Zomato Prioritizes Profitability, Allots INR 2.52 Cr in ESOPs to Employees

Zomato, a leading foodtech company, recently announced its decision to allocate INR 2.52 Crore worth of shares as Employee Stock Option Plans (ESOPs) to selected employees across the company and its subsidiaries. This move was approved during a meeting of the nomination and remuneration committee of the board of directors on July 31, 2023. The approved allocation comprises 2,52,59,179 equity shares, each having a face value of INR 1, and these shares will be considered fully paid-up once the vested options are exercised.

The ESOPs have been vested under two of Zomato's Employee Stock Option Plans, namely the 2018 and 2021 schemes. This allocation resulted in the company's issued, subscribed, and paid-up equity share capital increasing from INR 857.9 Crore to INR 860.4 Crore.

Following the announcement, Zomato's shares experienced an upward trend on the Bombay Stock Exchange (BSE) on August 1. By 1 PM IST, the shares were up 0.7% at INR 84.7.

It is noteworthy that approximately at the same time in the previous year, Zomato had issued 4.65 Crore ESOPs, each having a face value of INR 1, under its stock option plans for the years 2018 and 2021.

A significant development was revealed in May of the current year when Zomato's exchange filing disclosed that its founder, Deepinder Goyal, alone cost the startup INR 1,111.5 Crore during the combined period of FY22 and FY23 due to the vesting of his ESOPs.

This recent ESOP allocation comes at a crucial juncture as Zomato focuses on achieving overall profitability and reducing operational expenses. The efforts seem to be bearing fruit as Zomato achieved adjusted EBITDA positivity in the fourth quarter of FY23, signaling improved financial performance. In fact, the company's net loss for that quarter decreased by 48% compared to the same period last year, amounting to INR 187.6 Crore. Moreover, Zomato's net loss for the entire FY23 stood at INR 971 Crore, indicating a substantial improvement from the INR 1,222.5 Crore loss reported in FY22.

As Zomato continues to strengthen its position in the foodtech industry and expand its services, the ESOP allocation aims to motivate and reward employees for their contributions to the company's growth and success. By providing employees with ownership through ESOPs, Zomato aligns their interests with those of the company and fosters a sense of ownership and dedication among its workforce.

Zomato's decision to allocate INR 2.52 Crore worth of shares as ESOPs to its employees is a strategic move to incentivize and retain talent while driving the company's growth and financial performance. As the foodtech giant progresses towards profitability, the allocation of ESOPs demonstrates its commitment to recognizing the invaluable role played by its employees in achieving these goals.