challenges ahead”,
International Journal of Economics and Business Modeling, Vol. 1 No. 2, pp. 1-11.

Christie, P.M.J., Kwon, I.W.G., Stoeberl, P.A. and Baumhart, R. (2003), “A cross-cultural comparison of
ethical attitudes of business managers: India Korea and the United States”, Journal of Business Ethics,
Vol. 46 No. 3, pp. 263-287.

Dinodia Capital Advisors (2013), “Indian auto industry: minor speed bump, but smooth ride ahead”,
available at: www.dinodiacapital.com/pdfs/Indian%20Auto%20Industry_Minor%20speed%20bump_but%
20smooth%20ride%20ahead_December_2012.pdf (accessed March 2013).

Jakubowski, S.T., Chao, P., Huh, S.K. and Maheshwari, S. (2002), “A cross-country comparison of the codes of
professional conduct of certified/chartered accountants”, Journal of Business Ethics, Vol. 35 No. 2, pp. 111-129.

Knowledge@Wharton (2012), Business vs. Ethics: The India Tradeoff?, available at: http://
knowledge.wharton.upenn.edu/article.cfm?articleid⫽2897 (accessed 15 September 2013).
KPMG (2010), “The Indian Automotive Industry-Evolving Dynamics”, available at: www.kpmg.de/docs/
Auto_survey.pdf (accessed June 2010).

KPMG (2012), “Auto industry: India in the changing world order”, available at: www.kpmg.com/IN/en/
IssuesAndInsights/ThoughtLeadership/Auto_2012.pdf (accessed November 2012).

Kroll (2011), Global Fraud Report, Kroll.

Lather, A.S. (2009), “Measuring the ethical quotient of corporations: the case of small and medium
enterprises in India”, available at: http://forumonpublicpolicy.com/spring09papers/archivespr09/
lather.pdf (accessed 15 September 2013).

LeFebvre, R. (2011), “Cross-cultural comparison of business ethics in the U.S. and India: a study of business
codes of conducts”, Journal of Emerging Knowledge on Emerging Markets, Vol. 3, pp. 390-409.

Maheshwari, S.K. and Ganesh, M.P. (2006), “Ethics in organizations: the case of tata steel”, VIKALPA,
Vol. 31 No. 2, pp. 75-87.

PwC (2005), Economic Crime Survey.

Salter, M. (2010), Lawful but corrupt: gaming and the problem of institutional corruption in the private
sector, Harvard Business School, Boston.

Seshadri, D.V.R., Raghavan, A. and Hegde, S. (2007), “Business ethics: the next frontier for globalizing
Indian companies”, VIKALPA, Vol. 32 No. 3, pp. 61-79.

Srinivasan, P. and Srinivasan, V. (2011), “Status of corporate governance research on India: an

exploratory study”, Working Paper No. 334.

TechNavio (2013), “Automotive engineering services market in India”, available at: www.technavio.
com/report/automotive-engineering-services-market-india-2012-2016 (accessed March 2013).

Further reading
Ardichvili, A., Jondle, D., Kowske, B., Cornachione, E., Li, J. and Thakadipuram, T. (2010), Ethical
business practices in BRICs: comparing perceptions of managers and employees in Brazil, Russia,
India and China, and G7 Nations, Centre for Ethical Business Cultures.

TATA Strategic Management Group (2008), “Overview of Indian auto industry”, available at: www.tsmg.com/
download/article/Overview%20of%20the%20Indian%20Auto%20Component%20industry.pdf (accessed
June 2012).

PAGE 8 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 2 2014

Exhibit 1

Figure E1 Structure of the Indian auto-component industry

Exhibit 2
Figure E2 Indian automotive industry – product breakdown

VOL. 4 NO. 2 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 9

 Exhibit 3

Table EI SWOT of Indian auto component industry

Opportunity Threat
1. Cost-competitiveness in terms of labour and raw materials 1. Low investment in research and development
2. Established manufacturing base 2. Limited knowledge of product liability and offshore
3. Qualified and skilled manpower warranty handling
4. Growing domestic automotive industry 3. Limited domestic market for various components
5. Manufacturing capabilities with international quality standards inhibiting capacity creations
6. High-operational efficiency 4. Comparatively poor infrastructure for supply chain
and exports
5. Lack of experience in system integration
Opportunity Threat
1. The growing need to outsource 1. Competition from other low-cost countries like
2. Continuous pressure on global OEMs and Tier-1s to reduce China, Taiwan, Thailand etc.
cost and source from low-cost countries 2. Free trade agreements/preferential trade agreements
3. Higher frequency of introducing of newer models by 3. Expansion of the European Union–inclusion of
auto-makers Hungary, Czech Republic Poland, etc. which are
4. Global market opportunity itself is the ultimate opportunity major exporting countries to Western Europe
provided by auto industry 4. Appreciation of Rupee
5. Leverage on product engineering expertise to improve the 5. Developments of new technologies like fuel cell
worthiness and exports of auto component and hydrogen-powered vehicles, which may affect
6. Acquisition in foreign markets the auto-component industry
6. Large number of OEMs entering in Indian market
may result in migration of talents from supplier to
OEMs
Source: Borgave & Chaudhari, 2010

