Zerodha’s Nithin Kamath clarifies on Rs 100-cr salary after Twitter backlash: Enabling liquidity to de-risk

Zerodha’s Nithin Kamath clarifies on Rs 100-cr salary after Twitter backlash: Enabling liquidity to de-risk

Zerodha is India’s largest stock broker.

Zerodha founder and CEO Nithin Kamath has clarified after the recent buzz around Rs 100-crore salaries that he might draw along with his brother and co-founder Nikhil Kamath and Wife Seema Patil each. In a series of tweets, Nithin Kamath explained that the company has only passed the resolution for allowing the three 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. “It is important to take liquidity out when you are ‘up’ to de-risk. We have always done this, ~15% of profits,” The Zerodha CEO said.

Although the actual salary might be lower than the approved Rs 100 crore, it will still be higher than the norm, according to Nithin Kamath. He added that the resolution passed by the company is an enabling resolution that allows the working promoters to draw salaries up to the number in case of liquidity requirements. The move would help the promoters in supporting their personal investments in small businesses and social causes.

The Zerodha CEO further added that the broking business is a risky business with most of the revenue coming from active traders with leveraged positions. These active traders take the risk and brokers earn from the positions taken. Nithin Kamath added that a one black swan event could result in large losses for the business. “Also due to changing regulations, any of which can potentially impact profitability significantly,” he added.

Also Read: Zerodha now valued at $2 billion; Nithin Kamath mulls another ESPO buyback this year

After their ESOP buyback last year that valued the company at $1 billion, Zerodha earlier last week announced it is planning another ESOP buyback worth Rs 200 crore which would value the company at $2 billion. The planned buyback would see the company’s valuations double in the space of one year. Zerodha’s net profit in the previous financial year stood at Rs 1,000 crore. Zerodha’s promoters have been facing some social media backlash since news of the Rs 100-crore resolution became public.

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