Zepto DRHP: Founders face ED summons under FEMA, IPO document shows

Zepto has disclosed in its updated draft red herring prospectus (DRHP) filed with market regulator SEBI on June 8, 2026 that the Enforcement Directorate (ED) issued summons to both its founders, Aadit Palicha and Kaivalya Vohra, under the Foreign Exchange Management Act (FEMA), just two months before the filing of the IPO papers.

The disclosure appears as Risk Factor #29 on page 46 of the DRHP. The Directorate ED had issued summons to both promoters, dated April 8, 2026, under the Foreign Exchange Management Act, 1999.

The ED sought a detailed set of documents and information from both founders personally. These included foreign investments and overseas investments, audited balance sheets going back to financial year 2020-2021, owned immovable properties, shareholding pattern, details of loans and guarantees, income tax returns and bank accounts, and a note on the business model.

According to the DRHP, Kaivalya Vohra appeared before the ED on April 17 and April 22. Aadit Palicha appeared on April 20 and again on May 15. Both have since provided the requested documents, including details on the holding structure, the Singapore-to-India scheme of amalgamation, business agreements, and invoices. As of the UDRHP filing date, the matter remains ongoing.

Why Is This Disclosure Important?

The disclosure is notable for two reasons. One, the timing. Summons in April, appearances through May, DRHP filed June 8. The entire sequence unfolded in the weeks immediately before the DRHP filing. Two, the placement. This is not tucked into the litigation section at the back of the document. Zepto's own bankers and lawyers have flagged it as a named risk factor, meaning they consider it material enough for investors to weigh before committing capital.

More Regulatory Overhangs

The ED summons are not the only regulatory overhang on this IPO. The Competition Commission of India has an active inquiry into predatory pricing and anti-competitive discounting in quick commerce, with Zepto squarely named.

Second, The All India Consumer Products Distributors Federation had separately written to SEBI seeking to block quick commerce IPOs, citing deep discounting and cash-burn-led market capture.

The Maharashtra FDA had previously suspended the food business license of Kiranakart Technologies, Zepto's predecessor entity, following violations at a Dharavi storage facility including fungal growth on food items and improper cold storage maintenance.

The company is also listing under Regulation 6(2) of SEBI ICDR Regulations, the route for companies that do not meet standard profitability norms, the same path taken by Zomato (Now Eternal) and Swiggy before it.

Bigger Growth, Wider Losses

Zepto's financials tell a story of extraordinary growth alongside widening losses. Revenue from operations for financial year 2026, came in at ₹22,624 crore, more than double the ₹11,110 crore reported in financial year 2025. Net loss for the year widened to ₹5,905 crore in FY26 from ₹4,700 crore in FY25.

For the fourth quarter of the financial year gone by, Zepto's revenue increased by 75% from last year to ₹7,498 crore, while its net loss narrowed to ₹1,539 crore from ₹1,832 crore earlier.

Zepto processed 210 million orders in the fourth quarter or 2.33 million orders a day, across its 1,139 dark stores. Orders per store per day increased from 1,425 from 2,140 from last year, resulting a 50% improvement in store productivity.

Narrowing Operating Loss

On a per-order basis, the efficiency gains are sharper still. Adjusted EBITDA loss per order has nearly halved in just two quarters, from ₹110 in the second quarter of FY26 to ₹59 in Q4. Cost per order has fallen from ₹181 to ₹128. Free cash flow loss per order has improved from ₹103 to ₹42.

All About Zepto's IPO

Zepto's IPO comprises of a fresh issue of ₹8,010 crore, which goes directly to the company, and an offer for sale by early institutional investors, which is expected to take the total to between ₹11,000 crore and ₹12,000 crore. Neither founder is selling a single share. Early backers Nexus Ventures, which entered at under ₹4 per share, Contrary Capital, Razor Ventures, and Kaiser Permanente are among the sellers.

Proceeds from the fresh issue of shares will fund dark store expansion, technology and cloud infrastructure, marketing, and inorganic acquisitions.

Seven banks are running the book. Axis Capital, Morgan Stanley, Goldman Sachs, Motilal Oswal, HSBC, JM Financial, and IIFL Capital. Listing is targeted for July on both BSE and NSE.

CNBC-TV18 had first reported Zepto's IPO plans in December 2025.