­Established presence in Capital Market
Tipsons Financial Services Private Limited (TFSPL) is promoted by Mr Dilip Shah and Mr Jitendra Shah. Mr Dilip Shah has more than 28 years of experience across various sectors. Mr. Jitendra Shah is an engineer and has more than 25 years of experience in various segments.
Incorporated in 1993, Gujarat based TFSPL, is a SEBI registered Category–I Merchant Banker and provides financial services including G-Sec & bond trading, Investment banking, corporate advisory services, equity & commodities trading and mutual fund distribution etc. through its PAN India presence. TFSPL is the group’s flagship company and is amongst the top 10 leading players in G-Sec and bonds trading in India. TFSPL benefits from the established presence in the Indian capital markets and long standing relationships with various clients. TFSPL functions as an intermediary for its clients to buy and sell debt securities, both Government and private. Its network and market intelligence enable it to offer solutions to its clients which mostly comprise banks, mutual funds, insurance companies, provident funds, pension funds, trusts and corporate treasuries etc. TFSPL’s net worth stood at Rs. 212.89 Cr. as on March 31, 2023.
Acuité believes that Tipson’s group presence in the domestic capital market and established relationships with various clients and investors should support its business risk profile over the near to medium term.
 
 Strength of underlying structure
The structure being assessed envisages an aggregate borrowing limit of Rs. 280.00 Cr. in the form of cash credit from the bank secured by pledge of underlying bonds and securities. The underlying securities will be government securities and corporate bonds rated AA and above within overall limit of Rs. 280.00 Cr. The bank has also stipulated differential margin for different category of securities to be purchased under this arrangement.
The government securities purchased by the company will be held in a designated Constituent Subsidiary General Ledger (CSGL) Account and a joint depository participant account for corporate bonds, which will be duly pledged to the bank. The limits as sanctioned by the bank stipulates purchase of only Government securities and corporate bonds rated AA and above.
The joint holding of the account facilitates for strict monitoring at the lenders end with respect to transactions. The bank stipulates margin requirement in the range of 5 percent to 15 percent (depending on the nature of the security i.e. lowest margin for risk-free securities like G-Sec). The stipulations also include the options available to the lender in case of a margin shortfall. 
The securities pledged against which funding would be provided is restricted to Government securities and Corporate Bonds rated AA and above and requires its inclusion in the lenders bank pre-approved list thus providing an effective mitigation of credit risk at the initial stage of selecting securities for trade purposes. The structure further provides for shorter duration of the securities held like in case of securities outstanding in CGSL account for more than 30 days would not be reckoned while calculating drawing power. Hence, the exposure to credit risk is limited to the period the security is held and the structure facilitates for a shorter duration. 
Acuité believes that the structure sanctioned by the lender provides for adequate covenants to safeguard the interest of the lenders. The lenders have adequate buffers available to initiate corrective action and mitigate the risk arising out of any adverse market movements. The strict adherence to the sanctioned terms and conditions is central to the rating.