comtech analyst briefing note – eka update

© Commodity Technology Advisory llc November 2014 1

Eka Nov. 2014 Update

OverviewEka has continued to grow and at a rate that places them in the upper echelons of the CommodityTrading and Risk Management (CTRM) vendor group and has found considerable success in sellingproducts to a global base of users across multiple categories, including agriculturals, softs, metals,consumer products and most recently, energy. The company has embarked upon an aggressivegrowth strategy, expanding their functional coverage via internal development and measuredacquisitions, allowing the company to better compete not only in the traditional single or multi-commodity trading and risk management opportunities that arise in around the globe, but furtherpositioning the company to address the lucrative commodity management, or CM, markets..

Given the increasing globalization of the commodity markets, shifting supply and demand patterns,and global economic uncertainty, ComTech believes that advanced analytics will be an increasinglyimportant component of the next generation of solutions for commodity traders, commodityconsumers and the broader CM market. With Eka’s focus on advanced analytics as an integralcomponent to their solutions, they appear to be well positioned to execute on their vision of the nextgeneration of commodity management solution, termed “CM 3.0” or “Smart CommodityManagement.” The company is well funded and has an experienced leadership team in place. Giventhe genesis of the company in the agricultural markets and success in metals, and with the recentacquisition of the EnCompass product (an energy centric solution), Eka would appear to be wellpositioned to attract and successfully service new CM 3.0 customers in the agricultural trading,metals and mining, consumer package goods (CPG), food processors and North American energymarkets.

In 2008, Eka established its Americas headquarters in Norwalk CT and has continued to add executive,product management, sales and delivery staff in that location. In 2014, the company’s founder andchief executive officer, Manav Garg, relocated to the US, moving their global headquarters from Indiato Stamford CT. Additionally, the company has made substantial investments in expanding theirmarket reach and in hiring additional experienced staff. A number of industry veterans with trackrecords of successfully growing companies in this market have been brought in, including Presidentand COO, Greg Taylor; VP of Global Services and Support, Wah Chu; EVP and CMO, Michael Schwartz;and newly appointed board member, Peter Armstrong. A number of additional new hires, includingnewly appointed VP of Field Operations in Asia Pacific, James Brackenrig, have been added tostrengthen the company’s ability to support a growing roster of clients in that region, and in NorthAmerica.

Eka maintains their primary software development center in Bangalore, with additional developmentand support centers in Canada, the US and Australia.

Prior to 2013, revenue growth had been organic, with the company successfully acquiring a numberof blue chip customers including Cargill, Louis Dreyfus, Noble, Tata and Graincorp.

In 2013, the company supplemented its solution portfolio with two strategic acquisitions: EnCompassTechnologies of Calgary was acquired in early 2013 to bolster Eka’s energy commodity capabilities;and later in the year MatrixGroup, an Australian-based provider of mining and bulk commodityhandling software was added.

In order to fund additional acquisition activity and support rapid development of new functionalcapabilities in support of Eka’s “Smart Commodity Management” initiative, the company accepted a

ComTech AnalystBriefing Note

Company BackgroundFounded: 2004CEO: Manav GargPresident and COO: Greg TaylorOffices: Stamford CT, US

Bangalore IndiaRichmond UKCalgary CANAdelaide AUSSingapore

Employees: 410 (Est.)Website: Ekaplus.com

ProductsInSight CM - AgricultureInSight CM - OriginationInSight CM - Supplier Collaboration PortalInSight CM - BiofuelsInSight CM - Chemicals & FertilizersInSight CM - MetalsInSight CM - ConcentratesInSight CM - CoalInSight CM - Natural GasInSight CM - PowerInSight CM - OilInSight CM - Commodity Planning & ProcurementInSight CM - SMARTInSight CM - Site Automation ControlInSight CM - Commodity Site ManagerInSight CM - 3D Stockpile ManagerInSight CM - 3D Anti CollisionInSight CM - Smart ScalesInSight CM - Smart ProbesInSight CM - Dodd-FrankInSight CM - ICE/CME IntegrationInSight CM - Hedge Accounting

Market Profile (ComTech Est)Customers by GeographyNorth America 20%South America -%Europe 15%Africa 10%AsiaPac including Aust. 55%

Customers by Market SegmentAg Producers 20%Ag Processors 25%Ag Traders 20%Energy Producers 8%Energy Traders 7%Metal Producers 20%

Financial ResultsEka is a privately held company anddoes not disclose financials; thoughthe company has provided thefollowing statement “Eka’s 2013organic revenue growth of 33% andEBITDA growth of 96%”

At a Glance


strategic investment from Silver Lake Kraftwerk (SLK) in October 2013. Terms of the investment were not disclosed however, it is believed that thetotal investment was approximately $35 million, providing the company with a substantial war chest with which to pursue additional acquisitions.

