Leadership changes at Coforge and HDFC Bank: A proxy advisory firm's take

Coforge's recent boardroom dispute is likely to move towards resolution after the resignations of its chairperson and the Nomination and Remuneration Committee (NRC) chair, according to Shriram Subramanian, Founder & Managing Director of InGovern, a Mumbai-based proxy advisory firm. He believes the remaining board has presented a united front and that the company is moving quickly to restore stability by appointing new leadership.

According to the company's disclosures, an internal audit found that the detailed Board Evaluation Report had been seen only by then-chairman O P Bhatt and Nomination and Remuneration Committee (NRC) chairman D K Singh, and was not circulated to the rest of the board. The audit also found that certain findings, including aspects related to the chairman's own performance assessment, were not fully presented to other directors, making the former chairperson and NRC head's positions untenable, according to Subramanian.

All seven board members of the Noida-based IT services firm told investors that the crisis will not affect the company's strategy, priorities, or the outlook for the current financial year ending March 2027. Despite the assurance, shares fell over 3% in the first hour of trade on Tuesday (Sep 15).

"I would agree with that because, one, there is no financial implication per se from a perspective of financial malfeasance... It is a clear case of conflict amongst directors," he said, adding that the current board should now be able to function cohesively.

Coforge has decided to engage executive search firm Egon Zehnder to pick the next Chairperson. While he expects the internal conflict to subside, he cautioned that interim chairman Vivek Sharma's independence may continue to be questioned until the final replacement for Bhatt is found.

Sharma's previous role as a senior adviser to Advent, which has an interest in Coforge through Encora, has led some investors to question whether he should be regarded as fully independent. "Going by the strict definition of what is there in the LODR and the Companies Act, he would qualify as an independent director, but from the spirit of independence, probably not."

Who will be the next CEO of HDFC Bank?

Commenting separately on HDFC Bank's CEO succession process, Subramanian said shareholders would likely prefer leadership continuity through an internal candidate.

He said Kaizad Bharucha

would be an appropriate choice because of his familiarity with the bank's culture and operating style.

Subramanian added that HDFC Bank has traditionally promoted internal talent and said he expects the Reserve Bank of India (RBI) to decide on the succession process soon.

For the full interview, watch the accompanying video



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