Zerodha account: Zerodha co-founders not drawing Rs 100 crore salaries: Nithin Kamath

NEW DELHI: Zerodha co-founder and CEO Nithin Kamath today clarified that the actual salaries being drawn by him, his wife Seema Patil and his brother Nikhil Kamath is less than the Rs 100 crore figure reported in the media.

In a series of seven tweets, Kamath explained that the discount broking company has only passed a resolution for allowing the three family members to draw a salary that may equal Rs 100 crore each every year, but in reality, the actual salary drawn would not be the same.

“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,” Kamath said adding he is surprised by the “unwanted noise” around the news.

Although the actual salary will be lower than the approved Rs 100 crore figure, it will still be higher than the norm, admits Kamath. “Promoters don’t take out profits through salaries as it is tax-inefficient, you end up paying almost 50% in taxes,” he said.

Describing news headlines around salaries of Zerodha promoters as “misleading”, the billionaire said: “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.”

Cautioning about any unprecedented black swan event, Kamath mentioned that broking is a risky business as majority of revenue is derived from active traders with leveraged positions that carry risk. Changing regulations can also impact Zerodha’s profitability significantly.

The stock broker further said the company is enabling de-risking for the entire team through its ESOP buyback. This year, Zerodha allocated Rs 200 crore out its Rs 1,000 crore profit after tax (PAT) earned during FY 2020-21.

Kamath mentioned that Zerodha is among the highest tax paying new-age businesses in India. He said, “We believe that building sustainable businesses and paying taxes is a great step in contributing to society and the nation. We take great pride that we are giving back most of our success through Rainmatter,” he said.

Zerodha’s promoters have been facing backlash on social media since the news of the Rs 100-crore resolution became public. According to some reports surfaced earlier, the Kamaths will get a basic salary of Rs 4.17 crore each every month, besides perks and allowances of the same amount.