KPMG audit revealed OP Bhatt suppressed key information as Coforge board chair

Mumbai|Bengaluru: OP Bhatt’s surprise resignation as non-executive chairman of Coforge stemmed from a row over the findings of an April board evaluation being kept from other directors, people with knowledge of the matter told ET.

Crucially, these pertained to his own poor ratings during the exercise, according to the people cited. Bhatt couldn’t be reached for comment despite several attempts to reach him by phone and email.

Also Read: Coforge stock tanks 7% as chairman OP Bhatt resigns over audit concerns


Coforge, formerly NIIT Technologies, had said Bhatt resigned on Tuesday after concerns were raised over the way a board evaluation exercise was handled and presented, without disclosing details. The 75-year-old is currently chairman at Greenko Energy Holdings and an independent director at Wockhardt. Previously, he has served on the boards of several blue chip companies, including Hindustan Unilever, ONGC and Tata Consultancy Services.

ET spoke to executives with knowledge of the matter and examined key documents to understand what transpired behind the scenes and led to the exit. The annual board evaluation process is mandatory as per the Companies Act of 2013 and the Sebi listing regulations of 2015. Coforge’s board conducted these under the supervision of Bhatt and DK Singh, who is nomination and remuneration committee chairman.

Two Separate Exercises

Granular details and evaluation criteria were finalised after consultation with both in February. The audit chair and chief finance officer hired KPMG a few months later as part of a governance review.

While investigating various documents regarding board and other committee meetings from July, KPMG said it uncovered inconsistencies. These were especially linked to two separate, but related, exercises — the board member evaluation report (BMER) and the board evaluation report (BER). The first rates directors individually, while the second considers performance as a collective.

The findings had not been shared in full with the entire board in violation of the law, KPMG said. Only Bhatt and Singh had access to the reports in their entirety, according to the firm. Bhatt and Singh had summarised BMER and BER findings at the relevant NRC and board meetings in June, but certain key findings were left out or distorted, according to KPMG.

Legal Violations

Under Regulation 25(4) of the SEBI LODR regulations, independent directors are required to review the performance of the board chair. Under Schedule II, Part D, Sub Part A of the same SEBI regulations, the NRC is required to consider the performance evaluation report of an independent director while deciding tenure extensions.

Under Regulation 17(10), also of SEBI’s LODR norms, the performance review of any independent director needs to be vetted by the entire board, excluding the person under review.

While discussing the evaluation report of individual directors, only certain sections were taken up for deliberation by the board. KPMG said half of the eight criteria, including the section that covered Bhatt’s own performance — which had received the lowest score among all directors — were not mentioned at all.

KPMG also said he misled the board by stating the areas that fared most poorly included corporate culture.

“On two key parameters, which are linked, Bhatt kept the board in the dark,” said an executive.

Serious Allegations

The audit firm also recorded that the NRC chair presented findings of the report concerning individual members (BMER), while referring to it as the review of the entire board (BER). Conclusions were drawn without clearly distinguishing the two separate reports. Consequently, NRC members and the board were not explicitly informed that the BMER and BER were actually two separate reports and had different outcomes. There are video recordings of these board discussions.

After KPMG highlighted these discrepancies in August, key Coforge investors confronted him with the findings.

KPMG’s investigation had commenced in early August after the declaration of first-quarter results at the end of July. The review covered a period of 12 months preceding the start of the audit.

Bhatt, who’d been chair since May 2024, resigned on September 8. His term was to have ended in May 2027 and was scheduled for reappointment. An AGM notice for a special resolution regarding this matter was also circulated last month. People in the know said the NRC had been in support of the reappointment, as was Advent, which has two nominee directors on board. However, once the KPMG investigation came out, the tide turned against Bhatt.

At the 34th AGM on August 24, the special resolution on Bhatt’s reappointment to a five-year term as an independent director from May 2027 failed to gain the requisite 75% support. As per stock exchange disclosures, 65.46% shareholders voted in favour while 34.54% voted against. Despite this, Bhatt continued to remain on the board.

Coforge and its investors, PE groups Advent International and Warburg Pincus, did not respond to queries.

The resignation and the subsequent disclosure by the company about the concerns raised during the audit led to the company’s shares plummeting 7% on Wednesday. It closed flat on Thursday at Rs 1,843 with a market value of Rs 81,630 crore. Following his exit, Vivek Sharma was named interim chairperson.

KPMG highlighted that the NRC and the board had recommended Bhatt’s continuation but without being in possession of all the facts. This was a material breach, according to KPMG.

Bhatt had been asked to respond on the points raised in the KPMG report in writing to the other directors within 48 hours late in August. He resigned within a week. In an official communication, he wrote: “I believe continuing in the board while there remains 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.”

According to an industry veteran, Bhatt is among the rare executives who held the chairmanship position at a technology company despite having a financial sector background.

Gurgaon-registered Coforge is an AI-native listed mid-cap tech services firm operating in 33 countries . Advent and Warburg Pincus together own around 21% of the widely held, board-run company, having joined the captable following Coforge’s $2.4-billion acquisition of Encora, a software engineering peer, earlier this year. Several mutual funds including Motilal Oswal Midcap, HDFC Mid Cap, ICICI Prudential Tech Fund, SBI Equity Hybrid Fund are other prominent shareholders, as are LIC and Vanguard.