Brokerage giant Zerodha’s FY21 profit more than doubled to Rs 1,000

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Earnings at India’s largest equity brokerage, Zerodha, more than doubled in the last financial year (FY21) to Rs 1,000 crore, co-founder Nithin Kamath said on Sunday.

Zerodha’s profit in FY30, according to regulatory documents, was Rs 442 crore and revenue was Rs 1,000 crore.

“Our PAT (profit after tax) for the financial year 2020-21 was around Rs 1,000 crore,” Nithin said, as part of a series of tweets which also explained that the brothers’ salaries of Rs 100 crore founders Nithin and Nikhil and wife of Nithin Seema Patil was an empowering resolution not an absolute number.

“First of all, the figure reported is not the actual salary drawn. This is an enabling resolution that allows us, as active promoters, to levy wages up to the number when cash is needed. I didn’t expect it to get so much attention,” he said.

The Zerodha Board of Directors has passed a special resolution that, all three will receive a base salary of Rs 4.17 crore per month each, along with allowances, which amount to Rs 300 crore as salary per annum .

“Even though the actual salary will be lower, it will still be high compared to the norm. Promoters don’t take profit through salaries because it’s tax inefficient, you end up paying almost 50% in taxes,” Nithin added.

He said Trade standard Friday that the company wasn’t looking to go public because it means “either you want funding or you want to give some of the investors an exit. We don’t have both pressures.”

In April, Nithin said that Zerodha would not raise external funds now or in the future, as it is profitable and has no debt.

Moreover, it does not spend on marketing and advertising.

He also explained in a series of tweets on Friday that companies that raise funds pay higher taxes.

“As a promoter/founder, you pay almost 250% more in taxes if you take money out of the business in the form of salary/dividends compared to, for example, paying capital gains when selling your stake to an investor (fundraising route),” he said.

Kamath has always said that booking is a high-risk business and a change in regulations can also impact profitability.

“We believe that building sustainable businesses and paying taxes is a big step in contributing to society and the nation. We are very proud to give back most of our success through @RainmatterOrg and to be among top paying new age companies,” he added on Sunday.

The Kamath brothers also run the Rainmatter Foundation, an NGO that supports action against climate change. Zerodha said in January that it would invest $100 million in grants and equity investments to fight climate change.

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