Among the assets disposed of by a beleaguered Noble Group, a Hong Kong-based commodity trading giant, in 2018 as part of a $3.5-billion debt restructuring were four bulk carrier vessels. The Hong Kong company owned these ships through a Mauritius company controlled jointly with Jindal Steel and Power Limited, records of Conyers Dill Pearlman show.
An investigation by The Indian Express shows that the chain of transactions begins in 2011 when Mudit Paliwal quit his position as co-head of global freight business at Noble Group and set up Panacore Investments Limited (PIL), backed by New Delhi-based entrepreneur Sunil Nihal Duggal. Records show that PIL was owned by Prosperity Investments Worldwide Limited (BVI) where Vision Shipping Private Ltd, a Singapore company set up in August 2011, held 90 per cent stake and Paliwal and his wife Aishwarya the remaining 10 per cent. “The understanding” between Duggal and Paliwal, records show, entitled Paliwal “to take additional 20 per cent shareholding in Prosperity at par.”
While Duggal’s role in Vision Shipping (Singapore), incorporated months before PIL, remains unclear, he set up Vision Shipping Private Limited in India in 2006. One of its subsidiaries Vision Shipping HK Ltd (later Nihal Group HK Limited) was incorporated in 2009. In an emailed response, Sunil Duggal denied being a beneficiary of Vision Shipping Pte Limited (Singapore), underlining that Vision Shipping Pvt Ltd (India) had “no connection with Panacore businesses” and Vision Shipping (Singapore). In May 2012, PIL placed orders with Chinese builders for four “kamsarmaxes” — 82,000-ton bulk carriers or ships — for $108 million, plus another $5 million in legal and delivery expenses.
Four subsidiaries, Core Ambition Limited, Core Forte Limited, Core Integrity Limited and Core Vision Limited, set up in Marshall Islands were to register a ship each upon delivery. Under 80:20 debt:equity ratio, the total equity requirement for purchasing the vessels was $22.5 million. In August 2012, Jindal Steel and Power (Mauritius) Limited signed an MoU with Duggal and Paliwal to pump in $9 million into PIL and its freight business company Panacore Shipping Pte Limited (Singapore).
Before JSPML’s entry, records show, the already complex offshore structure had a ship-owning company (PIL), a management company (Panacore Resources DMCC, UAE) and freight business company (Panacore Shipping) under a holding company Panacore Group Pte Limited (Singapore) which was owned by Prosperity Investments Worldwide limited (BVI). Vision Shipping (Singapore) and Paliwal held shares of the BVI company at 90:10 ratio.
CEO Paliwal exited PIL in November 2013. Records show that JSPML kept pumping funds to the tune of $23 million through the year. Following Paliwal’s exit, the holding structure changed and, by February 2014, JSPML held 16,000 shares in PIL and Vision Shipping Pte Ltd the remaining 4,000. In another restructuring, Vision exited the company by transferring its shares to JSPML which in turn passed on 7,000 shares to its subsidiary Blue Castle Ventures Limited (BCVL, Mauritius) in March 2014. Claiming that he did not “remember exactly” the details, Duggal said he was “director (in PIL) for a few years” and Vision Shipping (Singapore) exited Panacore businesses “around the time Panacore started making huge losses.”
In April 2014, JSPML sold its 65 per cent stake in PIL to Noble Chartering Limited, a wholly-owned subsidiary of Noble Group Limited. Noble Group also paid off PIL’s debts to Vision and Cumulative Investments Limited, a Hong Kong company. It also settled partly what PIL owed to JSPML. The unsettled part of JSPML’s loans was transferred to its subsidiary Blue Castle Ventures Limited which continued to hold 35 per cent stake in PIL.
The Jindal group removed PIL and its four subsidiaries as subsidiaries on record from April 8, 2014, the day Noble acquired JSPML’s stake in the company. However, records show, Noble and Jindal were “running the business in Joint Venture basis (Jointly Controlled Entity)”. In an emailed response, a JSPL spokesperson said: “The prime reason for JSPML to venture into the shipping business was to complement its increasing export and import volumes. Since JSPL did not have any experience in the shipping business, it later decided to divest the majority stake to a strategic partner and accordingly 65 per cent stake was sold to Noble Chartering which was world renowned in the shipping business. However, all the activities with respect to operations (including chartering), financing, financial accounting and reporting and management of PIL was being managed by Noble and JSPML through BCVL.”
The four vessels — Ocean Ambition, Ocean Forte, Ocean Integrity and Ocean Vision — were delivered during 2014-15. By 2016, Noble Group’s businesses floundered and it ran into debt. In August 2017, Noble Chartering Limited completed its takeover of PIL by acquiring the remaining 35 stake for a consideration of $1, apparently to facilitate the group’s debt restructuring.
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The JSPL spokesperson said: “Due to financial constraints at JSPML leading to JSPML defaulting in debt servicing commitments, JSPML/ BCVL could not meet its funding commitments towards PIL and Noble continued to fund the same. PIL valuation fell drastically due to the fall in the value of the ships and the continuing operating losses incurred by PIL and JSPML/BCVL had huge liability towards Noble. Against this backdrop JSPML decided to sell its 35 per cent stake in PIL to Noble at US$1 which was hugely benefiting to JSPML as JSPML did not have to fund the past liabilities.” “JSPL complied with all the requisite regulations and made all the filings under the ODI regulations. Further, all requisite disclosures were made in the audited financial statements,” the spokesperson said.
It took Noble Group a year to complete sale of mortgaged Panacore vessels by September 2018 for approximately $95 million, allowing the group to retire $63 million of debt.