Background to Commodity Management StrategyCommodity Management (CM) describes a set of capabilities, including “traditional” CTRM, that address the commodity procurement, transportationand logistics, processing, marketing and hedging requirements of a wide variety of commercial enterprises. These companies, including foodprocessors, CPG’s, metal processors and fabricators, energy merchants and mining operations, have increasingly recognized the inherent risksassociated with their commodity procurement and transformation processes, identifying not only market and price risks, but also the risks associatedwith operationally and financially exposed multi-threaded supply chains. Utilizing CM solutions, these companies can gain an enterprise wide viewof operational constraints and options for maximizing value along the supply/production chain; and actively manage and mitigate financial risksassociated with foreign currencies, interest rates and credit. In order to provide the requisite functionality to address the needs of CM, these solutionsrequire not only robust and rich trading and risk management functionality, but they must also provide:

the ability to manage complex, multi-model transportation networkscapture and management of the complex quality characteristics of multiple commodities such as ags, softs, metals, concentrates, naturalgas, power, oil and oil products and any number of other commodities utilized as feed stocks in production processescapture and analysis of enterprise-scale risk exposures, anda complex array of key performance indicators necessary to effectively manage and optimize a global scale operation.

Company StrategyEka has developed a fully capable CM solution that can address the breadth of requirements in the markets they service. Additionally, Ekamanagement believes, based on their conversations with industryparticipants, that the markets’ expectations of CM have moved pastthe initial capture and management of commodity exposures alongthe entirety of the supply chain (from source to market). Thisrecently formed market expectation and requirement is that CMsolutions must move past transaction management into providing adecision support environment, founded in predictive and user-controlled analytics and enriched with improved and real-timevisualizations of key performance indicators and relevant marketdata and information. The provision of a technology environmentthat enables this information aggregation also facilitates thedeployment of optimization tools that can aggregate vast amounts ofinformation and data, and provide a near real-time view ofoperational or financial options that reduce risk and improveoperational efficiencies.

ComTech has reviewed many of Eka’s products and believes it isprogressing well along the path to achieving this vision of the next generation of CM, what the company terms CM 3.0 or Smart CM, though Eka willneed to continue to develop additional capabilities and/or acquire existing components. The InSight CM - SMART solution is the current basis for thiseffort. We believe Eka has made demonstrable progress in their development of their next generation of Smart CM solutions.

Product Set and Technology BaseEka has taken full advantage of a modern technology stack and architecture allowing it to offer its solutions in a traditional on-premise model as wellas via the cloud as hosted or true SaaS. Eka is one of a minority of CTRM vendors that offers the possibility of a multi-tenanted SaaS environmentwith data partitioning for each customer, though we understand its current cloud clients are all single-tenanted hosted deployments. The technologyalso allows for a flexible and full-featured user interface that makes use of analytics, graphics and drill-down functions and features to enhanceusability; Eka dashboards are relatively easily built and deployed by educated users of the software.

Given Eka’s modular design, it is able to construct pre-configured solutions for specific purposes or market niches, offering the ability to add additionalmodules as the customer requires them.

The company has recently changed the product name to InSight CM to reflect their focus on analytics and fact-based decision support,. Eka’s productsnow include:

InSight CM - Agriculture: An end-to-end agri-commodity solution to facilitate trade, operations, and risk management from the farm tothe marketplace.

