ESOP COSTS
JM Financial cuts Zomato's target price by 8% on ESOP costs
JM Financial has lowered Zomato's target price to Rs 230 from Rs 250, noting that ESOP costs are no longer considered one-off expenses following the approval of a new policy. The formulation of this policy indicates that ESOP costs will be treated as regular business expenses, expected to recur.
Zerodha to end zero-brokerage model; Unacademy lays off 250 employees
Online stock broker Zerodha will likely discontinue its zero-brokerage structure due to new Sebi rules. More on this in today’s ETtech Top 5.
Zomato gets shareholder approval for Esop plan, gives up pursuit of NBFC licence
Food delivery company Zomato had proposed an Esop pool of 183 million shares. The new plan would mean a 2% stake dilution for existing shareholders, founder and CEO Deepinder Goyal had told shareholders in May, adding that the new pool would be sufficient for the next five years.
Purplle closes Rs 1,000 crore funding deal led by Abu Dhabi Investment Authority
Purplle has also announced a Employee Stock Ownership Plan (Esop) liquidity programme and will offer liquidity of Rs 50 crore to its employees. Company cofounder and CEO said they will constantly innovate their technology to provide the best for their customer. Purplle is one of the fastest-growing retailers in the beauty and personal care (BPC) segment, having grown its GMV by four times over the last three years.
ESOPs exempt from GST, barring where foreign companies charge additional amount
The Central Board of Indirect Taxes and Customs (CBIC) clarified that multinational companies offering Employee Stock Purchase Plans (ESPPs), Employee Stock Option Plans (ESOPs), or Restricted Stock Units (RSUs) without additional charges will not attract GST. This decision benefits tech giants like Google, Microsoft, Oracle, and Walmart, alleviating tax litigation concerns
A quarter of hits & a few misses; and other top tech, startup stories
Welcome to another edition of ETtech Unwrapped – our weekend newsletter. This is Pranav Mukul in New Delhi. This week we’ve wrapped up another compelling quarterly earnings season for listed new-age companies from Zomato and Delhivery to Paytm and PB Fintech.
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PB Fintech's top executives to offload marginal stakes; floor price at Rs 1,258
Substantial portions of the proceeds from the sale will be used to make the payment of taxes on current and future ESOP exercises. ESOPs are subject to payment of taxes on exercise in addition to the payment of capital gain tax on the sale of shares. Post the sale Yashish Dahiya will continue to have a 4.83% stake and Alok Bansal will have a 1.63% stake in PB Fintech on a fully diluted basis.
Zomato sees Esop costs rising on grant of stock options to Blinkit leadership
Costs incurred under the Esops head are non-cash expenses, and will rise in the ongoing fiscal “on account of grant of Esops to the Blinkit leadership team and senior employees,” the management said in a post-earnings call.
Esop non-disclosure triggers black money law
A number of resident individuals working in Indian subsidiaries and arms of offshore parents have recently received notices from the Income Tax (I-T) department which has pointed out amounts that either went undisclosed or untaxed or both.
Amid cost conservation focus, startups keep tighter rein on top rung hikes during appraisals
Startups and ecommerce companies are focusing on profitability and cost conservation, with some holding back pay raises for senior staff during appraisals. Some founders are forgoing hikes on their own, while others are forgoing them. Sandeep Murthy, partner at VC fund Lightbox Ventures, suggests that the main goal is to create a stakeholder advantage.
Flipkart tweaks merit approach, converts hikes into payouts
Flipkart changes increment policy, offering merit-linked payouts and 100% bonuses to employees. Lump sum payments replace salary hikes. Last year, Flipkart had frozen hikes of 30% staff including senior leadership among tough macroeconomic conditions. In January 2023, ET had reported that Flipkart has begun a workforce reduction exercise that could see its total team size decrease by 5-7% and be completed by March-April as part of performance reviews.
Meesho kicks off Rs 200-crore Esop buyback
Both current and former employees can participate in the buyback programme, its largest to date. Meesho said it had conducted similar buybacks of $1 million, $5 million and $5.5 million in February 2020, November 2020, and October 2021, respectively.
Startups talk up funding winter, but loosen their purse strings
During the ongoing funding winter, several internet majors such as Paytm, Policybazaar parent PB Fintech, Flipkart failedd to control expenses in FY23. Horizontal omnichannel retailers such as Nykaa, Mamaearth parent Honasa Consumer and FirstCry also saw both employee expenses and marketing costs rise anywhere between 23% to 55% during FY23.
