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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 30.00 | ACUITE BB+ | Stable | Reaffirmed | - |
| Bank Loan Ratings | 20.00 | ACUITE BBB+ | CE | Stable | Reaffirmed | - |
| Total Outstanding | 50.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuite has reaffirmed the long-term rating of ‘ACUITE BBB+(CE)' (read as ACUITE Triple B plus (Credit Enhancement)) on the Rs. 20.00 Cr. bank facilities of Sovereign Global Markets Private Limited (SGMPL). The outlook is ‘Stable’.
Acuite has reaffirmed the long-term rating of ‘ACUITE BB+' (read as ACUITE Double B plus) on the Rs. 30.00 Cr. proposed bank facilities of Sovereign Global Markets Private Limited (SGMPL). The outlook is ‘Stable’. Rationale for rating The rating action factors in the increase in the business volume reflected by a total transactional value of securities at ~Rs. 42,628 Cr. during FY2025 as against ~Rs. 33,795 Cr. during FY2024. Accordingly, the PAT stood at Rs. 4.44 Cr. for FY2025 as against Rs. 1.73 Cr. for FY2024. The transactional value during 9MFY2026 reduced to ~Rs. 18,927 Cr. (provisional) due to increased margin requirements by banks, resulting in a PAT of 0.66 Cr. (provisional) for the period. The rating continues to factor in the strong client network, and expertise of the management in the bond market. However, the rating remains constrained on account of income volatility as a result of dependence on debt market volumes, low margin and highly competitive scenario in the industry. While the company’s trading volumes are mainly intraday, it is exposed to some price risk in its investment and treasury portfolio. Acuité believes that SGMPL's business operations would remain susceptible to inherent risks in capital market and overall economic environment. |
| About the company |
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Delhi based Sovereign Global Markets Private Limited (SGMPL) was incorporated on Aug 12, 2010. The company is promoted by Mr. Umesh Kumar Tulsyan & Ms Nidhi Tulsyan. SGMPL is mainly involved in dealing of fixed income securities along with interest rate derivatives to hedge the market risk. The Company is also involved in fixed income advisory services, debt syndication and investment banking consultancy. The company has a network of 5 branches in India, as on December 31, 2025. The company services Financial Institutions, HNI, family offices and corporate clients.
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| Unsupported Rating |
| ACUITE BB+/Stable |
| Analytical Approach |
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Acuite has assigned differential rating based on the structure and stipulations of the lender in respect of the facility. In respect of the facility, which has been secured by the pledge of highly rated bonds/debentures, Acuite has considered a notch up from the standalone rating. Acuite has considered the standalone financial and business risk profile of SGMPL to arrive at the rating.
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| Key Rating Drivers |
| Strength |
| Established business model based on diversified revenue streams
Sovereign Global Markets Private Limited (SGMPL) has been in the fixed income business of trading for more than a decade. The company is promoted by Mr. Umesh Tulsyan and Ms. Nidhi Tulsyan. Mr. Umesh is a seasoned Fixed Income Fund Manager with around two decades of experience in the finance industry. The company has active operations in Debt Markets. They also have a presence in Mutual Fund and Financial Advisory. SGMPL has transactional relationship with ~1000 institutional & retail clients. SGMPL has a well-diversified portfolio of business verticals comprising of fixed income investment advisory, investment banking consultancy and dealing of fixed income securities. The company has a professional team managing each of these business verticals. With the expected buoyancy in the debt market segment, Acuité believes that SGMPL will benefit from its relations with institutional clientele and its expertise in debt market. Strength of underlying structure in respect of one of the rated instruments In respect of facilities of Rs. 20 Cr. rated at ACUITE BBB +(CE), Acuité has been guided by the structure of the underlying facilities. The structure being assessed envisages an aggregate borrowing limit of Rs. 20.00 crore in the form of Overdraft facility from the bank secured by a pledge in the form of SLR and Non SLR Securities (Bonds) with margin stipulations and other risk mitigations measures in place. The bank stipulates a cash margin requirement of 50 percent for Overnight and Intraday Trading. The lending bank has adequate buffers available to initiate corrective action and mitigate the risk arising out of any adverse market movements. |
| Weakness |
| Susceptibility to operating performance to volume and level of activity in capital markets
Sovereign Global Markets Private Limited’s business performance is linked to the level of activity in the bond markets, which in turn is linked to the overall economic activity. The volumes in the debt capital market are influenced by economic cyclicality and other macroeconomic factors such as GDP, growth rate, inflation, movement in interest rates and policy actions adopted by RBI. SGMPL generally engages in to buy and sell transactions on behalf of its clients, which comprises of provident and pension funds, mutual funds, banks, family offices etc. Most of the purchases of the securities are simultaneously sold to its clients. As a prudent strategy, SGMPL prefers to minimize the holding period in respect of any securities, which significantly mitigates the associated credit risk and market risk. However, this approach doesn't eliminate vulnerabilities. The practice, though prudent, is not always perfectly matched. As a result, SGMPL occasionally maintains an inventory of securities. This residual inventory, even if minimal, exposes the company to market risks. Such exposure, though reduced compared to conventional trading strategies, remains a point of concern. Modest scale of operations Sovereign Global Markets Private Limited’s business is supported by a networth of Rs 18.30 Cr. as on March 31, 2025. During the fiscal year 2025, total transactional value (buy and sale) of securities stood at ~Rs. 42,628 Cr. during FY2025 as against ~Rs. 33,795 Cr. during FY2024. SGMP’s profitability stood at Rs. 4.44 Cr. during FY2025 as against Rs. 1.73 Cr. during FY2024. The transactional value during 9MFY2026 reduced to ~Rs. 18,927 Cr. (provisional) due to increased margin requirements by banks, resulting in a PAT of 0.66 Cr. (provisional) for the period. Acuité believes that the company’s ability to increase its scale of operations along with maintaining a positive trend in profitability would be a key monitorable. |
