Zagros, who had lost to Kuwait SC 36-24 in Group A on Thursday, was defeated against Qatar’s Al-Arabi 40-23.
Foolad Mobarakeh was also lost to Al-Wehdah of Saudi Arabia 34-29 in Group B
Foolad had started the competition with a 33-31 loss against Qatar's Al-Wakrah on Thursday.
Foolad will play Oman on Sunday and Zagros face Al-Sharja of the UAE on the same day.
The competition is being held in Samcheok, South Korea from November 7 to 17.
The Asian Handball Club League Championship is the official competition organized by Asian Handball Federation for the men's handball clubs of Asia, and takes place every year.
In addition to crowning the Asian champion, the tournament also serves as a qualifying tournament for the IHF Super Globe.