Automating commodity trading

Automating commodity trading

Eka Software, which makes software for the commodity trading market, has made a mark by bringing in smart products for a volatile sector

S. MEERA

Bengaluru-based Eka Software (Eka) came into the limelight when it was identified as one of the top 50 fastest growing companies by the New Delhi-based software body, NASSCOM. Since we last wrote about it in 2010, the company has lived up to its potential and continues to impress with a growth rate of 30 per cent to 50 per cent. In the wake of market uncertainties that have plagued most industries, this is no mean feat.

Manav Garg, founder and CEO, explains this growth, “Commodity markets have been extremely volatile since 2008 and this has forced companies to look at better ways to manage their risks and protect operating margins.” As a result, Eka focused on offering products that have very strong capabilities for financial risk management using derivatives. The products have been built specifically for firms that deal in physical commodities and hence, offer the best of breed functionalities to manage the physical supply chain covering procurement, logistics, inventory management and marketing. There is an additional layer of business intelligence and analytics built into the products to help companies make smarter decisions. “We offer an end-to-end commodity management platform which helps companies enhance their visibility and establish better control over their entire business,” he adds.

Enhanced product portfolio

Today, Eka has around 250 employees across five different locations and also at client sites. “We have offices in India, U.S., U.K., Australia and South America. We have expanded our product offerings across energy and bio-fuels besides agri-commodities and metals,” says Garg.

Eka has expanded its reach horizontally and vertically. The company’s initial offering, Eka, was targeted at trading in agriculture products, metals and crude oil. Since 2010, it has released, Eka.Energy – a physical ETRM (Energy Trading and Risk Management) solution for managing end-to-end trade lifecycle of crude oil, refined products, and bio-fuel; Eka.Grownet – an online portal specifically designed to help agri-marketing companies improve grower experience through personalised and professional services; Eka.Analytics – a business intelligence and analytics platform for commodity firms providing real time, meaningful and actionable information; and Eka.Processing – a commodity sourcing and procurement solution for consumer product companies to manage demand aggregation, trading, scheduling, logistics and hedging strategies.

In the coming years, Eka plans to diversify and expand its product portfolio by offering an end-to-end commodity platform to manage the physical supply chain, trade, operations and risk from source to market for agri-commodities, metals, energy and consumer product companies.

Garg pegs the market size for commodity management software at close to US $2 billion annually. “One of our biggest growth areas is commodity firms that are exposed to the unprecedented volatility in the commodity markets, which need a system that can handle both the physical and financial aspects of commodity trading by securing both physical supply and managing risks.” He expects this would remain a key growth driver for the company in the future too.

Garg adds that there is industry consolidation with commodity trading firms focusing on upstream integration and physical supply chain. He thinks that with the end-to-end commodity management platform, Eka is uniquely positioned to serve this market.

Intelligent analysis

One of the big offerings from Eka is its product, Eka.Analytics, which has been specifically designed for commodity markets. “Existing CTRM (Commodity Trading and Risk Management) solutions  serve more as a system of record for metrics like position, exposure, P&L, trade capture and implementing risk metrics, and have had very limited reporting and analytics capabilities,” points out Garg. He adds that another drawback of the current analytics offerings in the market has been that they are targeted towards senior executives with limited usability for traders and risk managers.

Eka.Analytics is created for traders and risk managers to C-Level executives, providing insights into their trading and risk management processes using best–in-class, visually intuitive analytical tools. Companies that deal in buying, selling and storing of commodities are impacted by the volatility in commodities markets. Eka.Analytics uses transactional data to generate business insights that help these companies improve their business performance.

The existing analytics solutions in the market are also bundled with the CTRM products and have very limited integration capabilities with third party systems. “We have positioned Eka.Analytics as a standalone solution, which can integrate with any solutions that our clients may have like spreadsheets, order management systems, Eka CTRM or even third party CTRM solutions,” explains Garg. Little wonder then that Eka was ranked amongst the top three providers of CTRM solutions in the agri-commodity space by a survey conducted by ‘Commodity Point’, one of the biggest providers of CTRM research, analysis and consultative services for commodity markets.

Wider reach

Along with product development, Eka has also focused on strengthening its sales team to position these products to the new markets and also cross-sell to existing clients.

“Our principal markets have been international markets like U.S., Europe, Latin America and Australia, and so far we have had good success in these markets,” says Garg. The company has established itself well in the Australian agri-business space with names like Cargill, Gavilon and Graincorp using its products. The company has also got a lot of traction in Europe and the U.S. with leading players such as Boliden and Tata Steel Europe signing up with it. “We have recently entered the U.S. energy markets by signing up with Renewable Energy Group (REG), a leading provider of bio-fuels,” shares Garg.

Now, Eka has set its sights set on expanding its geographical coverage in both emerging markets and scaling up its operations in Australia, Europe and North America.

Staying stable

Competition has grown with time, and the market is seeing a lot of acquisitions and buyouts by some of the bigger players to strengthen their product offerings.

But Garg’s mandate is clear – keep innovating, investing in research and development, sales and marketing, and work in close collaboration with clients to stay ahead of the market. This is his magic mantra to steady growth in this highly volatile market.


DID YOU KNOW?

  • Eka received a seed investment of US $5 million from GP Group, a Thailand-based conglomerate and a second series of funding in 2009 from Nexus Ventures for US $10 million
  • Eka is expanding its product portfolio, entering new verticals and adding new horizontal offerings. Another growth area is emerging because of industry consolidation where commodity trading firms are focusing on upstream integration and physical supply chain

THEN AND NOW

Product – Eka for agriculture products, metals and crude oil Eka.Energy – for energy segment; Eka.Grownet: portal for agri-marketing companies; Eka.Analytics – a business intelligence and analytics platform; and Eka.Processing – commodity sourcing and procurement solution
200 employees 250 employees
Office in India with reach in the US and Europe Five offices – India, U.S., U.K., Australia and South America
Focused on CTRM (Commodity Trading and Risk Management) Added Business Intelligence and Analytics product, online portal for agri marketing, and commodity sourcing and procurement solution

Meera Srikant has been working with publishers and publications since 1993, writing and editing articles, features and stories across topics. She also blogs and writes poems, novels and short stories during leisure. Writing for The Smart CEO since 2010, she is also a classical dancer.