Coforge Ltd. shares experienced a 2% decline in Friday's trading session following new disclosures regarding an internal audit report and the resignation of its former Chairman, OP Bhatt. The IT company's stock opened at Rs 1,800, down from its previous close of Rs 1,843, and hit an intraday low of Rs 1,800.
Audit Uncovers Undisclosed Performance Ratings
The internal audit revealed significant governance issues related to the evaluation findings presented by former Chairman OP Bhatt to the Nomination and Remuneration Committee (NRC) and the board. The audit determined that Bhatt's presentations did not encompass all relevant aspects and findings from the evaluation reports. Crucially, the full reports themselves were never shared with either the committee or the board.
A specific finding highlighted by the audit was that the Chairman's category had received the lowest rating in the evaluation reports. However, this critical information was neither disclosed nor discussed with the NRC or the full board by the NRC Chair or the Chairman of the board.
Company Clarifies Scope of Audit Review
Coforge emphasized that the internal audit's review of the evaluation reports was solely focused on governance processes. The company explicitly stated that this matter is distinct from its financial reporting and audit procedures. It confirmed that the findings do not pertain to Coforge's financial statements, accounting policies, revenue, or profitability, and therefore have no impact on its financial or operational performance, business, or growth outlook.
Leadership Changes Amidst Findings
OP Bhatt's resignation as Chairman occurred recently, prompted by the concerns identified in the internal audit review regarding the handling and presentation of the Board Evaluation Report. In response, Coforge has appointed Vivek Sharma, a Non-Executive Independent Director, to serve as interim Chairperson until January 31, 2027.
Despite these internal governance issues, Coforge stated that its board has maintained close collaboration, with business strategies and governance decisions consistently receiving unanimous approval. The company cited several key decisions, including the divestment of its AdvantageGo business, the exit from the data-centre business, the acquisition of Encora, the execution of the Sabre contract, and the strategic decision to exit the loss-making India Government business, as examples of unanimous board actions.