Commodity Technology Advisory llc January 2014 1

Eka
Overview
Though a relatively new entrant into Commodity Trading and Risk Management (CTRM) markets, Eka
has found considerable success in selling products to a global base of users across multiple categories,
including agriculturals, softs, metals, consumer products and most recently, energy. Founded in
2004, its initial successes were primarily in the Asia-Pacific markets; however, with success in
servicing a growing roster of global-scale clients, its market reach now extends to include Europe,
Africa, and North America.
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. The company maintains
their primary software development center in Bangalore and has development centers in Canada,
the US and Australia.
Prior to 2013, revenue growth had been organic with the company successfully acquiring a number
of blue chip customers including Cargill, Louis Dreyfus, Noble, Tata and Graincorp.
In 2013, the company undertook an aggressive strategy to develop a comprehensive solution for the
Commodity Management (CM) markets, supplying software products to address the needs of the
worlds largest commodity merchants, processors and traders. In line with this strategy, Eka acquired
EnCompass Technologies of Calgary in early 2013 to bolster their energy commodity capabilities; and
later in the year acquired MatrixGroup, an Australian-based provider of mining and bulk commodity
handling software.
In order to fund additional acquisition activity and support rapid development of new functional
capabilities in support of Ekas Smart Commodity Management initiative, the company accepted a
strategic investment from Silver Lake Kraftwerk in October 2013. Terms of the investment were not
disclosed however, it is believed that the total investment was between $30-$40 million, providing
the company with a substantial war chest with which to pursue additional acquisitions.
Recent Acquisitions
EnCompass Technologies, acquired in April 2013, provides the company with strengthened
capabilities in gas, power, and crude, and energy risk management. The companys North American
based clients include EDF and Twin Eagle, giving Eka a new and significant presence in North American
energy 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. The products crude
capabilities are limited, though additional development is currently underway in cooperation with
clients and should show significantly enhanced functionality during the first half of 2014.
As the EnCompass products were developed for the US and Canada markets, their fitness for serving
European gas and power opportunities will be limited without additional development efforts.
ComTech Analyst
Briefing Note
Company Background
Founded: 2004
CEO: Manav Garg
President and COO: Rick Nelson
Offices: Norwalk CT, US
Bangalore India
Richmond UK
Calgary CAN
Adelaide AUS
Singapore
Employees: 400 (Est.)
Website: Ekaplus.com
Products
Eka.Agriculture
Eka.Metals
Eka.Energy
Eka.Analytics
Eka.Risk
Eka.Commodity Planning & Procurement
Eka.Bulk Handling
Eka.Site Automation
Eka.Anti Collision
Eka.3D Stockpile Manager
Eka.Commodity Site Manager
Market Profile(ComTech Est)
Customers by Geography
North America 20%
South America -%
Europe 15%
Africa 10%
AsiaPac including Aust. 55%
Customers by Market Segment3
Ag Producers 20%
Ag Processors 25%
Ag Traders 20%
Energy Producers 8%
Energy Traders 7%
Metal Producers 20%
Financial Results
Eka is a privately held company and
does not disclose financials though
the company has provided the
following statement Ekas 2013
organic revenue growth of 33%and
EBITDA growth of 96%
At a Glance
Commodity Technology Advisory llc January 2014 2
MatrixGroup is an Australia-based provider of software and consulting services for operators of bulk product terminals and related facilities. The
companys products ensure safe and efficient operation of complex facilities and the machines involved in stacking and reclaiming of bulk materials
including ores, grains and coal. Its clients 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 currently
available for servicing the needs of terminal equipment operators in the areas of machine anti-collision and operational optimization, as these
systems are otherwise approached as custom developed solutions by other vendors/consultants.
There are several integration points between the Matrix and current Eka software products, and these may provide some leverage in selling new
licenses to clients that may not currently utilize both product sets. However, ComTech believes the greater value in the combination of Matrix and
Eka software products lays in providing Eka with an advantage in marketing and in deploying a larger-scale CM solution for the bulk
products/ags/mining market segments.
Financial Results
Eka is privately held and does not publically disclose financial information. However, management has indicated that the company has been
profitable 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 most
recently completed financial reporting year (ending March 31, 2013), the company has seen 33%annual growth in revenues and 96%growth in
EBITDA. Based upon the companys forecast for FY 2014, revenues are expected to grow 154%and EBITDA to increase 147%, including the impact
of acquisitions. Organically, the company expects 2014 revenue growth to be 35%and EBITDA to increase 45%.
Product Set and Technology Base
Eka has taken full advantage of a modern technology stack and architecture allowing it to offer its solutions in a traditional on-premise model as well
as 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 environment
with data partitioning for each customer, though we understand its current cloud clients are all single-tenanted hosted deployments. The technology
also allows for a flexible and full-featured user interface that makes use of analytics, graphics and drill-down functions and features to enhance
usability; Eka dashboards are relatively easily built and deployed by educated users of the software.
Given Ekas modular design, it is able to construct pre-configured solutions for specific purposes or market niches, offering the ability to add additional
modules as the customer requires them.
Ekas products include:
Eka.Agriculture An end-to-end Agri-Commodity solution to facilitate trade, operations and risk management from the farm to the
marketplace.
Eka.Metals A solution for managing physical trading, position, P&L, derivatives, risk, logistics and finance across base metals, Ferro alloys,
steel and scrap.
Eka.Energy - A multi-commodity energy trading and risk management (ETRM) system covering trade capture through confirmation,
operations, settlement and risk management.
