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.

About Manav Garv

Mr. Manav Garv

Manav founded Eka after a brief stint as a trader with a large global commodity trading house. It was during his trading days that he saw the deficiencies in traditional trading and risk management software. Realizing the market opportunity, and combining this with his passion for technology, Manav setup Eka with venture capital funding.

The first few years of organizational building at Eka were an invaluable experience, helping him gain deep and unique insights into all aspects of the business, and the needs of customers across the globe. Today, with Eka having shown significant growth in revenues, profitability, customer base and employees, Manav provides leadership and overall direction in such strategic areas as talent management, product direction and growth strategy. He constantly strives to achieve ever higher levels of organizational excellence and customer satisfaction by encouraging responsibility and accountability at all levels.

Born in 1974, Manav graduated as an engineer from REC (Regional Engineering College) Jalandhar, and followed this by an MBA from IIFT (Indian Institute of Foreign Trade), Delhi. Manav is a member of the CII National Committee on IT, ITeS & e-Commerce for the year 2009-10 and is part of the sub-committee on Information and Communication Technology (ICT) in Agriculture.

Solid Financial Performance
The impact of the general difficult business environment we all experienced in 2009 meant that Navita unfortunately lost several of its customers as consequence of customer bankruptcies, going into administration, or because they simply chose to close down trading activities. However, 2009 was also a year in which those very same business challenges meant that there was a good deal of procurement activity as trading companies sought to address business issues such as risk management, credit and operational risks. As a result, Navita was able to more than compensate for lost customers as it completed a number of additional licensing deals including a POMAX PENS license to Gunvor International, a global energy trading firm based in Amsterdam. It also had two major wins in North America, by following its European accounts into the North American market, along with 2 major wins in Germany, including DB Energie, and signing a new license deal with a major Russian player.

The result of this activity was, according to Dr. Gjonnes, a strong and profitable financial performance with an estimated 5-10% growth in revenues relative to FY08 (pending finalization of its accounts) off of approximately the same level of orders as in FY08 which was a record-high for the company carrying a “full order book” going in to 2010.

Investments
Navita also made some key investments in 2009 in areas such as strengthening its delivery and engagement models for strategic accounts, and increasing its enterprise readiness. Another area of focus was working with partners which CommodityPoint has identified as a key requirement in European markets and in ’09 the company became a designated Microsoft Gold partner and enlisted in the Thomson Reuters Application Partner Program while developing closer and more formalized cooperation with the top-tier system integrators. It also strengthened its links with universities in particular becoming a member of the joint university industry center officially designated as the National Center of Expertise in energy trading, as one way of seeking highly talented individuals that can take POMAX, Navita’s product platform, one step further.

Navita in 2010
In 2010, Navita has a number of strategic plans including an effort to further enhance and develop its product platform including completing its .Net conversion work and further progress around integration across its entire product portfolio. Another key and innovative initiative is the creation of Navita Labs which allows experimentation with new technologies such as Microsoft Surface and with location/map-centric information, especially for gas logistics. It also plans to continue to strengthen its products’ functionality in the area of electric power for North American, Russian and Asian/Australian markets where it sees good growth potential.

Industry Trends
Dr. Gjonnes sees some of the emerging trends in the industry as being the continued convergence between physical and financial trading, the addition of commodities to ETRM software particularly including Carbon, further consolidation in the CTRM software space, the growing interest in Software as a service delivery models for CTRM software solutions and, more activity in markets such as Asia and Russia.

Summary
Like its competitors, 2009 was a mixed year for Navita. The financial crisis actually drove some traders out of business – especially commodity trading hedge funds as investors withdrew funds – and banks who had to cover losses in other areas of their business and were forced to downsize trading operations as a result, as well as impacting other types of traders across the industry. But, consistent with findings in CommodityPoint’s market research reports, the economic downturn created demand for procurement as trading firms dealt with new challenges around credit, regulations, volatility and liquidity issues. Against this backdrop, Navita made forward progress and is well positioned to benefit in 2010.

Mr. Wais told me that about 40% of its customers are based in Europe and that it has a representative office in Singapore from which it has gained clients in Singapore, India, Thailand and the Middle East. It does have a small number of US clients on the shipping side but currently no office there. The system is primarily used by traders, integrated refiners/petrochemical firms and shipping companies.

ComFin has 30+ employees in development, support, consulting, business development and marketing.

Mr. Wais described The BullDog as utilizing typical client/server architecture and delivered either on a traditional license basis or on a leased basis. He claims that the software can be implemented with base set ups, no enhancements and users trained in as little as 2-weeks.

We will be getting a demonstration of The BullDog in the coming weeks and we are looking forward to learning more about this solution.

According to the press release, Sprague has been a SolArc customer for more than five years, using RightAngle to manage their oil trading, marketing and risk management operations.

I talked with Alan Gunn, Solarc’s managing director of natural gas sales, this afternoon and he indicated that this deal was one of “several” new gas deals they’ve closed in the last few months (including a previously announced deal with Southcross Energy). He also said, “…and the year isn’t over yet”. Stay tuned.

The press release provides some interesting discussion of Chiquita’s bunker fuel usage and market exposure that would result if they did not hedge (and also the necessity of proper hedge accounting to fully realize the benefits of those activities), including a note that Chiquita’s ship fleet burn more than 300,000 metric tons of bunker fuel every year (I know there is a banana boat joke somewhere in there!).

Triple Point also notes several new non-energy clients that they have signed recently (including a couple that have not been previously announced) covering the consumer products, agricultural and manufacturing industries. These new clients include Unilever, The Campbell Soup Company, Gavilon (formerly ConAgra Trade Group) and Incitec Pivot Ltd. Based on those results, it would be hard for anyone to argue that Triple Point is not leading the market in non-energy commodity license sales.