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Wednesday, June 23, 2021

Zerodha FY21 profit doubles to Rs 1,000 crore

Zerodha CEO Nithin Kamath said the board had passed an enabling resolution that allowed “working promoters to draw salaries up to the number in case of liquidity requirements”

By: ENS Economic Bureau | New Delhi |
June 1, 2021 3:19:45 am
Nikhil Kamath, co-Founder, Zerodha and True Beacon

Online stock brokerage Zerodha’s bottomline for 2020-21 (April-March) ballooned to Rs 1,000 crore, more than double from last year’s profits of Rs 442 crore, according to the company.

Zerodha CEO Nithin Kamath — in a series of tweets, elaborating on the special resolution passed by the company’s board for a salary of Rs 100 crore each for the three founder promoters — said that the board had in fact passed an enabling resolution that allowed “working promoters to draw salaries up to the number in case of liquidity requirements”.

The promoters in question are Nithin Kamath, his brother and co-founder Nikhil Kamath and the former’s wife Seema Patil.

“… the reported figure isn’t the actual salary being drawn. This is an enabling resolution that allows us 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. This also helps us in supporting our personal investments in small businesses & social causes,” Kamath said on Twitter.

“While the actual salary will be lower, it will still be high compared to the norm. Promoters don’t take out profits through salaries as it is tax-inefficient, you end up almost paying 50% in taxes,” he added.

Kamath also pointed out that the company does the said de-risking through buyback of employee stock options, or ESOPs. “A portion of the profits allocated for the buyback every year. This year it is ~Rs 200 crores. Our PAT for FY 20/21 ~Rs 1000 crores( similar to bank brokers),” he tweeted.

The company has decided against going for further external fundraising given its profitability and zero debt-levels.

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