| Assessment of Adequacy of Credit Enhancement under various scenarios including stress scenarios (applicable for ratings factoring specified support considerations with or without the “CE” suffix) |
| The structure provides for adequate covenants to safeguard the interest of the lenders and has adequate buffers available to initiate timely corrective action and effectively mitigate the risk arising out of any adverse market movements. |
| Rating Sensitivity |
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| All Covenants |
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Affirmative covenants
a) The facilities must be used for the purpose for which it is sanctioned. Any deviation without Bank’s approval would entail cancellation of all the limits. b) Monthly interest has to be serviced on the day of application. Hence, Borrower to make necessary arrangements to fund the account well in advance to service the monthly interest. c) The Borrower should ensure governmental and regulatory approvals, wherever applicable. d) In the event of any decline in Security Value or FACR held, the Borrower shall provide, on the first demand by the Bank, additional security acceptable to the Bank and/or cash collateral. e) The Facilities granted by the Bank are subject to review at periodical intervals; consequent to such review, the Facilities may be continued / cancelled / reduced depending upon the conduct and utilisation of the Facilities. f) For the purpose of such periodic review / renewal the Borrower should submit data as demanded by the Bank. g) The Bank reserves the right to revise the spread over any benchmark rate stipulated by Bank on the loan, if the Reserve Bank of India • Revises the standard provision on assets and / or • Enhances the risk weights for assets and / or or, in the event of deterioration in the credit risk profile of the Borrower in line with RBI guidelines. h) During the currency of the Bank’s credit facilities, the Borrower shall keep the Bank informed in writing on any material change in the Borrower unless they are in compliance with our covenants i) The Borrower will keep the Bank informed of the happening of any material event likely to have substantial effect on their production, profits, operations, etc including any action taken by any creditor, Government authority against them. j) The Borrower shall furnish to the Bank with the position vis-à-vis the outstanding statutory obligations such as income tax, payment of provident fund, additional statutory obligations such as income tax, payment of provident fund, additional emoluments (compulsory deposit), gratuity, electricity dues etc. as and when demanded by the Bank with reasons, if any, for increase from the earlier number and the proposed plan of payments thereof. k) The Borrower declares that the information and data furnished by the Borrower to the Bank are true and correct. l) The Bank may assign or otherwise transfer facilities (or portion/s thereof) to any third party/parties without prior consent of the Borrower. The Borrower shall not, without the prior written consent of the lender, assign or otherwise transfer any of its rights and obligations created hereunder. m) All out-of-pocket expenses incurred by the Bank (including preparation of documentation, insurance, telex and legal cost, (if any) in respect of the aforesaid Facilities and/or enforcing any of its rights hereunder, will be on the Borrower’s account. n) The Bank may at its sole discretion disclose such information to such institutions in connection with the credit facilities granted to the Borrower. o) The Borrower agrees that in case of any default in the payment of loan/interest on due dates, Bank/RBI will have an unqualified right to disclose or publish the name of the Borrower and its directors as defaulter in such manner and through such medium as Bank/RBI in their absolute discretion might think fit. p) The Bank reserves the right to cancel/suspend/reduce any or all the limit/s sanctioned and to alter/amend/vary the terms of the sanction including rate of interest at its sole discretion without assigning any reason whatsoever. q) This sanction does not vest in anyone a right to claim any damages against the Bank for any reasons whatsoever. The Borrower shall enter into arrangements including but not limited to consortiums/multiple banking arrangements exclusively with the Bank, its Affiliates and/or other arrangements approved by the Bank and the Borrower shall not open a current account with any other bank without the prior written permission of the Bank. r) The Borrower shall ensure that during the term of the Facilities the Borrower shall utilize the services of the Bank for the Borrower’s transactional banking needs. s) The Borrower agrees that the Bank shall receive details of the “unhedged foreign currency exposure” of the Borrower, as prescribed by RBI and the Bank, from time to time, (i) in such form and manner (ii) at such intervals and (iii) to be calculated on the basis of such parameters as so communicated by the Bank from time to time. t) In case a person, whose name appears in List of Wilful Defaulters (“LWD”), is found to be on the board of the Borrower or as a person in charge and responsible for the management of the affairs of the Borrower, the Borrower would take expeditious and effective steps for removal of such a person from the board or