OP Bhatt quits as Coforge chair after internal audit flags disclosure gaps

The resignation followed concerns identified in an internal audit review over the handling and disclosure of information relating to the board evaluation report

Information technology (IT) services company Coforge’s non-executive Chairman O P Bhatt has resigned with immediate effect, after an internal audit flagged concerns over the handling and disclosure of a board evaluation report. The resignation comes weeks after shareholders voted against his reappointment at the company’s annual general meeting (AGM). 

The Noida-based company has appointed Vivek Sharma, a non-executive independent director, as interim chairman until January 31, 2027. Bhatt has also stepped down from all board committees, Coforge said in a stock exchange filing. 

Proxy advisory firm IIAS described an internal audit of a board evaluation exercise as “an unheard event in a normal course,” while InGovern Research Services said the episode underscored a disagreement between Bhatt and Advent International, Coforge’s largest shareholder. 

 

The internal audit was part of the company’s second-quarter audit plan and examined the board evaluation exercise conducted under Bhatt’s guidance, as well as the report subsequently presented to directors. 

It found concerns over how the report was handled, including the failure to fully disclose certain material information contained in or relating to the evaluation and the chairman’s performance. 

“The board considers it important to clarify that the chairman’s resignation followed the concerns identified in the internal audit review and the subsequent process undertaken by the board to seek and consider his explanation in relation to those concerns,” Coforge said in a BSE filing. 

Bhatt, a former chairman of State Bank of India, on the other hand, said he had always discharged his duties “independently, objectively and in the best interests of the company”. 

“…Continuing on the board while there remains a disagreement considering the characteristics of my good faith actions in the board evaluation process would not be conducive to the effective functioning of the board,” he said in a letter addressed to the board. 

His departure comes about two weeks after shareholders voted against his reappointment as an independent director and chairman for another five years, through 2032. Bhatt, who turned 75 earlier this year, was appointed an independent director for three years from May 1, 2024, and became chairman on June 29 that year. His original term was due to expire in April 2027.

His reappointment required a special resolution because of his age. The nomination and remuneration committee had recommended the proposal, but shareholders rejected it, with Coforge’s largest shareholder, Advent International, among those voting against it. 

The developments have prompted scrutiny from proxy advisers. Shriram Subramanian, founder and managing director of InGovern Research Services, said the episode pointed to a disagreement between Bhatt and Advent. 

“This is a rare instance and underlines a point of disagreement between Bhatt and the largest shareholder Advent that was brought to the fore,” Subramanian said. “The company seems to have couched it as a matter of board evaluation, rather than disagreements in strategies or policies between the chairman and Advent.” 

Advent owns about 20 per cent of Coforge following the company’s acquisition of Encora for about $2.35 billion last year.

Coforge shares fell 5.25 per cent to close at ₹1,847 on the BSE on Wednesday. 

Behind the exit 

• Coforge shareholders voted against O P Bhatt’s reappointment at AGM
• Audit raised concerns over handling of report on board evaluation, failure to disclose certain info on evaluation and chairman’s performance