TReDS platform M1xchange eyes 60-70% growth in business volumes this fiscal

Growth optimism stems from expected increase in number of MSMEs, NBFC presence and trade credit insurance, says Chief Executive Mohindru

M1xchange, a digital invoice discounting platform for MSMEs, is eyeing 60-70 percent growth in business volumes this fiscal to about ₹40,000 crore on the back of “manifold” growth in adoption of TReDS in Indian industry, Sundeep Mohindru, Chief Executive, Mynd Solutions, said.

Last fiscal, M1xchange had recorded business volumes of ₹ 23,100 crore, substantially higher than ₹ 12,600 crore in 2021-22. In fiscal 2020-21, M1xchange had recorded business volumes of about ₹5,700 crore.

M1xchange, which is one of three RBI licensed TReDS platforms that made small profits in 2022-23, is confident of good growth in profits this fiscal as it looks to spread its geographies and bring in more MSMEs and corporate customers on board the platform, Mohindru told businessline. Last fiscal was the first full year when M1xchange made profits.

Growth in NBFCs

M1xchange, which has 18,000 MSMEs registered with the platform, also expects this number to grow by 50-60 per cent this fiscal.

Mohindru said that the current fiscal would see an increase in the number of non-banking finance companies (NBFCs) getting onboarded. This along with the possibility of IRDAI-approved trade credit insurance taking off (still awaiting RBI guidelines) could spur growth for the platform this fiscal, Mohindru added.

He also said that M1xchange has signed agreements with three State Governments — Goa, Tamil Nadu and Madhya Pradesh—for allowing their State-owned entities to do business on M1xchange platform. “Three more governments are in the pipeline”, he said.

Currently, M1xchange through its mobile App serves micro, small and medium enterprises (MSMEs) in 1,600 cities. TReDS is an electronic platform for facilitating the financing/discounting of trade receivables of micro, small and medium enterprises through multiple financiers. These receivables can be due from corporates and other buyers, including government departments and public sector enterprises. One of the big benefits of TReDS is that MSMEs are not required to give collateral and there will be no recourse to them in case of defaults.

Mohindru highlighted that adoption of TReDS in the industry is growing manifold as it is bringing value addition to all the participants including large corporate and their SME customers. “Cost of financing is reasonable as it is ranging between 7-10 percent per annum. There is saving of 5-6 per cent saving in financing cost, which is reflected in P&L of both buyer and supplier. The adoption of platform as concept has grown multifold and that is helping us. Our objective was to bring down cost of doing business for both buyer and supplier, help SMEs get their receivables faster. Both are being achieved and so adoption is going up”, he said.

Mohindru also said that M1xchange is in the process of integrating itself with government’s GeM procurement portal.