from being in charge of its management. u) The Borrower understands that under no circumstances shall the Bank renew / provide fresh credit facilities or restructure existing facilities provided to such a Borrower so long as the name of its promoter and/or the director(s) and/or the person in charge and responsible for the management of the affairs of such Borrower is in the List of Wilful Defaulters (“LWD”). The Borrower shall ensure that the internal/statutory auditors of the Borrower shall submit to the Bank, as and when required by the Bank, a certificate certifying that there has been no diversion/siphoning of funds sanctioned to the Borrower on annual basis. v) The Borrower hereby gives consent to the Bank to appoint an auditor acceptable to the Bank for the purpose of verifying diversion/siphoning of the Facility sanctioned by the Bank. w) The Borrower gives consent to the Bank to commission a forensic audit of affairs of the Borrower and its book of accounts, if required by the Bank. Negative covenants a) During the tenor of the Facility, the Borrower shall not without prior approval of the lenders, which would not be held unreasonably: • Formulate or enter into any scheme of undertaking new project, expansion, merger, de-merger, amalgamation, compromise or reconstruction • Permit any change in its ownership or control or constitution or shareholding or the management or majority of directors, managing partners, promoter directors or partners •Declare any dividend on its share capital if it fails to meet its obligations to pay interest and/or installments due to the Lender as long as it is in such default. • dispose of all or any part of its assets or make any acquisition or investment except where made in the ordinary course of business. • make any change to the general nature of its business. • acquires fixed assets (excluding routine capital expenditure). • Borrower making investment by way of share capital in or lend or advance funds to or place deposits with any other company, firm or person save as required in the normal course of business. b) The Borrower should not divert working capital funds for long-term purposes. c) The loan shall be utilised for the purpose for which it is sanctioned and it should not be utilised for: • Subscription to or purchase of shares/debentures • Extending loans to subsidiary companies/associates or for making inter-corporate deposits. • Any speculative purposes. d) The Borrower will not create, without prior consent of the bank, charges on any or all properties or assets assigned to Bank as security during the currency of the credit facilities sanctioned to them. e) The Borrower shall not make any change to/in its constitutional documents, except with prior written consent of the Lender; f) The Borrower shall not utilise the Facilities or any part thereof for setting up of new units consuming/producing Ozone Depleting Substances as mentioned in annexures 1 and 2 to the Montreal Protocol. The Borrower also declares that it is not engaged in the manufacture of the aerosol units using Chlorofluorocarbon. g) The Borrower shall not induct a person whose name appears in the List of Wilful Defaulters (“LWD”) on its board or as a person in charge and responsible for the management of the affairs of the Borrower. h) The Borrower confirms that none of their directors or its guarantors/persons in charge of the management of affairs of the entity appears in the list of large defaulters/List of Wilful Defaulters (“LWD”) by way of reference to DIN/PAN, etc. Financial Covenants Company should maintain minimum TNW of INR 120 Mn during the tenure of the facility. Same to be tested on quarterly basis. Information Covenants (a) The Borrower shall submit regularly to the Bank: Audited accounts as soon as the audit has been completed but not later than 9 months from the end of the financial year. (b) The Borrower shall provide half-yearly certification by professionals with regard to compliance of various statutory prescriptions as per Annexure III of the RBI Circular on ‘Lending under consortium arrangement/Multiple Banking Arrangements’ dated December 08, 2008 bearing reference number RBI/2008-2009/313 DBOD.No.BP.BC.94/08.12.001/2008-09, as the same may be amended, substituted, modified from time to time within 60 (sixty) days of the end of the half year (if multiple banking or consortium is applicable). (c) Information necessary to enable the Bank to comply with “know your customer” or similar identification procedures as the Bank may request from time to time. In the event of any subsequent change in the information provided/delivered to the Bank to comply with “know your customer” or similar identification procedures, the Borrower shall immediately inform the Bank of such change in the information within 7 (Seven) days of change in the information; (d) Details of any litigation, arbitration or other proceedings threatened, commenced, or pending within 7 (Seven) days after the Borrower becomes aware of such litigation, arbitration or other proceedings. (e) Any further information/data the Bank may reasonably request from time to time in writing regarding the Borrower/Obligors; (f) Borrower shall submit financial covenants compliance certificate at quarterly intervals. |
| Liquidity Position |
| Adequate |
| The company's liquidity position is adequate and has cash and cash equivalents of Rs. 0.46 Cr. as on March 31, 2025. As of December 31, 2025, SGMPL has cumulative fund-based limits amounting to Rs. 115 Cr. against pledge of highly rated g-secs and corporate bonds. |
| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
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| Status of non-cooperation with previous CRA (if applicable): |
| Not applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Banks And Financial Institutions: https://www.acuite.in/view-rating-criteria-45.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Explicit Credit Enhancements: https://www.acuite.in/view-rating-criteria-49.htm |
| Note on complexity levels of the rated instrument |
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