SUMMARY
75 CaratLane employees are in line to receive ESOP payouts as Titan looks to acquire most of the remaining 1.72% stake in startup by October
The payouts will not cover a majority of CaratLane’s 1,500 retail and manufacturing workforce, which is largely compensated through bonuses and hikes
Tata-owned Titan, last week, said it would acquire an additional 27.18% stake in CaratLane for INR 4,621 Cr, effectively pegging the jewellery startup at a mammoth $2 Bn valuation
Employees of caratlane
are reportedly set to receive INR 340 Cr to INR 380 Cr from ESOP buyback by Titan as the Tata-backed company aims to own a 100% stake in the omnichannel jewellery startup.
It must be noted that Titan, last week, announced its plan to acquire an additional 27.18% stake in CaratLane for INR 4,621 Cr, increasing its stake in the startup to 98.28% from 71.09%. While the deal is still subject to regulatory approvals, the startup raked up a valuation of INR 17,000 Cr ($2 Bn), effectively turning it into a unicorn.
CaratLane cofounder and CEO Mithun Sacheti told Moneycontrol that employee stock option plan (ESOP) comprises the remaining 1.72% of the startup’s shareholding and this remaining stake will be bought out by Titan by the time the deal closes in October this year.
“The ESOP component (of 1.72% in the company) will also be bought out at the same time by the end of October. A bunch of it will be done by then and whatever remains, Titan will buy as and when the vesting happens,” said Sacheti.
As per the report, the omnichannel brand has a workforce of 1,500 people. Of this, 75 employees, who are part of the corporate team, are expected to receive ESOP payouts in the range of INR 340-380 Cr as they account for around 1.72% shareholding in the company.
It is pertinent to note that a majority of its employees, around 1,100, work across retail and manufacturing verticals and are largely compensated through bonuses and hikes only. ESOPs are only imparted to the corporate team which accounts for 400 employees.
Founded in 2008 by Sacheti and Srinivasa Gopalan, CaratLane is an omnichannel startup that sells and manufactures jewellery items in India and the US. The company logged a total income of INR 2,177 Cr in FY23, up 71% from INR 1,267 Cr in FY22.
The development comes at a time when a bunch of Indian startups have announced ESOP payout initiatives. Just months ago, ecommerce giant Flipkart announced its $700 Mn ESOP buyback scheme, offering employees a one-time cash payout owing to the demerger of PhonePe.
In July, Swiggy commenced the second phase of its ESOP liquidation initiative pegged at $50 Mn, while Zypp Electric also announced a ESOP buyback programme worth INR 1.5 Cr. Apart from this, a slew of Indian startups have announced additional stock options to retain employees as they look to chart out a profitable growth and spend cautiously.
In the past one month, major listed new-age tech startups such as Nazara, Paytm and Zomato have either received board approval or initiated the allotment of additional ESOPs for its employees as they look to further scale profitable growth.
As per an Inc42 report, employees of homegrown startups made more than $196 Mn via various ESOP buyback schemes in 2022.
