FMCG distributors' body urges Sebi to halt loss-making quick commerce IPOs

FMCG distributors' body AICPDF has asked Sebi to pause or tighten IPO approvals for loss-making quick commerce firms such as Zepto, citing cash-burn pricing and ongoing CCI proceedings.

Reservations have been expressed on loss-making quick-commerce and ecommerce companies such as Zepto going in for an initial public offering (IPO) because there are complaints against them regarding their market behaviour. 

The All India Consumer Products Distributors Association (AICPDF) has written to the Securities and Exchange Board of India (Sebi), seeking the regulator’s intervention in this matter. 

Zepto has made a confidential filing with Sebi for its $1.22 billion IPO.   “Our members have faced sustained and severe market disruption due to deep discounting, predatory pricing, and cash-burn-led market capture strategies, funded almost entirely through repeated private capital infusions,” said the letter, reviewed by Business Standard.  

The letter stated it had filed a complaint with the Competition Commission of India (CCI) about supposed predatory pricing and anti-competitive conduct by quick-commerce platforms.  

“Zepto has now formally applied for an IPO, signalling that another heavily cash-burning quick-commerce entity may imminently access public markets while competition investigations into the sector remain ongoing,” the letter said. An email sent to Zepto did not elicit a response. 

Sources, however, said the company had no pending inquiry with the CCI. “Having a pending case with the CCI is not a hurdle to an IPO. Some other companies too have had such complaints but are now listed,” said a source.  The AICPDF said Swiggy had completed its IPO and also an offer-for-sale (OFS), which allowed early investors to exit at scale, and Zomato followed the same pattern.  

The exit-driven IPO pattern, with sustained losses and subsidised pricing, is used to acquire market share, the letter said, adding, valuations are built on gross merchandise value rather than profitability. Public listings are then used as liquidity events for early investors — often through substantial OFS components — rather than as instruments for raising durable growth capital, it said. 

It has asked for an immediate moratorium on new IPO filings or approval by quick-commerce and closely related ecommerce entities, including those that have applied (such as Zepto), until the CCI’s investigation and the AICPDF’s submission are addressed. 

It has asked for strict restrictions or a conditioning of OFS for the sector, enhanced disclosures in the Red Herring Prospectus (RHP) for cash-burn companies, escrow or restricted-use conditions for fresh issues, and safeguards for retail investors. 

In March, the AICPDF had complained to the CCI about Blinkit, Zepto, and Instamart. In October last year, it had first written to the CCI on matters the traditional supply chain was facing owing to the rapid growth of quick commerce.  

Issues flagged

• Deep discounting, predatory pricing and cash-burn led market capture strategies, disrupting market
• Exit-driven IPO pattern with sustained losses and subsidised pricing used to acquire market share
• Valuations built on GMV rather than profitability