Regulatory Issues Come Into Focus Ahead Of Zepto’s Mega IPO

Ahead of its IPO, quick commerce giant Zepto has taken multiple hits with a trail of ongoing cases against its operating practices over the years.

Most recently, the Enforcement Directorate (ED) summoned Zepto’s cofounders Aadit Palicha and Kaivalya Vohra, on April 8, regarding the company’s ownership structure. The summons was issued as part of an inquiry under the Foreign Exchange Management Act, 1999 (FEMA), which regulates foreign investments, cross-border transactions, and foreign exchange dealings in India.

Based on the company’s UDRHP, Kaivalya Vohra appeared before the ED on April 17 and April 22, while Aadit Palicha appeared on April 20 and May 15.

Notably, reports from earlier this month said that the ED had found that Zepto ran promotional campaigns on Parimatch, which was operating in India through mirror websites after facing a ban. The company had denied any direct involvement in the ED’s probe against Parimatch, noting that it had no part in activities related to the banned online betting platform back then. 

On the other hand, Zepto has been slapped with penalties numerous times for complaints around dark pattern operations, foul product quality and hygiene issues in warehouses.

Prominently, the CCPA last year highlighted that Zepto was using two types of dark patterns namely “drip pricing” and “basket sneaking”. In regards to these, the agency had slammed a penalty of ₹7 Lakh on December 4, 2025. Zepto appealed the order before the National Consumer Disputes Redressal Commission (NCDRC), and secured an interim stay on the penalty on January 20.

Further, the CCPA also issued a show cause notice June 2025, to Zepto’s subsidiary Zepto Marketplace Pvt Ltd for alleged use of dark patterns namely “drip pricing” and “disguised advertisement” involving overcharging beyond maximum retail price, misleading advertisements, unfair trade practices and violation of consumer rights. 

The subsidiary responded that overcharging beyond MRP occurred owing to inadvertent and technical overlaps.

Besides dark patterns and FEMA, the company also finds itself at the opposite end of the spectrum to regulatory bodies in charge of overseeing health and sanitation conditions across India.

A Food Safety Officer from Maharashtra government’s food and drug administration (FDA), Pune, filed a complaint against Zepto post finding certain expired food products stocked on the retail shelves without a warning board or label. 

Subsequently, Zepto received a summons on May 16, and is in the process of filing a reply before the adjudicating authority.

Besides, Zepto disclosed multiple fresh regulatory and labour-related proceedings in its UDRHP. These include allegations of underpayment of wages in Karnataka, operating a Tamil Nadu dark store without a valid trade licence, wage payment complaints in Haryana, industrial disputes in Gujarat and food safety violations linked to mustard oil and sattu samples in Uttar Pradesh. All matters remain pending.

The quick commerce major filed its updated draft red herring prospectus (UDRHP) with SEBI, where the proposed public offering will comprise a fresh issue of shares worth ₹8,010 Cr. 

The company plans to use a majority of the proceeds towards dark store expansion, enhance its tech and cloud infrastructure and for marketing and promotion initiatives.

On the financial front, Zepto’s consolidated net loss jumped 26% to ₹5,905 Cr during FY26, from ₹4,695.4 Cr in the preceding fiscal year. Operating revenue more than doubled to ₹22,623.6 Cr during the year from ₹11,109.9 Cr in FY25.

It earned a majority of ₹17,587.9 Cr via sale of goods, a portion of ₹5,022 Cr came in from sale of services, which included warehousing, packaging and last-mile charges, platform services, subscription fee, advertisement revenue, licence (IP) charges and franchisee fees.

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