Eka.Analytics Predictive and user-controlled analytic tools to view, analyze and simulate KPIs for Commodity Markets.
Eka.Risk - For commodity companies to define, measure and control organization wide commodity risk.
Eka.Commodity Planning& Procurement - For manufacturers to capture, analyze and manage demand, budgets, forecasts, coverage,
procurement & hedging.
Eka.Site Automation - A dynamic bulk site management and control tool, incorporating high level process planning, scheduling, task
execution and product tracking.
Eka.Anti Collision - 3D modeling of mobile machines and structures providing precise position to prevent collisions.
Eka.3D Stockpile Manager 3D model of stockyard, including quality, for better stacking and reclaiming decisions.
Eka.Commodity Site Manager Physical operations management of bulk commodity handling sites including stock, cargo receipt,
shipment, and billing.
The Eka.Agriculture and Eka.Metals solutions are rather comprehensive and competitive products. We do view Eka.Energy as something of a work
in progress because of the acquisition of EnCompass and the work that still needs to be done to integrate and expand the product in crude.
Eka.Analytics and Eka.Risk are also both relatively new solutions. Eka.Risk is an enterprise risk solution that purports to be agnostic to the underlying
CTRM solutions and would compete more with products from the specialty risk product vendors. Eka.Analytics represents Ekas move toward offering
a more robust analytic and decision support environment across the board but particularly in commodity management. The other named products
are the MatrixGroup product set that is in the process of being re-branded.
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Company Strategy
Commodity management (CM) is a term coined in 2008 to describe the use of traditional CTRM software products as the core of a broader solution
set that addresses the commodity procurement, transportation and logistics, processing, marketing and hedging requirements of a wide variety of
commercial enterprises. These companies, including food processors, CPGs, metal processors and fabricators, energy merchants and mining
operations, have increasingly recognized the inherent risks associated with their commodity procurement and transformation processes, identifying
not only market and price risks, but also the risks associated with operationally and financially exposed multi-threaded supply chains. Utilizing CM
solutions, these companies can gain an enterprise wide view of operational constraints and options for maximizing value along the supply/production
chain; and actively manage and mitigate financial risks associated with foreign currencies, interest rates and credit. In order to provide the requisite
functionality to address the needs of CM, these solutions require not only robust and rich trading and risk management functionality, but they must
also provide:
the ability to manage complex, multi-model transportation networks
capture and management of the complex quality characteristics of multiple commodities such as ags, softs, metals, concentrates, natural
gas, power, oil and oil products and any number of other commodities utilized as feed stocks in production processes
capture and analysis of enterprise-scale risk exposures, and
a complex array of key performance indicators necessary to effectively manage and optimize a global scale operation.
Recognizing the growing acceptance of CM solutions, particularly in the agricultural and food markets, Eka has developed a fully capable CM solution
that can address the breadth of requirements in the markets they
have identified. Additionally, Eka management believes, based on
their conversations with industry participants, that the markets
expectations of CM have moved past the initial capture and
management of commodity exposures along the entirety of the
supply chain (from source to market). This recently formed market
expectation and requirement is that CM solutions must move past
transaction management into providing a decision support
environment, founded in predictive and user-controlled analytics and
enriched with improved and real-time visualizations of key
performance indicators and relevant market data and information.
The provision of a technology environment that enables this
information aggregation also facilitates the deployment of
optimization tools that can aggregate vast amounts of information
and data, and provide a near real-time view of operational or
financial options that reduce risk and improve operational
efficiencies.
ComTech has reviewed many of Ekas products and believes it is progressing well along the path to achieving this vision of the next generation of
CM, or CM 2.0 or Smart CM, though Eka will need to continue to develop additional capabilities and/or acquire existing components. The Eka.Analytics
solution is the current basis for this effort.
Outlook and Analysis
While 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-year
declines 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. This
above market performance is due, in part, to their origins and market gravity in the agricultural segment of the Asia Pacific region, one of the few
bright spots in the current CTRM markets. Leveraging this advantage, the company has embarked upon an aggressive growth strategy, expanding
their functional coverage via internal development and measured acquisitions, 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 further positioning the company to address
the 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 its
vision of CM 2.0 or Smart Commodity Management. The company is well funded and has an experienced leadership team in place. Given the
genesis of the company in the agricultural markets and recent acquisition of EnCompass, Eka would appear to be best positioned to acquire and
successfully service new CM 2.0 customers in the agricultural trading, metals and mining, consumer package goods (CPG), food processors and North
American energy markets.
Source: Eka
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Opportunities
Early leading vendors in CM market have not been able to sustain momentum, providing an opening for a new vendor, such as Eka,
to displace
Eka is well positioned to define and potentially lead the next generation of CM/Smart Commodity Management
Growing adoption of CM by leading global scale CPGs, food processors, and agricultural traders
Growing adoption of the SaaS and hosted CTRM solutions market
Risks
Inability to identify and/or consummate acquisitions to complete roadmap for CM 2.0
Inability to sufficiently integrate developed or acquired components into a full CM architecture
Sustained CTRM/CM market weakness limiting market sales of new products
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About ComTech Analyst Briefing Notes
Commodity 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 affecting
both the users and providers of the applications and services that are crucial for success in markets constantly roiled by globalization, regulation and
innovation.
ComTech Analyst Briefing Notes are intended only to provide an overview of a technology, vendor or product of interest in the Commodity Trading
and Risk Management market space. These Notesare not an endorsement of any product or vendor and should be viewed only as an additional
source 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 companys management cooperated in the
preparation of this ComTech Analyst Briefing Note.
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