India’s largest stock marketing giant Zerodha crossed profit more than doubled in the (FY21) Financial Year 2021 to Rs.1,000 crores. As per Nitin Kamath, cofounder said on Sunday.
“Our PAT (profit after tax) for FY 2020-21 was about Rs.1,000 crore,” Nithin said, as part of a series of tweets that also explained that the Rs 100 crore salaries of the founder brothers Nithin and Nikhil and Nithin’s wife Seema Patil were an enabling resolution and not an absolute figure.
“Firstly 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. Didn’t anticipate that this would get this much attention,” he said.
According to the reports of the regulatory fillings, Zerodha’s profit was Rs.442 crores and revenue was Rs.1000 crores. Moreover, the company has boosted a profit of Rs. 250 crores and 350 crores in FY18 and 19.
Zerodha, which Kamath co-founded with his brother Nikhil in 2010, currently has annual earnings of Rs 1,000 crore, which are equivalent to those of legacy bank brokers like ICICI Direct and HDFC Securities, according to Kamath. Unlike these brokers, Zerodha charges consumers a “discount brokerage” or a flat price of Rs 20 regardless of the size of the investment, rather than a percentage commission.
Board of Zerodha, approved a special plan according to which all the three members will be paid a base salary of Rs. 4.17 crores, in total up to Rs.300 crores per year.
“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,” Nithin added.
“As a promoter/founder you pay almost 250% 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),” he said.
Booking is a high-risk industry, according to Kamath, and changes in rules can have an influence on profitability. Rainmatter Foundation, a non-profit dedicated to climate change action, is also operated by the Kamath brothers. Zerodha announced in January that it will contribute $100 million in the battle against climate change through grants and stock investments.