Zerodha steals the headlines: salary news, Rs 1000 Cr profit after tax, Rs 200 Cr ESOP buyback

Good morning,

News late last week around Zerodha board passing a special resolution that would enable its Founder and CEO Nithin Kamath, his brother and Co-founder Nikhil Kamath as well as Nithin’s wife and whole-time director Seema Patil to draw salaries of Rs 100 crore each per annum had netizens in a frenzy.

Expressing surprise at the "unwanted noise" around the salary news and calling the headlines “misleading,” Nithin on Sunday issued a clarification on social media even as he stated there were "no obligations" for a private company like Zerodha to do so. 

In his clarification, Nithin said the reported figure isn’t the actual salary that is being drawn, and that the resolution was merely an enabling one that allows them as working promoters to draw salaries up to the number in case of liquidity requirements.

“Running a business is like trading, you can be up or down very easily. It is important to take liquidity out when you are “up” to de-risk. We have always done this, ~15% of profits,” Nithin said, as he added that Zerodha’s Profit After Tax for FY21 stood at around Rs 1,000 crore.

“This (de-risking) also helps us in supporting our personal investments in small businesses and social causes,” he said. Earlier this year, the company set up a $100 million Rainmatter Foundation to support grassroots individuals, organisations, and companies working on solutions for climate change.

Nithin had earlier spoken about his strategy around de-risking and on building a sustainable, bootstrapped business focused on traditional growth metrics in a fireside chat with YourStory Founder and CEO Shradha Sharma last year.

Zerodha — which last year formally claimed unicorn status — is also enabling the same derisking for its employees too in the form of its Rs 200 crore ESOP buyback programme. 

But even before Zerodha entered the coveted $1 billion+ valuation club, it had turned a ‘proficorn’ — a profitable startup with no external funding — by focusing on building a sustainable business model instead of opting for a 'growth-at-any-cost' approach. 

Which is why, many netizens, including notable startup ecosystem stakeholders such as Paytm's Vijay Shekhar Sharma, all believe a profitable, bootstrapped business like Zerodha — which prides itself on being the highest tax payer among new-age businesses — should not have to clarify details around its promoters’ rewards and compensation programmes. See the findings of our poll here: 

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Microsoft focuses on three things to help SMBs navigate the crisis — how they respond to the lockdown, how they recover from the economic slump, and how they can use technology to reshape their business in a post-COVID-19 world.

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In a conversation with YourStory, COO Vaibhav Tewari outlines how Portea Medical has been aiding patients across the country since the outbreak of the pandemic last year. Read more.

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News & Updates

• According to government sources, large social media companies like Google, Facebook, and WhatsApp have shared details with the IT Ministry as per the requirement of the new digital rules, but Twitter is still not following the norms.

• In his monthly 'Mann ki Baat' radio address, Prime Minister Narendra Modi said that the Indian Air Force, the railways, and scores of tanker drivers worked overtime to ensure medical grade oxygen was delivered on time to those in need.

• The Finance Ministry said the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme will now offer concessional loans to hospitals for setting up on-site oxygen generation plants. The validity of the scheme has been extended by three months or till guarantees for the amount are issued.

Before you go, stay inspired with… 

“We believe that building sustainable businesses and paying taxes is a great step in contributing to society and the nation.”

— Nithin Kamath, Founder and CEO, Zerodha

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