Zepto's Dharavi Warehouse Resumes Operations After FDA Revokes Suspension
The Dharavi dark store was run by Zepto's warehouse licensee Drogheria Sellers.
Maharashtra’s food inspection authority has revoked the suspension order for Zepto’s facility in Mumbai's Dharavi, two weeks after the licence was first put on hold, the company said in a statement on Saturday.
This revocation was issued by the Food Safety Commissioner, Food and Drug Administration, following "a detailed re-inspection process and submission of a compliance report that demonstrated necessary corrective actions had been implemented," the Zepto statement read.
On June 1, Maharashtra’s food inspection authority has cancelled the licence of Zepto’s facility in Dharavi as part of a larger crackdown on the quick commerce company’s operations in Mumbai.
The FDA's inspection at Dharavi, which revealed non-compliance with food standards, followed inspections at Zepto’s facilities in Bhiwandi, Bandra West and Borivali a few days earlier, which also found violations of standards.
In Dharavi, the agency noted that fungal growth in certain food articles was observed, storage of products near clogged/stagnant water, indicating poor hygiene was seen and cold storage temperatures were not maintained as per regulatory standards. Wet and filthy floors, with food items stored in a disorganized and unsanitary manner, including directly on the floor, were seen and even expired food products were not clearly separated from non-expired stock.
Zepto's appeal against the licence suspension of the Dharavi warehouse was heard on June 13 by an appellate authority. After reviewing the company's internal audit report, water analysis report, and photographic evidence, the appellate authority passed an order allowing the appeal and thereby revoking the suspension order.
The Dharavi warehouse has now resumed its operations.
Whose Warehouse Is It Anyway?
One must note that currently, Zepto works on a business-to-business basis with its warehouse licensees, which are Geddit Convenience, Drogheria Sellers and Commodum Groceries. Zepto buys directly from brands and sells the products to these companies. When an end consumer places an order on the app, the licensee's warehouse fulfils it and pays a fee on the sale to Zepto.
The Dharavi warehouse was run by Drogheria Sellers.
Upon the warehouse's closure, NDTV Profit had reached out to the warehouse stakeholders, who had said that they are not incentivised enough to maintain clean warehouses, and Zepto doesn't seem to mind this.
Margins for licensees are thin after deep discounting, and they have to pay a commission to Zepto on top of it, which leaves very little to be spent on maintenance of the warehouses, a person aware of the matter had told NDTV Profit.
In its statement on Sunday, the Aadit Palicha-led firm said that it is committed to adhering to all necessary food safety standards prescribed by the Food Safety and Standards Act, 2006.
"Zepto reiterates its strong commitment to upholding food safety standards and delivering a safe and trusted experience for its users nationwide," the company added.
And while communications with Zepto over re-structuring commission models end up with limited or unhelpful responses, the quick commerce firm is already pushing for more sellers in order to reduce concentration risk, the abovementioned person had added.
