Axis Bank Ltd, India's third-largest private-sector lender, has formed a joint venture with Mjunction Services Ltd for a trade receivables discounting platform, as per a stock market disclosure.
The bank has invested Rs 16.5 crore in A.Treds Ltd, which is its subsidiary, while Mjunction has injected Rs 8.25 crore. Axis Bank will hold a 67% stake in A.Treds and Mjunction will own the remaining as a result of the transaction.
A.Treds is licensed by the Reserve Bank of India to start a trade receivables discounting system (TReDS), which is aimed at improving the flow of funds to micro, small and medium enterprises by reducing the receivables realisation cycles.
Mjunction, which is an equal joint venture between Tata Steel Ltd and state-run Steel Authority of India Ltd, is India's largest online B2B marketplace and dominates transactions related to the steel industry.
“It (Mjunction) is expected to add strategic value to the company through its experience in building and operating [an] online marketplace, especially in the domains of commodities, industrial products, consumer products and services, and providing value-added services to the operators on similar platforms," Axis Bank said. The bank can nominate four directors and Mjunction two directors on the board of A.Treds. The two partners will have pro-rata first right of subscription in case of any further issuance of shares by the company, the filing said.
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