Nikhil and Nithin Kamath, the brothers who founded Zerodha back in 2010 along with Seema Patil, are likely to take a fat pay check of Rs 100 crores each, after their company clocked an impressive Rs 1000 crore in profits.
The three who currently get a basic salary of Rs 4.17 crore per month in addition to other perquisites and allowances of about the same amount, will add up to a whopping Rs 300 crore as salary per year. This will place them above other high paying promoters and CXOs in India.
According to EMA Partners, Sun TV’s Kavery Kalanithi and Kalanithi Maran get roughly Rs 88 crore per annun, followed by Hero’s Pawan Munjal who earns Rs 85 crore per year.
“Last 2 years have been spectacular for Zerodha online. Lucky to be at right place right time, ready with products & initiatives when there was a surge in retail participation. With success, what I say gets valued more,” said Nithin Kamath on Friday.
According to National Stock Exchange data, the Bengaluru-based Zerodha managed to grow its earnings by over 15 per cent to Rs 1,093.64 crore during the fiscal ended in March 2020 from Rs 950 crore earned in FY-19. Zerodha’s operating revenue stood at Rs 1,034.8 crores, while its total expenses were Rs 500.66 crore and total profits were Rs 442.36 crore.
“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,” Nithin explained in a series of tweets on Friday.
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 6/11
— Nithin Kamath (@Nithin0dha) May 28, 2021
The biggest chunk of its profits came from its net cashflow from its operations which were Rs 2,776.31 crore. All this while, Zerodha maintained a sizable EBITDA margin of 55.37 per cent.
With continuing lockdowns, investors flocked to stocks and share markets, and Zerodha grew its client base to more than 3.14 million as of January 31, 2021, almost double its closest rival Upstox which has over 1.8 million active clients.
Zerodha was first to introduce a flat fee model (a maximum of Rs 20 per trade), helping traders save upto ~90 per cent of brokerage charges compared to the exorbitant percentage fees which was common at the time.
“In addition, we offered this single pricing plan to all our clients unlike the then incumbent players who had opaque offerings for different groups of clients. While we started from zero, this transparency slowly got us attention on online communities and via word of mouth,” said Nithin in a blog post.
The company has kept its employees in mind in these testing times, and created a stock option pool worth Rs 200 crore for its 850 employees in FY 20. Now, it is planning a buyback in 2021, similar to previous year, at a $2 billion valuation.
Zerodha’s fintech incubator Rainmatter has incubated more than 20 companies which vary from non profits to climate change initiatives. The incubator, much like Shark Tank, provides mentoring, fully-equipped work spaces and funding ranging from $100,000 to a million, to startups in capital markets for minority stakes.