FMCG distributors' body asks Sebi to pause IPOs of loss-making quick-commerce firms

Despite the absence of demonstrated profitability, valuations are often built on gross merchandise value and market share rather than earnings or free cash flow.

• AICPDF urges Sebi to pause IPOs of loss-making quick-commerce companies
• Concerns raised over investor risks and impact on India's retail trade ecosystem
• Ongoing CCI investigations cited as reason to halt IPO approvals

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Fast-moving consumer goods distributors' body AICPDF has urged the market regulator Sebi to pause the Initial Public Offerings (IPO) of loss-making quick-commerce companies.

In a representation, the All India Consumer Products Distributors Federation (AICPDF) has urged Sebi "to consider immediate measures including a temporary pause on IPO approvals" for quick-commerce and closely related e-commerce companies until ongoing proceedings in the Competition Commission of India are conclusively resolved.

It has urged the Securities and Exchange Board of India (SEBI) to take urgent regulatory action to protect small retail investors and India's retail trade ecosystem from the risks posed by loss-making quick-commerce and e-commerce companies seeking public listings, said AICPDF, which claims to represent over 4.5 lakh distributors and more than 1.3 crore kirana and retail outlets across India.

"Several quick-commerce companies continue to operate with large cumulative losses, negative operating cash flows, and unproven unit-level profitability. Their business models are sustained primarily through repeated infusions of private capital, which are used to fund consumer subsidies, discounts, and capital-intensive dark-store and logistics infrastructure," it said.

Despite the absence of demonstrated profitability, valuations are often built on gross merchandise value and market share rather than earnings or free cash flow, AICPDF added.

Recent listings in the sector by Zomato and Swiggy illustrate this trend. "Both companies listed after years of sustained losses, with IPO structures allowing significant exits by early shareholders. Large venture and institutional investors monetised their stakes either at the time of listing or through post-listing sales, even as the companies continued to report substantial losses and negative operating cash flows," it said.

AICPDF has already filed formal complaints before the Competition Commission of India (CCI) alleging predatory pricing and anti-competitive conduct by quick-commerce platforms.

"These proceedings remain active and unresolved, with the CCI having sought additional evidence. Proceeding with IPO approvals while competition-law investigations are ongoing raises serious concerns regarding material disclosure, regulatory arbitrage, and investor protection," it said.

Their business models are sustained primarily through repeated infusions of private capital, which are used to fund consumer subsidies, discounts, and capital-intensive dark-store and logistics infrastructure. Despite the absence of demonstrated profitability, valuations are often built on gross merchandise value and market share rather than earnings or free cash flow.

"India's capital markets must not become exit routes for business models that are structurally loss-making and sustained only by continuous cash burn. When early investors exit through IPOs while losses persist, the risk is unfairly transferred to small retail investors.

"At the same time, predatory pricing funded through investor money is destroying lakhs of kirana livelihoods. Sebi has a constitutional responsibility to ensure transparency, fairness, and investor protection. We urge the regulator to intervene decisively before irreversible damage is done to both investors and India's retail ecosystem," said Dhairyashil Patil, National President, AICPDF.