Zepto’s Dharavi Hygiene Lapse Prompts FDA Suspension, Casting Doubt on IPO

For India’s smartphone-tapping generation, Zepto rewrote the rules of convenience. Founded in 2021 by Aadit Palicha (Zepto CEO) and Kaivalya Vohra—two Zepto founders who dropped out of Stanford at 19—the startup promised groceries in 10 minutes, not days. It was a revolution. Today, Zepto commands 29% of India’s $5.3 billion quick-commerce market, operates 650+ hyperlocal "dark stores," and stares down giants like Swiggy and Zomato. But as it races toward a landmark IPO in 2025 (targeting $800M–$1B), a perfect storm of crises threatens to derail its dream run. At the eye: a damning Maharashtra FDA shutdown of its Dharavi hub.

The Dharavi Debacle: Fungus, Filth, and a Frozen License (FDA Suspension Fallout)

Picture this: You order fresh vegetables, bread, or dairy through the Zepto app. Instead of a pristine warehouse, your goods were stored beside clogged sewage water, on wet fungus-caked floors, in broken cold storage. This wasn’t a rogue outlet—it was Zepto’s Dharavi dark store, suspended by the Maharashtra FDA on June 1, 2025. Inspectors documented "unacceptable biological contamination" and "systemic hygiene failures," forcing an immediate license freeze under the Food Safety Act.

For Zepto, Dharavi isn’t just another store. It’s a strategic nerve centre in Mumbai’s densely packed heart, serving 50,000+ orders monthly. Overnight, deliveries halted. Customers faced delayed orders, substitutions, or cancellations as Zepto rerouted logistics from distant facilities. The Zepto CEO issued swift apologies, but trust erosion is real. As a user of Zepto shared on social media: "I loved the speed. But would you eat food from a place tagged ‘unsafe’ by the government?"

Zepto’s damage control:

• An emergency audit across all Maharashtra facilities

• Retraining 500+ staff on FSSAI protocols

• Third-party hygiene certifications for every dark store

Yet, the FDA suspension lingers—no reopening date exists. For a brand built on "trusted freshness," this is a body blow.

Cracks in the Foundation: Strikes, Shuttered Cafes, and Scaling Struggles

The Dharavi crisis isn’t isolated. It’s the loudest symptom of Zepto’s breakneck growth straining its seams. Consider Hyderabad: Since May 19, 2025, over 300 Zepto delivery partners have protested outside dark stores. Their grievances?

• Unfair wages: ₹15/order (below gig economy averages)

• No safety gear: Riders buying their own helmets

• Algorithmic punishment: IDs blocked for rejecting "unsafe" routes

"We’re treated like machines, not humans," says striker for the Zepto. When protests intensified, workers allege Zepto used police pressure and social media bans to silence them—a claim the Zepto CEO denies.

Parallelly, Zepto Cafe—its cloud kitchen experiment—collapsed. In April 2025, it abruptly shut 44 locations across 9 cities. While positioned as a "strategic pivot," insiders cite unsustainable costs and kitchen mismanagement. *"Cafes burned ₹40 lakh/month with zero path to profit,"* reveals an ex-manager.

Zepto’s ambition now faces hard questions:

• Can it ethically manage 15,000+ gig workers while chasing profitability?

• How many more Zepto Cafe-style experiments will backfire?

• Are 650+ dark stores too many, too fast?

IPO Dreams Amidst Firefighting: Will Investors Bite?

Here’s the paradox: Even as Zepto battles operational fires, its IPO plans accelerate aggressively. In late 2024, the Zepto founder duo announced a 2025 listing, raising targets from $450M to $1B. Their pitch? Blistering growth:

• FY24 Revenue: ₹4,454 Cr (↑120% YoY)

• FY26 Projection: $5.5B gross sales

• Path to Profit: Positive EBITDA by Q1 FY26

Pre-IPO moves are textbook-perfect:

• Raised $350M from Indian investors (November 2024)

• Shifted legal base from Singapore to India

• Hired ex-Flipkart CFO for listing readiness

But the Maharashtra FDA suspension is a grenade in the boardroom. Bankers whisper the IPO GMP (grey market premium) dipped 12% post-Dharavi. Why? Investor red flags:

The Human Cost: Delivery Riders Speak Out

Behind Zepto’s glossy app interface lies a grinding reality for its delivery partners – an army of anonymous riders navigating urban chaos under relentless pressure. “They preach 10-minute deliveries like gospel, but treat our safety as an afterthought," vents one rider in Hyderabad, voice crackling with exhaustion over the phone. "When my bike broke down last month during a delivery, support didn’t send help – they threatened to block my ID if orders were delayed. No insurance. No backup. Just ‘deliver or disappear.’"

This isn’t an isolated grievance but a chorus echoing across Zepto’s supply chain. During recent protests, multiple riders described identical experiences: being forced to choose between unsafe working conditions or lost livelihoods. 

The alarming patterns are validated by data. A 2025 Quick-Commerce Labour Survey revealed systemic issues:

• 68% earned below state minimum wage – often due to opaque "distance pay" formulas

• 42% subsidized Zepto’s operations by paying for vehicle repairs from their own pockets

• 89% received zero safety training despite navigating hazardous traffic and extreme weather

Until Zepto recognises riders as stakeholders rather than replaceable inputs, its growth rests on fractured foundations. The true cost of 10-minute convenience? Paid in the sweat and security of those who deliver it.

Rebuilding Trust: Zepto’s Long Road to Redemption

The Zepto founders face a brutal triage:

1. Fix Dharavi, Fast: The Maharashtra FDA license must be restored before audits spread nationally.

2. Overhaul Labor Models: Fair wages, insurance, and dignity aren’t negotiable.

3. Transparency Over Hype: Share hygiene audit reports publicly.

Zepto’s rise mirrored India’s tech ambition—young, fast, unstoppable. But 2025 is its reckoning year. The IPO isn’t just about raising funds; it’s about proving Zepto can balance scale with ethics. As Palicha himself tweeted post-Dharavi: "We will emerge stronger."

For millions waiting, the question lingers: Will Zepto’s next chapter be about responsible growth, or become a cautionary tale of speed hitting its limits?