Tag Archives: Sahara

The pressure mounts in India for Kingfisher Airlines

Although Force India has done well this year on the race tracks, there are still very serious worries about the team’s future funding because of difficulties that its two owners – Vijay Mallya and Roy Subrata Sahara – have run into.

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Mallya’s deeply-indebted Kingfisher Airlines – which owes an estimated $1.4 billion – is now facing ever-deeper trouble. This morning a number of Kingfisher pilots in Mumbai decided to join the strike called by the company’s engineers, who are complaining that their salaries have not been paid in seven months. The Indian Directorate General of Civil Aviation says it is “examining the situation” and will decide whether it is safe for the airline to continue to operate flights.

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Almost all the shares in Kingfisher Airlines have been pledged to guarantee loans, many of them to other companies in the Mallya empire, but also to banks. Some of the debts have been sold on to other financial institutions. It has been clear for some time that Mallya has been running out people willing to loan him money. No-one appears to want to buy into the airline and thus there is strain on other companies in the empire. The local offshoot of the credit rating agency Moody’s has in recent days reduced the rating on the loans to Mallya’s United Spirits to junk status. This will increase the pressure on Mallya to sell the profitable liquor business to Diageo. The British firm is playing a canny game at the moment and says it wants control of the Indian business, or at least to be able to have a way to gain control in the future. Mallya is baulking at that but he seems to be running out of options. Even if he sells some of his stake in United Spirits, Mallya will not have enough money to pay Kingfisher’s debts, although it might allow him to find banks willing to keep the airline afloat.

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In the meantime Sahara is also in significant trouble. At the end of August the Supreme Court of India ordered the company to pay a thumping $5 billion to the Securities and Exchange Board of India within three months, in order for the Sahara investor to be refunded. In addition the court ruled that investors should be paid 15 percent interest for each year. This means that the full extent of the repayment should be in the region of $10 billion. That money will be deposited in a nationalized bank that offers the maximum rate of interest and will then be repaid to investors. If this money is not paid the regulator has the right to seize and sell property and freeze all Sahara bank accounts. The firm was ordered to furnish the regulator with all the appropriate records by September 10, which it failed to do. It is not clear where all this leaves the F1 team. It will need a solid budget to continue its activities and to fund its technology deals with Mercedes-Benz and with McLaren, not to mention the operational costs. There have been rumours for some time that the team is up for sale, but it seems that Mallya wants to remain involved so as to retain his image of being the leader of Indian motorsport. Whether the team can find someone who is willing to pay for that is another matter.

Source: joesaward.wordpress.com

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Sahara court order to further hurt Force India?

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With team founder Vijay Mallya under pressure to sell off Kingfisher Airlines and rumours that none of its drivers had been paid a salary in 2012, Force India could do without further financial worries, but they keep on coming.

New co-owner Sahara is facing a court order to repay more than $3bn raised from small investors.

According to Reuters, India’s top court has instructed the company, which also backs India’s national cricket and hockey teams, to pay back the sum as its fundraising practices involving two smaller companies which raised $3.18bn over four years did not comply with securities regulations.

The Securities and Exchange Board of India has already ordered the refund – complete with 15 per cent interest – but an appeal, based on Sahara’s claim that it had been a private placement, sent the matter to the courts, who upheld the original decision and instructed the company to repay the full amount within three months. Sahara, founded by Subrata Roy Sahara, bought into the Force India team during the 2011 F1 season, after Mallya ran into trouble with a couple of his own companies, including Kingfisher Airlines, which he has come under pressure to sell off.

Meanwhile, Hulkenberg’s manager, Timo Gans, has shrugged off the claims that his client had not been paid for his services this season. “These are rumours,” he told Germany’s Sport1, “I really wonder where this information comes from — maybe people know more than we do.” Hulkenberg and di Resta are both being touted as potential replacements for Felipe Massa at Ferrari next season.

Report – Force India duo racing without pay in 2012?

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Force India’s drivers may have gone without pay so far in 2012, according to rumours.Paul di Resta, Sahara Force India F1 Paul di Resta, Sahara Force India F1. Austria’s Sportwoche reports speculation that Nico Hulkenberg and Paul di Resta are the latest victims of team owner Vijay Mallya’s struggling Indian airline Kingfisher.

As the 2011 season kicked off, German Hulkenberg said the airline’s high profile financial problems have “nothing to do with us”.

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“This is formula one, not an airline,” he insisted. Business Book GP 2012 estimates Hulkenberg and his Scottish teammate di Resta’s salaries this year at EUR 500,000 and 200,000 respectively. But Sportwoche cited more than one paddock source in suggesting that the duo have not been paid anything yet. The magazine said only the payments from title partner Sahara are keeping the Silverstone based team afloat.

Source: Motorsport.com