Exhibit 4
Figure E3 Organogram of FAPL

PAGE 10 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 2 2014

Exhibit 5: Growing usage of plastic in Indian automobile sector
Indian OEMs currently use about 155 pounds of plastic per car, and that amount is
expected to climb significantly, and possibly double, by 2016.
With the rising raw material cost and increasing pressure on OEMs to keep the car prices in
check to remain competitive, the carmakers will use more plastic components in the years to
come, said Jayesh Rambhia, President of the All India Plastics Manufacturers’ Association,
during Automotive Plastics India 2011, held November 24, 2013, in Mumbai.

According to Rambhia, plastic content will rise from current levels to 240-300 pounds in the next
five years. Volkswagen Group has already achieved the 300-pound level in its car range, he
said. China and the USA use 286 and 330 pounds of plastic per car, respectively, which shows
the huge opportunity in India for plastic consumption in the rapidly growing automobile sector.

Indian automobile manufacturers are focusing on innovations such as inline painting to match
international standards. Certain techniques like thermoforming for exteriors and
long-fibre-reinforced thermoplastics for replacement of metals are yet to take off in India and
have phenomenal potential.

Source: Satnam Singh. (2011). “Plastics to play key role in growing Indian automotive sector”,
available at: www.plasticsnews.com/article/20111212/NEWS/312129988/plastics-to-play-key-
role-in-growing-indian-automotivhibite-sector (accessed on June 2012).

Exhibit 6: FAPL’s code of conduct for employees

An employee shall:
 make efforts towards the success of the Company rather than of any individual;
 act both with loyalty and honesty in carrying out the policy and instructions of the
organization and not undermine its image or reputation;
 demonstrate integrity in dealings with other people;
 keep reasonable distance in relationships with the suppliers to ensure that it does not
influence the business dealings;
 declare the relationship, if any, with a supplier or customer with whom one deals with on
behalf of the Company;
 must not accept expensive gifts, except for eatables. In case, for some reason it
becomes unavoidable to receive gifts, especially on foreign visits, then the same must
be communicated to the management and the gift be deposited with the Administration
Department;
 ensure, no obligation is taken from suppliers/customers in any business dealing, and if
taken, the same must be brought to the notice of the management;
 not misuse one’s authority/office for personal gains, including asking for personal favour
from Company’s employees; and
 support Company’s anti drugs/substance abuse efforts.

Exhibit 7: Auto expo

The Auto Expo is a biennial automotive show held in New Delhi, India. It is Asia’s largest and
the world’s second-largest motor show. The expo is organized at Pragati Maidan and is
organized jointly by the Automotive Component Manufactures Association (ACMA),
Confederation of Indian Industry (CII) and Society of Indian Automobile Manufactures (SIAM).
Origin: The Auto Expo was conceived in the year 1985 and had its debut showcasing in
1986. The Auto Expo 1986 was a window for technology transfers showing how the Indian
Automotive Industry was absorbing new technologies and promoting indigenous research
and development for adapting these technologies for the rugged Indian conditions. The
nine-day show was marked by then Prime Minister of India, Rajiv Gandhi.
Accreditation: The auto expo is accredited by the Organisation Internationale des
Constructeurs d’Automobiles
Source: http://en.wikipedia.org/wiki/Auto_Expo (accessed on June 2012).

VOL. 4 NO. 2 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 11

 About the author
Tanushree Sharma is working as an Assistant Professor – HR & organizational behavior
(OB) at the University of Petroleum & Energy Studies. She has to her credit more than 15
years of work experience ranging from industry, consulting to academics. She has served
a US-based MNC as a DM-HR and the Indian Telecom Company as the zonal trainer. Her
academic assets include bachelor’s degree in Science, PG Diploma in Personnel
Management, LLB and masters in Arts. She is presently pursuing a Fellow Program from
AHRD, Ahmedabad. Tanushree Sharma can be contacted at: [email protected]

PAGE 12 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 2 2014