Nithin Kamath and Nikhil Kamath — the founders of Zerodha, India’s biggest stock brokerage company in terms of volume of trade, are all set to take a remuneration of up to ₹100 crore each a year. The brokerage house has recently passed a resolution to pay the whopping amount as annual salaries to Kamath brothers as well as to whole-time director Seema Patil.
Explaining his salary, Nithin Kamath told News18.com, “A resolution has been passed where co-founders can take up to a certain amount if it’s required. That actual salary may differ from the upper limit mentioned in the resolution.”
“As a owner and promoter of any business, you can take either liquidity as salary which is highly tax-inefficient or you can sell stakes in your business. We don’t intend to sell stakes of Zerodha. We are bootstrapped and we intend to remain that way. So the only other way to take money out from the business is through salary,” he further explained.
Started in 2010, Zerodha was India’s first online brokerage firm. “The plan back in 2010 was for Nikhil to trade with the very little money we had left after starting Zerodha to generate enough runway for the retail broking attempt. And that’s what he did, and that’s how we survived,” founder Nithin Kamath recently shared in a blog. Ten years on, with their products and technology and education, the startup has grown massively. “Our disruptive pricing models and in-house technology have made us the biggest stock broker in India in terms of active retail clients,” the company said.
“The last two years have been really spectacular and we were lucky to be at the right place right time. As market expanded, there has been significant growth,” Kamath told. In early 2020, we had 20 lakh customers, now we have nearly 60 lakh customers on our platform, he added. However, Kamath remained a bit skeptical about the volatility that is often related to the brokerage platforms. “While our growth is exciting, we know that this isn’t sustainable. A broking business is an extremely high beta — highly correlated with the market conditions. Even if there was a mini bear market, our business could drop by 40% in a heartbeat,” he said in tweet.
In a bid to share his success with Zerodha employees, Kamath is all set to announce a buyback employee stock ownership plans (ESOP) worth about Rs 150-200 crore in July-August this year. This move will benefit nearly 85% of Zerodha’s employee base as they will be eligible to participate in the buyback. It will allow employees to sell up to 33% of their ESOPs to the company at a valuation of $2 billion. “Maybe conservative valuations, but our business risks are high. Personally, the proudest moment in this journey,” Kamath shared.
“We have committed most of what we have earned personally and through our business to climate change and other initiatives. We have committed $100 million to grass-root organizations and startups working on climate change and creating green jobs,” he further mentioned.
For the fiscal year ending March 2021, Zerodha more than doubled its profit to ₹1,000 crore. The brokerage platform offers trading in equities, bonds, currencies, commodities and mutual funds. An investor has to spend ₹300 to open an account in Zerodha. The equity delivery investments are free. Securities transaction tax is charged variably for equity delivery, equity intraday, futures and options. It charges a flat fee of ₹20 for every trade, irrespective of its size with no brokerage fee.
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