Gurugram-based ecommerce logistics unicorn Delhivery has allotted over 11K ESOP shares to 18 employees under Delhivery employee stock option plan 2012 (as amended on March 8, 2019).
According to the Ministry of Corporate Affairs filings accessed by Inc42, the company has allotted 11,614 shares worth $126.6K to its employees. The present and ex-employees who have received ESOPs include senior directors, VPs and engineers.
Delhivery was founded in 2011 by Mohit Tandon, Sahil Barua, Bhavesh Manglani, Kapil Bharati, and Suraj Saharan. It services about 600 cities and 8,500 PINs in India. As of December 2018, the company had 12 fulfilment centres for B2C and B2B services and works with ecommerce companies such as Flipkart and Paytm.
Delhivery: Logistics Unicorn Aiming IPO
The company has raised $819.6 Mn from investors such as SoftBank, Carlyle, Fosun among others. Delhivery was last valued at $1.6 Bn in a round of $413 Mn led by SoftBank.
Earlier in February, Delhivery acquired the India business of Dubai-based logistics firm Aramex for an undisclosed amount. Delhivery planned to take over Aramex’s local operations with effect from March 1, 2019.
In FY18, the company reported a jump of 42% in its revenue gaining total revenue of $153.26 Mn (INR 1,073.64 Cr). Here, its operational revenue contributed almost 95% to its total revenue as against $107.92 Mn (INR 756 Cr) for the previous year.
The company is speculated to be scouting for an initial public offering (IPO) since last year. Recently, reports surfaced that Canada Pension Plan Investment Board (CPPIB) is looking to pick up around 8% stake worth $150 Mn in Delhivery via a secondary market investment.
According to Inc42’s State of The Indian Startup Ecosystem 2018 Report, India had over 900 logistics startups as of November 2018. Between 2014 and 2018, these startups have raised over $1.4 Bn funding across 115 deals.
In the competitive logistics space, which is poised to touch by $215 Bn by 2020, Delhivery competes with equally strong investor-backed startups such as Rivigo, Blackbuck, Locus, Locanix, ElasticRun, and 4tigo Network Logistics.
ESOPs: Why Is It Lucrative Offer For Startup Employees?
The Indian startup ecosystem has over 39K active startups. These startups have collaborated to hire about 50K to 60K people in the last year itself and the hiring outlook looks positive across sectors in the near term.
ESOPs are used to incentivise employees contributions to the startup and reduce attrition rates thus several Indian startups have been looking to offer stock ownership in the form of ESOPs.
Startups are using ESOPs as a tool to not only retain talent but to maintain the cash liquidity as well in the near term. On the other hand, it becomes a kind of ‘lottery’ option for the employees, which they can encash at the right time. There are risks attached to it as well. An employee may enter the company when it is doing well but fails to maintain its stock value later.
But as the analysts say, in the ideal case, if a startup is flourishing – and employees can exercise their stock options to cheaply buy the company’s stock and sell it at a significant gain. Contrary to ordinary stock that might drop far below their original price and cause significant financial loss, the worst-case scenario with stock options is zero gains, but also no loss.
Recently, it was also reported that the Department for Promotion of Industry and Internal Trade (DPIIT) is discussing with the finance ministry to tax Employee Stock Ownership Plan (ESOP) options only once at the time of sale. Currently, ESOPs are considered as income and are taxed accordingly. This move comes as part of the government’s effort to make India a more conducive location for startups.