Source: Eka


InSight CM - Origination: A solution for agriculture companies to seamlessly manage the acquisition of produce from farmers, co-operatives, procuring agents, and commodity brokers.InSight CM - Supplier Collaboration Portal: A web-based software portal for originators and producers to reach out to suppliers withoutthe constraints of time and distance.InSight CM - Biofuels: A biofuels solution to manage requirements when converting agriculture products to energy, including theprocurement of raw material (such as sugar and corn), transportation and storage, price risk management with futures and options,mark-to-market P&L, as well as sales and distribution of the finished product.InSight CM - Chemicals & Fertilizers: A solution for manufacturers of chemicals and fertilizers to capture, analyze, and manage demand,budgets, forecasts, coverage, procurement, and hedging while providing real-time scenario and intelligence capabilities to optimizedecision making.InSight CM - Metals: A solution for managing physical trading, position, P&L, derivatives, risk, logistics, and finance across base metals,ferro alloys, steel, and scrap.InSight CM - Concentrates: A solution for managing contract terms and conditions, pricing, assaying, umpiring, settlements, financialhedges, and P&L across concentrates and ferro alloys.InSight CM - Coal: A solution for managing the full coal supply chain lifecycle including managing delivered product quality based onquality analysis reports, contract pricing penalties, and contract pricing rejections.InSight CM - Natural Gas: A solution for managing the entire lifecycle of natural gas including transaction capture, scheduling,confirmations, operations, risk management, credit, and settlement.InSight CM - Power: A solution for power trading, managing the entire lifecycle from transaction capture through confirmations,operations, risk management, credit, and settlement.InSight CM - Oil: A solution for managing the entire lifecycle of crude and refined products including purchase, refining, blending, storage,transportation, sales, distribution, and trading.InSight CM - Commodity Planning & Procurement: A solution for manufacturers to capture, analyze, and manage demand, budgets,forecasts, coverage, procurement, and hedging.InSight CM - SMART: An advanced analytics solution that provides real-time access to data and predictive, user-controlled analytic toolsto view, analyze, and simulate key performance indicators for commodity markets.InSight CM - Site Automation Control: A dynamic bulk site management and control tool, incorporating high level process planning,scheduling, task execution, and material tracking.InSight CM - Commodity Site Manager: A web-based software portal for bulk stock management that provides complete visibility of allstock.InSight CM - 3D Stockpile Manager: A bulk handling solution that provides a real-time, 3D model of stockyards, including quality, forbetter stacking and reclaiming decisions.InSight CM - 3D Anti Collision: A solution that provides 3D modeling of mobile machines and structures for positional awareness forprotection and optimization of equipment movements at bulk handling sites.InSight CM - Smart Scales: A solution to automate the truck weighing function at bulk handling sites to transform truck scales intounmanned weighbridges.InSight CM - Smart Probes: A solution to automate the sampling process at bulk handling sites that replaces the manual process ofsampling to test for commodity type and quality, making sampling stations run automatically with no manual intervention.InSight CM - Dodd-Frank: A solution that provides and maintains a complete audit trail of all changes to the system — who, what, when— and automatically submits reports to trade repositories.InSight CM - ICE/CME Integration: A solution to seamlessly connect with financial exchanges including ICE and CME.InSight CM - Hedge Accounting: A solution that automates the hedge accounting process for commodities and ensures an organizationstays in compliance with hedge accounting rules.

The agriculture and metals solutions are rather comprehensive and competitive products. We do view the energy solutions (the acquired Encompassproduct) as somewhat of works in progress as those products will require additional development in order to expand their functional footprint intoenergy commodities outside of natural gas and power; that being said, the company has made demonstrable progress with the release of InSightEnergy 8.0 and has successfully licensed the product to four new clients since its acquisition, including US based Just Energy, SEI Energy and twoothers. Eka’s analytics solution represents Eka’s move toward offering a more robust analytic and decision support environment across the boardbut particularly in commodity management. The bulk handling products are functional capabilities of the acquired MatrixGroup product set that candeployed as separate, standalone components.

Recent AcquisitionsEnCompass Technologies, acquired in April 2013, provides the company with strengthened capabilities in gas, power, and crude, and energy riskmanagement. The company’s North American based clients include EDF and Twin Eagle, giving Eka a new and significant presence in North Americanenergy markets. Eka has undertaken an aggressive plan to integrate the EnCompass products into the underlying Eka technical architecture.


The EnCompass acquisition provides Eka a solid model for servicing North American opportunities in power generation and natural gas production,trading and marketing. As the EnCompass products were developed for the US and Canada markets, their fitness for serving European gas and poweropportunities will be limited without additional development efforts

While the product’s crude capabilities are limited, Eka continues to invest in the development and expansion of the product. With the recent releaseof Version 8.0 (focused primarily on a comprehensive technology refresh) and additional planned functionality additions, the product should appealto a broader market both in North America and globally in the coming months and years.

