Book Title: Case Chronicles
Editors: Prof. Dr. Shraddha S. Bhandwalkar, Dr. Deepali S. Ubale and Dr. Shubhada A. Athavale
ISBN: 978-81-980078-8-9
Chapter: 4
DOI: https://doi.org/10.59646/cc4/274
Authors: Dr. Kavita B. Ubarhande and Dr. Shubhangi B. Vanarse
Abstract
This case study examines the interdepartmental conflict at AgroM India Ltd. due to transfer pricing discrepancies for Component X, a semi-finished product crucial for the company’s manufacturing operations. Department A Produces Component X at a cost of INR 120,000 per unit, transferring it internally to Department B at INR 150,000, despite the external market price being INR 130,000. This misalignment leads to operational inefficiencies and dissatisfaction within Department B. By proposing a negotiated transfer price of INR 140,000 per unit, the study demonstrates how both departments can achieve profitability and operational harmony, thereby aligning internal transfer prices with market conditions.
Keywords: Transfer pricing, Interdepartmental Conflict, Manufacturing, Profitability
References
- Annual Reports of leading agricultural machinery manufacturers for insights into industry practices.
- Case studies from Harvard Business Review and similar publications on transfer pricing issues in multinational enterprises.
- Examples and practical applications provided in textbooks on international business and accounting.
- Indian Government’s guidelines on transfer pricing as outlined by the Central Board of Direct Taxes (CBDT).
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