Understanding SG Finserve – A Quiet Enabler in Manufacturing
Lately, I’ve been spending some time reading up and thinking about SG Finserve. It’s not a company that builds things, but it’s becoming very important to those who do.
What do they do?
SG Finserve is focused on working capital loans, especially to distributors of large manufacturing companies like APL Apollo. Their model is interesting:
Distributors need money to buy steel (or other materials) from big manufacturers.
SG Finserve gives them loans and takes inventory as collateral.
If the distributor can’t repay, SG asks the manufacturer (anchor) to stop supplying further stock.
This way, SG Finserve keeps risk under control, since no distributor wants to be cut off from supplies. It also ensures:
Manufacturers get better visibility for production,
Distributors get smoother supply,
SG gets repaid on time — minimal NPA risk.
Financial thoughts
Their loan book is around ₹2000 Cr.
Churn is quick – 9 times a year.
Return ratios are good: ROA ~4%, ROE ~18-20%.
Borrowing is backed by recent equity – ₹780 Cr.
No reliance on bank funding yet, they’re doing it city by city.
As they scale, operating leverage can kick in, but ROE may slightly drop as debt increases. Still, it’s a solid and lean model for now.
Why it stands out
Not many NBFCs are focused only on Supply Chain Financing (SCF).
Getting accepted by large “anchor” companies is hard, so SG already having 28+ anchor tie-ups is a big entry barrier.
Tech is not a big differentiator here – it’s more about relationships and execution.
Also, some serious names have shown interest – Madhusudan Kela bought ~1.7% stake at ₹350/share.
In summary
SG Finserve is quietly filling a gap in the ecosystem. It’s not a flashy business, but it’s solving a real problem in a smart way. For anyone tracking India’s manufacturing growth, this is a company worth watching — not because it builds factories, but because it keeps the wheels turning for those who do.