M1x­change eyes ₹12,000 cr busi­ness vol­ume in 2019-20

The two-year-old plat­form ex­pects to break-even next fis­cal: CEO Mo­hin­dru

The Hindu Business Line - - NEWS - KR SRIVATS

M1x­change, a dig­i­tal in­voice dis­count­ing plat­form for MSMEs, is eye­ing busi­ness vol­umes of ₹12,000 crore in 2019-20, as more mi­cro, small and medium en­ter­prises un­der­stand the ben­e­fits of timely fund­ing pro­vided by such on­line mar­ket­places, a top of­fi­cial said.

“Our as­pi­ra­tion is to achieve busi­ness vol­umes of ₹12,000 crore in 2019-20. This fis­cal we are at ₹300 crore a month. There is no rea­son why we can­not scale up to ₹1,000 crore a month next fis­cal”, Sun­deep Mo­hin­dru, CEO, Mynd So­lu­tions told Busi­nessLine.

M1x­change, set up by Mynd So­lu­tions in April 2017, is among the three Trade Re­ceiv­able Dis­count­ing Sys­tems (TReDS) — on­line mar­ket­places — ap­proved by the RBI to bring to­gether buy­ers, sell­ers and fi­nanciers for dis­count­ing the MSMEs in­voices.

Mo­hin­dru said M1x­change hopes to close the cur­rent fis­cal with busi­ness vol­umes of at least ₹2,500 crore. “We have pro­cessed vol­umes of about ₹1,700 crore. In next two months, the num­ber of large cor­po­rate buy­ers are ex­pected to go up by 80, tak­ing the over­all count of cor­po­rate buy­ers to 180,” he added.

As on date, nearly 1,000 MSMEs are reg­is­tered with M1x­change and as many as 25 banks and NBFCs are on board. A salient fea­ture of this plat­form is that dig­i­tal sig­na­ture is a must for ev­ery trans­ac­tion, Mo­hin­dru said. As many as 10 cen­tral Sun­deep Mo­hin­dru CEO Mynd So­lu­tions

pub­lic sec­tor en­ter­prises are us­ing this plat­form. Talks are also on with State gov­ern­ment pro­moted en­ti­ties to see if they can also come on board, he said.

Mo­hin­dru said that most part of 2017-18 — where it trans­acted a busi­ness of just ₹300 crore — was spent on con­vinc­ing banks that the plat­form was se­cure and the whole struc­ture is le­gally valid. Now, there is ac­cep­tance of the sys­tem for the plat­form and the en­tire con­cept.

“Ev­ery­thing is dig­i­tal. Banks had no bi­lat­eral pa­per­work with sup­pli­ers. The en­tire re­course for banks in case of pay­ment de­fault is on the buyer,”he said.

TReDS al­low MSMEs to post their re­ceiv­ables on the elec­tronic plat­form and get them fi­nanced. This not only gives them ac­cess to fi­nance, but will also put greater dis­ci­pline on cor­po­rates to pay their dues on time.

How it works

A MSME sup­ply­ing goods and ser­vices to a large cor­po­rate has a re­ceiv­able from that large com­pany. It can put the in­voice on the ex­change. The large cor­po­rate will ac­cept the in­voice and ac­cept to pay on, say, the 60th day, as per the credit terms. The banks on the ex­change will then bid to dis­count that in­voice. Besed on the best bid, the MSME will get in­stant pay­ment which will be made by the cor­po­rate to the bank. The rate of in­ter­est it will get is based on the good­will of the large cor­po­rate. In this process, banks are es­sen­tially tak­ing a credit risk on the large cor­po­rates and not on the MSME.

The MSME is out of it as it is sell­ing the re­ceiv­able to the bank. There is bid­ding and so the process is trans­par­ent. The other ben­e­fit for banks is that they don’t have to source the busi­ness, have a re­la­tion­ship man­ager or a branch as ev­ery­thing is dig­i­tal.

Vir­tual mind

Mo­hin­dru said M1x­change was look­ing to ad­dress the prob­lems of MSMEs at a holis­tic level. It has launched a helpline for ven­dors by the name ‘Vir­tual Mind’, which will help MSMEs in in­come tax, GST and other com­pli­ances. It would also as­sist in HR, fi­nance, tech­nol­ogy and IT needs of MSMEs he added.

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