Case Name :      Flex Industries Limited

Authors :           Mohammed Akbar, Anurag Mishra

Source :             Ivey Publishing

Case ID :            907M76

Discipline :        Entrepreneurship

Case Length :    14 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

On November 8, 2001, the entrepreneurial owner of Flex Industries, a leading Indian firm in the flexible packaging industry, was accused of bribing the central excise commissioner in a case of evasion of excise duties. Excise duty is levied under the federal structure of the Indian taxation system on the production and manufacture of goods. Excise duty liability arises immediately on the movement of goods from the plant gate. Evasion of excise duty is a cognizable offence and carries severe penalties that can adversely affect the management of the company. The owner of Flex Industries, was an experienced professional recognized for his important contribution in revolutionizing the flexible packaging industry in India. However, the incident dented his long-standing record. Meanwhile, other controversies surfaced while the case was under disposition in the courts. The ensuing period gave an impression that there were other suspect events related to its governance that Flex Industries could have done without. However, the final verdict announced by the courts found the owner not guilty. The events were significant in the evolution of Flex Industries, which was strongly positioned in the flexible packaging industry. However, the market reaction to the news of the arrest of Flex Industries’ owner was very different from the news of his exoneration. This case demonstrates the impact of market disciplining forces and the premium stockholder’s place on good governance.