Zerodha's Kamath brothers, Seema Patil to get up to Rs 100 cr salary each

Company plans ESOP buyback at $2-bn valuation

Nithin and Nikhil Kamath, the brothers who founded what is now India's largest stock brokerage firm Zerodha, and Seema Patil, Nithin’s wife who has been promoted to whole-time director, can take home a salary of up to Rs 100 crore each, according to a special resolution passed by the company’s board.

The company will also run a buyback this year, similar to what it did the previous year, but at double the valuation -- at $2 billion. "Everyone holds ESOPs & continuously get new options, too. We ran a buyback last year at $1-billion valuation & we will this year do it at $2 billion. Maybe conservative valuations, but our business risks are high. Personally, the proudest moment in this journey," Nithin tweeted on Friday.

Zerodha, a bootstrapped start-up, made over Rs 1,000 crore in revenue and Rs 442 crore profit in FY20 -- a rare feat in the start-up world where many companies are loss-making.

Its board passed a special resolution, according to which, the three -- Nithin, Nikhil and Seema -- will get a basic salary of Rs 4.17 crore per month each, along with allowances, which add up to Rs 300 crore per year.

Though not strictly comparable, their salaries would exceed that of Infosys CEO Salil Parekh's annual pay package of Rs 49.68 crore in 2020-21, which has over half the amount coming from exercise of stock options.

Later speaking with Business Standard, Nithin said Zerodha wasn't looking to go public because that means “either you want funding or because you want to give an exit to some of the investors. We have neither pressure.”

In April, Nithin had tweeted explaining why the company hasn't raised funds. "We are profitable, have zero debt. And we don’t spend on marketing and advertising which is probably the single biggest reason for folks raising money... We want to build things around our core competency, do it well."

On Friday, he reiterated these beliefs in a series of tweets. "As a promoter/founder, you pay almost 250 per cent more as taxes if you were taking out money from the business as salary/dividends, compared to, say, paying capital gains when selling your stake to an investor (fundraising route)," Nithin said.

The firm competes with stockbroking firms, banks, and companies like Upstox, Groww, Paytm (Money).

Being profitable in the start-up ecosystem is not an oft-heard concept. "The reason for our higher profitability is also that we don't spend any money on acquiring customers," said Nithin, alluding to its competitors which are mostly externally funded; some of them spend a huge amount on advertising and customer acquisition.

The Kamath brothers have been praised for their razor-sharp focus and for building a profitable business without external funds. Nithin is, however, practical about their success. "Our performance is directly proportional to what's happening to the underlying stock markets, and right now the market in India is doing pretty okay," he said.

In January, Zerodha said it will invest $100 million as grants and equity investments, to fight climate change.