Questions over Magnis Energy customer revenue ‘black hole’
Sukh Energy – one of six customers Magnis Energy says has signed deals worth a total of $US898m ($1.24bn) – has no revenues and assets of just $70,000.
It’s the major customer described by Magnis Energy as a multinational “involved in the oil and gas industry, telecommunications and energy industries” with contracts totalling almost $700m.
But Sukh Energy – one of six customers Magnis says has signed deals worth a total of $US898m ($1.24bn) – has no revenues and assets of just $70,000, according to financial reports for the year ending March 31, 2020. “The company is into the business of solar based lighting solutions to customers,” the report filed with India’s corporate regulator reads.
After a week of questions about the unnamed customers with hundreds of millions of dollars in contracts, Magnis is finally hitting back, warning shareholders about the “many untruths in the media”.
The ASX-listed Magnis, first floated in 2005 and now worth about $300m, has transitioned from speculative projects such as graphite mining in Africa into the booming market for next-generation batteries that could soon power everything from public transport to the military. Over the past year, Magnis’ share price has risen from 22c to 32c.
It has attracted, and later lost, significant political and corporate figures including former Macquarie executive Warwick Smith, ex-NSW deputy premier Troy Grant and John McGrath’s former business partner James Dack.
The business proposition is simple. Magnis owns 63 per cent of New York-based manufacturer Imperium3 and 10 per cent of Charge CCCV, whose intellectual property is behind the batteries.
And the technology is promising. According to C4V, as Charge CCCV is better known, the batteries would almost double the range of electric cars. They could also be manufactured without the use of cobalt and nickel, two expensive materials that make similar batteries too expensive for mass use.
Progress, however, has not been easy. Imperium3’s New York plant, originally expected to open in 2019 and manufacture 15 gigawatts of lithium-ion batteries, is now just 23 per cent complete.
Sources told The Australian that both Mr Smith, who left after a year, and Mr Grant, a former police minister who chaired the company’s risk committee and left after eight months, had concerns about Magnis’s direction. Mr Grant declined to comment. Mr Dack did not return calls.
Those issues haven’t stopped Imperium3 signing customers. In all, Magnis says, it has sales agreements worth just under $1bn.
Despite declining to respond to questions about these companies, Magnis has confirmed Sukh Energy is a customer. The Australian last Tuesday reported it appeared to be headquartered in a house on the road to Heathrow Airport with net assets of £100.
Not so, Magnis told shareholders. In an email to one investor, a company spokesman said Sukh Energy was an “Indian based company with the parent company operating for decades, contracts in the energy, oil and gas, telco industries with an order book of over $US500m”. “(The Australian) is trying to make you believe that the company is based in the UK running out of a house with less than $200 in assets … this was clarified in our announcement,” the email read.
In reality, the Sukh Energy in Britain and India are related companies, sharing an online presence and a major shareholder, Hardev Singh Virdi. According to its Indian filings for the year ending March 2020, Sukh Energy had $58,000 in intangible assets, $7400 in tangible assets, $435 in cash and an investment in commercial development near Chandigarh worth $3751.
PDF: Sukh Energy Private Ltd - financial statement
PDF: Sukh Energy Ltd shareholders list
The company appears to have spent around $50,000 on research and development of lighting in the year ending March 2020, largely on rent and the purchases of “research light samples”.
Imperium3’s other customers have not been disclosed, with a Magnis spokesman previously citing agreements which contained clauses “requested by the client relating to their details being confidential”.
The Australian reported Sukh Energy was a Magnis customer on September 14. A day later, Sukh Energy submitted a new filing to Britain’s Companies House corporate registry. One Kuldeep Gupta had sold his 25 per cent holding in the London-based Sukh Energy in December 2020. Why this was disclosed now, some nine months later, is unclear.
C4V’s vice-president of strategic partnerships? Kuldeep Gupta. Magnis, whose chairman Frank Poullas is also an executive director at C4V, did not respond to a request for comment.
The Australian has previously reported another company which purports to be an Imperium3 customer – Ez4Ev – has assets of less than $2000, according to the company financial filings.
Ez4Ev directors Samita Johar and Ayesha Singh describe themselves in company documents as a “certified life coach” and an “artist” respectively. The company notes Imperium3’s chairman Shailesh Upreti is a “mentor”.
India’s Business Today and The Economic Times in August reported Ez4Ev was “introducing an innovative battery technology” from C4V and Imperium3.
In an email to shareholders, a Magnis employee wrote: “Yesterday’s article – trying to say that because (Imperium3)’s president is a mentor to a company they may be an offtaker … what rubbish journalism.”
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