PB Fintech's maiden profit; another markdown for Meesho
Policybazaar parent PB Fintech on Tuesday reported its first ever net profit on the back of strong revenue growth for the quarter ended December 2023. This and more in today’s ETtech Top 5.
Fidelity further marks down fair value of Meesho
A fund managed by financial services major Fidelity has further marked down the fair value of e-commerce firm Meesho, according to a monthly disclosure made by the fund.
Deepak Shenoy explains why he has trimmed exposure in Escorts
Deepak Shenoy says: "We have got very little in financials, very little in IT. I think those are the two areas and almost nothing in pharma in our fundamental driven strategies. And at this point, I will wait for results to finally come in. Things do not look as exciting as they were in the October news time when we saw the September quarter results come in."
ShareChat parent’s FY23 losses jump 38% to Rs 4,000 crore
Mohalla Tech CFO Manohar Charan said the company is looking to cut its losses to below Rs 1,000 crore in the ongoing financial year as it rationalises costs across key businesses like ShareChat and its short-video platform Moj.
Reliance General Insurance takes legal opinion on Hinduja's plan to extinguish ESOPs of RCAP subsidiaries
Reliance General Insurance has issued ESOPs to its employees. Khaitan & Co in its legal opinion submitted to the RGIC has opined that under IBC, treatment of assets and liabilities of subsidiary companies are not permitted to be prescribed under a resolution plan for the holding company. The IBC recognises the principle of 'separate legal entity', which means that once incorporated, the company becomes a separate legal person and has a personality that is distinct from the person responsible for its constitution.
The economics of evolving ecosystem: Why incubators need to be sustainable
The governments want incubators to be less dependant on grants and instead find other sustainable business models.
IIFL Finance's frontline staff to get ESOPs
The NBFC sector has seen average annual attrition rise to about 50% during FY21 and FY22 when several people were lured by huge jumps in salaries and other perks by fintechs and other startups. Since the middle of last year, though the attrition level has reduced a tad to 35-40% - due to opportunities drying up startups that are facing a funding winter - the number remains high.
Foreign employee stock options: Documentation, taxation and disclosure requirements in India
he employer only takes care of the tax liability via TDS at the time of vesting. Any tax liability for dividend received and capital gains at the time of sale should be dispensed by the employee via advance tax payment.
Indian units of foreign cos under GST scanner over ESOPs
Indian subsidiaries of foreign companies, particularly in the technology sector, are facing GST scrutiny over issues with employee stock option plans (ESOP) and employee share purchase plans. Authorities are reportedly demanding the 18% service tax as the obligation lies with the Indian subsidiary to provide shares under an employment contract.
Swiggy announces second tranche of $50 million optional Esop buyback at lowered valuation
About 2,000 employees, including those who transitioned from Dineout after its acquisition by Swiggy, will be eligible for the second tranche of the two-year liquidity programme initiated in June last year.
Swiggy's staff can get cumulative $50 million under ESOP plan
Swiggy, the Indian food and grocery delivery firm, will purchase shares worth over $50m from 2,000 employees in its next employee stock ownership plan. The stock upgrade offers staff from Dineout - which Swiggy purchased last year - a chance to participate.
Paytm targeting free cash flow by year-end: CEO Vijay Shekhar Sharma
Cash reserves at June end slightly gained on quarter; with improving earnings profile the company hopes to generate free cash flow.
Till debt do us part: will startups go the PharmEasy way, and other top tech & startup stories this week
This week’s ETtech newsbreak on PharmEasy going for a rights issue at a price 90% lower than its peak valuation of $5.6 billion to repay debt has tripped alarm bells in several startups that have taken debt financing.
Flipkart-PhonePe spilt: Flipkart staff to receive $700 million cash payout this month
Eligible former and current employees will receive $43.67, or about Rs 3,615 for each unit of Esop they hold in Flipkart as compensation for the loss of PhonePe’s value in the stock option as a result of its separation, the company had said in an internal note.
From funding winter to valuation drops: What it means for senior executives with ESOPs
The drop in startup valuations due to funding winter means a reduction in the real value of executive stock options. Although some buybacks still occur, the scarcity of VC funds and company underperformance have reduced them. While senior executives are waiting for the situation to improve, they are increasingly careful when choosing new companies to join.
In March, Swiggy’s food-delivery biz turned profitable, excluding Esop costs: CEO Sriharsha Majety
Food delivery platform Swiggy on Thursday announced that it has turned profitable as of March 2023.
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