Magnis Energy Technologies’ $243m client revealed as questions hang over financial future

Sukh Energy has 16 staff, an outdated list of clients and orders for $243m worth of batteries from ASX-listed energy play Magnis Energy Technologies.

Accountants offices in Hounslow, England, the registered office of Sukh Energy Limited.

Magnis Energy Technologies’ biggest customer, which has pledged to buy batteries worth almost $US243m ($373m), is run by a handful of staff from rented ­office spaces, with touted customers claiming they have never dealt with the business.

Sukh Energy, the linchpin customer pointed to by Magnis in a recent announcement, is run by one man in Britain with a smattering of on-the-ground staff in India. Magnis is banking on contracts with Sukh Energy and several other offtake partners as the listed battery player faces a funding crunch, with recent filings revealing just over 1.6 quarters of funding left in the tank.

In its latest set of accounts, Magnis revealed it had booked no revenues from sales. This came after the battery player told the market in October it had lost a deal with Premier Solar to supply $US20m worth of cells, but would reveal sales in upcoming results.

Magnis previously told the Australian Securities Exchange, in response to questioning, that Sukh Energy was well placed to deliver on its purchase orders.

Investors were told Sukh Energy was a sprawling set of businesses “which collectively have substantial revenues, assets and global operations”, with contracts worth almost $500m signed.

The Australian has confirmed the business is run part-time by the son of its founder, with some of Sukh Energy’s claimed clients denying links with the company.

Sukh Energy has placed orders for $US243m in batteries from Magnis' flagship iM3NY factory.

Magnis told the ASX Sukh Energy “is an entity of sufficient substance and standing” and the company had the “marketing and financial resources of the owners” that would ensure the company was “adequately capitalised” and able to pay for its hefty orders list.

Magnis said purchases from Sukh Energy would rise from $US4.6m in 2022 to $US35.1m in 2024, before topping out at $US117m by 2026.

Sukh Energy boss Ravi Virdi, who currently also works in IT for a pharmaceutical company in the UK, said he was confident the company would secure funding to finance its purchases of cells from iM3NY, which were set to rapidly escalate in coming years.

He said Sukh Energy would fund itself with borrowings and revenues.

“The reality is we have money and properties as well, we have partner companies we’re going to (joint-venture) with,” he said.

Sukh Energy’s company accounts filed with the UK’s Companies House agency, the government body charged with keeping an accurate accounting of business records, show Mr Virdi’s business reported £3560 in current assets in September last year.

These accounts showed Sukh Energy had £23,564 in net current liabilities.

Accounts for the Indian arm of the business showed Sukh Energy had 6.2 million rupees ($117,000) in reserves as of March.

The Australian has repeatedly attempted to contact Sukh Energy, including visiting the British accountants of the business that has made multimillion-dollar commitments.

Staff at the small suburban shopfront in London’s west were confused when asked about Sukh Energy. “What is the company name again?’’ asked a female staff member from the three-desk ­office.

The Magnis iM3NY plant was hit by delays.

A short time later she queried, “So this company is here, you say?”, before being assured that the registered address was the Hounslow address.

“Who are the directors?” she said.

“The person who deals with this account doesn’t work from here. Even though the registration address is here, we don’t deal with that account. The letters come here, but we don’t deal with them. Another company is their accountant,” she told The Australian. She added: “ I don’t know if I am allowed to give out their information.”

Magnis has previously told the ASX Sukh Energy’s owners were “involved in the oil and gas, renewable energy and technology sectors with operations in Asia, Africa and Europe”.

Sukh Energy previously operated a gas bottle refilling business in India under the same name, before selling it some years ago.

Mr Virdi said he was preparing for the delivery of battery cells from iM3NY, with almost 15 people working directly or on contract for Sukh Energy in India.

Mr Virdi said the five-year agreement with iM3NY was manageable as it started small before “we’re going to ramp it up”.

Sukh Energy listed a number of clients on its website, including Ghanaian-British solar company SukaSol, Indian solar manufacturer Premier Energies, and Indian water and sewage pumping business KSR Brothers.

However, SukaSol boss Abdul Raaj told The Australian “we have never traded with the said company”.

Mr Virdi said “there is a bit of housekeeping I need to do”, noting his father had done much of the early work contacting clients.

Mr Virdi said India had been a focus of the business, with plans to open discussions in the next two quarters, noting “there are many other Indian companies we’re speaking to”.

“They’re very large companies in battery management systems,” he said.

Mr Virdi said Sukh Energy was already testing cells it had received from iM3NY.

Magnis chair Frank Poullas.

Sukh Energy inked its original deal with Magnis March 2021, with the two sides recently extending the terms from 2026 to 2028.

Mr Virdi said the relationship with iM3NY had been going on for close to five years, with several plans for cell-based storage systems in the works.

Former Magnis figures said the original deal hashed out with Sukh Energy was tightly held within the business.

Mr Virdi said he had never met Magnis’ executive chair Frank Poullas, but had exchanged some email correspondence.

“We spent a few years building blocks and having lots of discussions with investors and companies,” Mr Virdi said.

Mr Virdi said Sukh Energy was looking at expanding its operations beyond batteries, into green hydrogen and other renewable energy projects.

“I’ve got a really good network,” he said.

A Magnis spokeswoman said iM3NY “conducted thorough due diligence” prior to signing its deal with Sukh Energy.

“The iM3NY team continues to meet regularly with the Sukh Energy chairman and leadership team to ensure delivery of the five-year agreement,” she said.

Originally published as Magnis Energy Technologies’ $243m client revealed as questions hang over financial future