Top Energy Company in India ONGC concludes first transaction worth 1 Cr on TReDS of M1xchange
New Delhi, 08 November, 2019: In a significant development, M1xchange, one of the foremost exchanges dealing in Trade Receivables Discounting System (TReDS), has successfully transacted with ONGC, an Indian Multinational Crude Oil and Gas Corporation. The digital platform of M1xchange came into being in April 2017 to serve micro, small and medium enterprises (MSMEs), which usually struggle to stay afloat due to paucity of working capital. While the private sector came on-board swiftly, PSUs have on-boarded TReDS recently. A total of 36 PSUs have been on-boarded and about 9 have joined M1xchange in the last quarter.
The coming together of M1xchange and ONGC would address the financing concerns of MSMEs in the energy sector, an important segment of the economy. Other PSUs such as Indian Oil, HPCL, BPCL, ONGC Videsh, NTPC, GAIL, etc. are also a part of TReDS on M1xchange. Launched by outsourcing and consulting firm Mynd Solutions, the use of TReDS is aimed at improving the flow of funds to the MSMEs by reducing the realization cycles of receivables. TReDS allows MSMEs to post their trade receivables on the system and get them financed.
“We welcome ONGC on board. This is an important development for M1xchange as it reflects the growing trust and confidence of PSUs where systems were not geared for TReDS but slowly they are reconfiguring their approval cycles to be able to extend the benefit of Digital financing to larger set of MSME vendors and fulfill the objective of TREDS, towards the growth of economy," said Sundeep Mohindru, CEO, M1xchange.
As the largest crude oil and natural gas Company in India, contributing around 75 per cent to Indian domestic production, ONGC ranks 11th among global energy majors.
"TReDS is the effective mechanism created by Government for financing Micro and small enterprises. Consistent with our aim to facilitate our Business partners we are encouraging more MSE suppliers to participate and benefit from the TReDS platform. At ONGC we are of the view that the TReDS initiative has the potential to solve the working capital related issues for MSE vendors efficiently at lower cost. " said Mr. Subhash Kumar, Director (Finance), ONGC.
The digital platform is known to offer transparency and helps in taking quick decisions on offering funding to MSME sector which is the backbone of India’s economy.