MatrixGroup was an Australia-based provider of software and consulting services for operators of physical bulk product sites, mines and terminals..The solutions ensure safe and efficient operation and materials management of complex facilities and supply chains for ores, grains and coal. Thesecustomers are primarily located in Australia and the AsiaPacific region.

Matrix has proven to be a leader in its market – in fact it appears to occupy a unique position as the only packaged software solution currentlyavailable for servicing the needs of upstream bulk physical commodity materials management including specialized machine anti-collision, stockpileoptimization and advanced 3D modelling, as these systems are otherwise approached as custom developed solutions by other vendors/consultants.

In defining a unique breadth of support for the physical commodity value chain, there are several integration points between these newly rebrandedSupply Chain & Operations Control software products, and these may provide some leverage in selling new licenses to clients that may not currentlyutilize both product sets. However, ComTech believes the greater value in the combination of Matrix and Eka software products lays in providingEka with an advantage in marketing and in deploying a larger-scale CM solution for the bulk products/ags/mining market segments. The companyhas demonstrated this leveraged capability through two recent new client wins, including Bracofeed, an international scale merchant trader of cattlefeed ingredients.

Financial ResultsEka is privately held and does not publically disclose financial information. However, management has indicated that the company has beenprofitable for most of its existence and has grown, on average, approximately 35% per year over the last 5 years. Eka has said that in the mostrecently completed financial reporting year (ending March 31, 2013), the company has seen 33% annual growth in revenues and 96% growth inEBITDA. Based upon the company’s forecast for FY 2014, revenues are expected to grow 154% and EBITDA to increase 147%, including the impactof acquisitions. Organically, the company expects 2014 revenue growth to be 35% and EBITDA to increase 45%. At this time, we believe the companyis on track to meet those goals for 2014.

Outlook and AnalysisWhile the global markets for CTRM products have been soft for about the last 18 months, and many vendors in the space have seen year-over-yeardeclines in revenue, Eka has continued to grow and at a rate that places them in the upper echelons of their peer group in the vendor market. Thisabove market performance is due, in part, to their origins and market gravity in the agricultural segment of the Asia Pacific region, one of the fewbright spots in the current CTRM markets. Leveraging this advantage, the company has embarked upon an aggressive growth strategy, expandingtheir functional coverage via internal development and measured acquisitions, allowing the company to better compete not only in the traditionalsingle or multi-commodity trading and risk management opportunities that arise in around the globe, but further positioning the company to addressthe lucrative CM markets.

ComTech believes that advanced analytics will be an important component of the next generation of CM. Eka is well positioned to execute on itsvision of CM 3.0 or “Smart Commodity Management.” The company is well funded and has an experienced leadership team in place. Given thegenesis of the company in the agricultural markets and recent acquisition of EnCompass, Eka would appear to be best positioned to acquire andsuccessfully service new CM 3.0 customers in the agricultural trading, metals and mining, consumer package goods (CPG), food processors and NorthAmerican energy markets.

OpportunitiesEarly leading vendors in CM market have not been able to sustain momentum, providing an opening for a new vendor, such as Eka,to displaceEka is well positioned to define and potentially lead the next generation of CM/Smart Commodity ManagementGrowing adoption of CM by leading global scale CPGs, food processors, metals and agricultural tradersGrowing adoption of the SaaS and hosted CTRM solutions market

RisksPotential for difficulties in integrating newly developed or acquired components into a full CM architectureSustained CTRM/CM market weakness limiting market sales of new products


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About ComTech Analyst Briefing NotesCommodity Technology Advisory (ComTech) is the leading analyst organization covering the Energy and Commodity Trading and Risk Management(E/CTRM) technology markets. We provide invaluable insights, backed by primary research and years of experience, into the issues and trends affectingboth the users and providers of the applications and services that are crucial for success in markets constantly roiled by globalization, regulation andinnovation.

ComTech Analyst Briefing Notes are intended only to provide an overview of a technology, vendor or product of interest in the Commodity Tradingand Risk Management market space. These Notes are not an endorsement of any product or vendor and should be viewed only as an additionalsource of information or data relating to the covered topic.

Disclosures: At the time of this writing, Eka is a customer of Commodity Technology Advisory and the company’s management cooperated in thepreparation of this ComTech Analyst Briefing Note.____________________________________________________________________________________________________________

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comtech analyst briefing note – eka update

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