London, 29 January 2010

Last week, I had an opportunity to talk to Mr. Manav Garg, the CEO and Founder of Eka Software Solutions, about his company's background, aims and objectives. Eka first appeared on CommodityPoint's radar screen around a year ago as a vendor of non-energy Commodity Trading and Risk Management software highly ranked for its coverage of agricultural commodities. But Eka has made rapid progress and it has already established a presence in the metals space and now has a foothold in certain energy commodities too.

Trading Beginnings

Mr. Garg started out his career trading Green Coffee in Singapore helping to set up a Coffee desk for a trading company there. In the process of setting up those trading operations he “saw people talking about systems but found that almost everyone was actually using spreadsheets.” He left his trading job in 2001 and spent some time looking at what needed to be provided as a trading software solution utilizing his contacts in the industry and in 2004 his company, Eka, produced its first software solution for Coffee trading. Eka rapidly extended its software's functionality across the agricultural commodities area launching a fully fledged product in 2006. As we got deeper into the market, “customers kept asking us about metals systems,” said Mr. Garg and so Eka added some metals specialists as employees and set about delivering a metals solution too. It was also soon made available as a part of the Eka solution.

A Young Company Taking Advantage of Technology

Mr. Garg describes Eka as a young company that has been able to take advantage of newer technologies to build out its solution. The company has sought, and gained, external funding which it has invested in operations, training and management. He describes Eka as “very strong on innovation, focused on providing user friendly software that handles the physical side of commodities trading very well.”

The company's vision is to build out across commodities specializing in physical commodity functionality, including some aspects of energy, he told me. A demonstration of the product soon shows that emphasis on managing the physical transaction is indeed an Eka specialty and certainly a differentiator for the company. Mr. Garg sees his company's product as strong on physical management and physical P&L but he quickly states that it can also handle paper trading too. “Most companies want to manage the supply chain better and understand the risks on the physical side particularly. That's where Eka excels,” he says.

The company today employs 210 people the majority of which are based in Bangalore, India, but last year it opened offices in the UK and USA. “We are an international company,” said Mr. Garg, “India is our headquarters but our other offices will have sales, support and delivery staff.”

A Blurring of Commodities

As for energy commodities, Eka will be launching energy coverage in July/September 2010 and are already slating demonstrations for February. “The boundaries between commodities are getting increasingly blurred,” sates Mr. Garg. “People want a multi-commodity platform from a single vendor and common technology. The approach that we have taken is fresh emphasizing implementation success and our understanding of the physical space.”

Indeed, it is this “blurring” of the commodity trading landscape that Mr. Garg sees as helping fuel some of the latest acquisitions in the CTRM space. “Most ETRM solutions came from the paper trading side and those vendors are now seeing that the physical side is more important. Competitors are trying to get into the broader commodities space and so we will see more and more interest in acquisitions from those vendors as a means to doing so.” However, Mr. Garg is of the opinion that it will take 2-3 years for acquiring vendors to truly assimilate what they buy so he isn't too worried about the short-term impact on Eka's fortunes meanwhile, he says, Eka will already have crossed over into the energy space.

His vision for Eka in 2-3 years is that it is a mutli-commodity platform with coverage of energy commodities such as oil, biofuels and products, for example. Eka itself may look at an acquisition, for instance, in natural gas. In addition, the company is also set to launch an innovative hedge accounting product to its portfolio shortly. Finally, Eka is adding more people to help with sales and its focus on implementation.

Summary

From appearing on our radar screen around a year ago, Eka have certainly started to emerge as a major player in agriculture and metals commodities. Its recent announcement of a new license deal with Traxys also mentions that energy commodities are included. With its lower cost base in India for development and its use of modern technologies and architectures it does seem that Eka can move rapidly into other commodities. It's emphasis on managing the physical side of commodities is also a differentiator that, in part, is helping the company to win new clients.

Can Eka maintain its momentum? Only time will tell.

Ends --

By Gary M. Vasey, Ph.D.
Managing Director, Europe and AsiaPac

www.commodity-point.com