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Ethical issues involved:

(i) Short term gain vis long term pair

(ii) Treating domestic consumers as a means against Kant's categorical imperative

(iii) Failure of corporate governance

(iv) Quality of product vis profit

(v) Reputation of the company is at stake

(vii) False marketing

(viii) Commerce without morality (Gandhi's 7 sin)

Actions that the competent authority must take:

(i) Immediately suspend the company's license to sell in domestic market

(ii) Search the company's godowns for more such violations

(iii) File case against the executives of the company for 'misleading advertisement'

(iv) Setup a committee to inquire more such cases and report to the competent authority

(v) Look for any collusion between the company executives and government officials.

Course of action for the company:

(i) Stop the defective batch from reaching the market

(ii) Issue a public apology and

(iii) Give compensation to domestic consumers

(iv) Destroy all the sub par product that have failed quality checks.

(v) Launch a trust reconciliation campaign

(vi) Coordinate with competent authority during inspection.

Above steps must be followed by the company to ensure that its reputation is restored.