Investment Policy

PREAMBLE

The Reserve Bank of India (RBI) vide RBI/DoR/2023-24/106 Master Direction DoR.FIN.REC.No.45/03.10.119/2023-24 dated October 19, 2023 (as amended) has advised Board of NBFCs to frame an appropriate Investment Policy for the Company and implement the same.

This Investment Policy has been made pursuant to para 29 of Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 as amended and may be modified by the Board of Directors of the Company from time to time.

APPLICABILITY

This Investment policy shall be applicable to all investments made by the Company.

DEFINITIONS

For the purpose of this Investment Policy –

  1. “Act” means the Reserve Bank of India Act,1934;
  • “Board of Directors” means the Board of Directors of SGS Fintech Private Limited (Formerly known as SGS Udyog Private Limited).
  • “Body corporate” means a body corporate as defined under Section 2(11) of the Companies Act, 2013;
  • “Break up value” means the equity capital and reserves as reduced by intangible assets and revaluation reserves, divided by the number of equity shares of the investee company;
  • “Carrying cost” means book value of the assets and interest accrued thereon but not received;
  • “Company” or “SGS” or “SGS” means SGS Fintech Private Limited (Formerly known as SGS Udyog Private Limited);
  • “Companies Act” means the Companies Act, 2013 or any statutory modifications or re- enactment thereof for the time being in force.
  • “Companies in the group” means an arrangement involving two or more entities related to each other through any of the following relationships: Associate (defined in terms of AS 23), a related party (defined in terms of AS 18), and investment in equity shares of 20% and above.
  • “Current investment” means an investment which is by its nature readily realisable and is intended to be held for not more than one year from the date on which such investment is made;
  • “Discounted Cash Flows (DCF) Value Method”, is defined as value equals to the present value of future cash flows that accrues to the equity shareholders of the Company.
  • “Earning value” means the value of an equity share computed by taking the average of profits after tax as reduced by the preference dividend and adjusted for extra-ordinary and non- recurring items, for the immediately preceding three years and further divided by the number of equity shares of the investee company

Note: If, an investee company is a loss-making company, the earning value will be taken at zero;

  • “Fair value” means the mean of the earning value and the break-up value and discounted cash flow value method;
  • “Long term investment” means an investment other than current investment;
  • “Net asset value” means the latest declared net asset value by the concerned mutual fund in respect of that particular scheme;
  • “Officer of a Company” means any person as defined in Clause (59) of Section 2 of the Companies Act, 2013 including an Auditors of the Company;
  • “Regulations/Prudential Norms” means Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023

Other terms not defined hereinabove shall have same meaning as defined in the Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 as amended from time to time.

COMPANY PROFILE

SGS Fintech Private Limited (Formerly known as SGS Udyog Private Limited) is a private Limited Company incorporated on 31st January, 2001 registered as a Non-Banking Financial Institution on 17th January, 2025 in terms of the provisions of Master Direction issued by Reserve Bank of India.

SGS is classified as a Non-Systemically Important Non-Deposit Accepting (ND-NSI) Non-Banking Financial Company.

SGS being a registered NBFC with RBI has been primarily engaged into (a) Investing in securities of listed and unlisted companies and (b) Lending activities.

Following broad guidelines have been framed by SGS to inform its investment decisions in order to conform with the Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023. Meeting of the long- term investment goals of the Company basically depends on a number of factors, which not only include fund availability and rate of return, but also inflation and taxes. The motive of the Company to hold the investments is to get returns out of the investments, which can be in any of the following manner:

  1. Return on investments in the form of Dividend and/or interest;
  2. For capital appreciation;
  3. For other benefits.

The Company may invest in Equity Shares, Preference Shares, Debentures, bonds, derivatives, Government securities, Warrants, Mutual Funds, Alternative investment fund, Portfolio Management Services, structured products, real estates, Stressed Assets, bidded (bade) assets, other marketable securities, etc. (This is an inclusive list and the Company may invest in any other manner as may be allowed by the regulations.

CLASSIFICATION OF INVESTMENT

The Investments, that the Company will hold, will be treated as the assets of the Company held with the motive of earning income by way of dividend, interest, and / or for capital appreciation and / or for other benefits. The   investments  of  the  Company  shall  be  classified  into  the  following two categories:

  1. Current Investment: The investments made by the Company which are intended to be held for not more than one year from the date on which such investment is made.
  2. Long Term Investment: Investment intended to be held for more than one  year  from the date on which such investment is made

TRANSFER OF INVESTMENT

  1. Investments in securities shall be classified into Current and Long Term, at the time of making each investment;
  • The Investments shall be transferred scrip-wise, from Current to Long term or vice-versa, at the Book Value or Market Value, whichever is lower;
  • The depreciation, if any, in  each scrip shall be fully provided for and the appreciation, if any, shall be ignored;
  • The depreciation in one scrip shall not be set off against the appreciation in another scrip, at the time of such inter-class transfer.

VALUATION

Valuation of Quoted Current Investment:

The quoted current investments shall, for the purposes of valuation, be  grouped  in  the  following categories:

  1. i) Equity Shares or any compulsory convertible instruments
    1. Preference Shares
    1. i) Debentures and bonds
      1. Preference Shares
      1. Debentures and bonds
      1. Government Securities including treasury bills
      1. Unit of Mutual Funds and
      1. Others

The quoted current investments for each category shall be valued at cost or market value, whichever is lower.

For this purpose:

  1. Investments in each category shall be considered scrip- wise and the Cost and Market value/Fair Value aggregated for all investments in each category.
  1. Our investment is shown in books on purchase cost and any depreciation or appreciation in the value of securities is completely ignored.

Valuation of Un-quoted Current Investment:

  1. Equity Shares

Unquoted equity shares in the nature of current investments shall be valued at Cost.

  • Preference Shares

Unquoted preference shares in the nature of current investments shall be valued at Cost.

  • Government Securities

Investments in unquoted Government Securities or Government guaranteed bonds shall be valued at Carrying cost.

  • Mutual Funds

Unquoted investments in the units of Mutual funds in the nature of current investments shall be valued at the Net Asset Value declared by mutual fund in respect of each particular scheme.

  • Commercial Papers

Commercial Papers shall be valued at Carrying cost.

  • Debentures

Unquoted debentures shall be treated as term loans or other type of credit facilities depending upon the tenure of such debentures for the purpose of income recognition and asset classification.

Valuation of Investment:

All Investments are to be valued as in accordance with Ind AS 109- Financial Instruments. Further, all the Equity Investment made till 31st March 2025 shall be valued pursuant to the para 5.7.5 read with para B5.7.1 of IND-AS 109 i.e. fair value through other comprehensive income and Equity Investment made on after 1st April, 2024 shall be valued pursuant para 4.1.4 of IND-AS 109 i.e. Fair Value through profit or loss.

Inter-Class Transfer

There shall not be any inter class transfer of securities.

AMENDMENTS

The Board may amend the provisions of this Policy from time to time.

Unless otherwise specified, such amendments shall be effective from the date of the Board meeting at which such amendments are approved.