Coforge’s internal governance review has found that former non-executive Chairman OP Bhatt received the lowest rating in the company’s board evaluation but that the finding was not disclosed to the full Board or its Nomination and Remuneration Committee (NRC), deepening questions around the circumstances of his abrupt exit.
KPMG Assurance and Consulting Services LLP, Coforge’s internal auditor, found that the manner in which the evaluation findings were presented by the chairman of the Board and the NRC chair did not cover all aspects and findings of the underlying report. The company disclosed the findings in an exchange filing late on Thursday.
The evaluation reports, according to Coforge, were available only to the chairman of the Board and the NRC chair and were not shared with other Board members, including independent directors, at the instruction of the chairman. KPMG’s review covered the supporting evaluation documents, Board minutes and recordings of meetings where the findings were presented.
The issue has assumed significance because Bhatt resigned as chairman on September 8, shortly after the Board evaluation process came under scrutiny. In his resignation communication, Bhatt said he had acted in good faith and that continuing on the Board amid a disagreement over the nature of his actions in the evaluation process would not be conducive to its effective functioning.
The developments also come against the backdrop of a shareholder vote that had already cast uncertainty over Bhatt’s continuation at Coforge. At the company’s August 24 annual general meeting, a resolution for his reappointment as an independent director from May 2027 failed to secure the required 75% approval, with 65.46% voting in favour and 34.54% against. Advent International, which became Coforge’s largest investor following the acquisition of Encora, voted against the resolution.
However, Advent was not part of the board evaluation at the centre of the current controversy. Its representatives joined Coforge’s Board only in May, while the evaluation related to the previous financial year, according to people familiar with the matter.
The sequence has nevertheless raised questions about whether the governance dispute reflects wider differences within the Board.
“It is clear that there was a widening conflict between the Board and the management that has existed for some time,” Pareekh Jain, CEO of IT research and advisory firm EIIRTrend, told Fe. The key question, he said, was why Bhatt received the lowest rating in the evaluation.
“Coforge has said that Advent wasn’t a part of the Board when the evaluation was done, indicating that there were possibly disagreements between Bhatt and the company management on policy-related matters,” Jain said.
He also pointed to the difference between Bhatt’s background and Coforge’s current operating environment. Bhatt, a former Chairman of State Bank of India, belongs to a more conventional school of business, while Coforge has emerged as a fast-paced mid-cap IT services company pursuing an aggressive growth strategy, he said.
Bhatt had also served as an independent director at large companies including Tata Consultancy Services. His departure therefore comes at a time when Coforge is pursuing a more acquisition-led growth strategy and taking larger strategic bets.
Board evaluations are a statutory governance exercise under the Companies Act, 2013 and the Securities and Exchange Board of India’s listing regulations. While the exercise has historically been viewed in some companies as procedural, it has gained importance as boards face greater scrutiny over their skills, independence and ability to oversee management.
Coforge, however, has sought to draw a distinction between the governance issue and its business performance. The company said the Board evaluation process was separate from financial reporting and had no bearing on its financial or operational performance, business or growth outlook.