Tag Archives: Vijay

Alcohol might just have saved Force India 

© Sahara Force India F1 Team

It is well documented that Vijay Mallya is in dire financial trouble at the moment, with reported debts of $2.5 billion at his Kingfisher Airline alone.

An arrest warrant was even issued against the Indian billionaire for unpaid user fees at India’s Hyperbad International Airport. His 11 planes are currently grounded, with one being impounded at London’s Heathrow Airport for unpaid fees, after the company’s aviation license was suspended by the Indian Aviation Authority.

Mallya has been under huge pressure to find investment in the region of $1 billion in order to get his planes back in the air – a difficult feat considering its debts and damaged image after failing to pay its staff for several weeks.

Why does this impact his Formula One team? Much has been speculated that the outfit might not have enough money to fund its 2013 campaign competitively and Mallya may be forced to find a buyer in order for it to continue operating.

Didn’t Subrata Roy Sahara just invest millions in the team through his Sahara India Pariwar company though? The billionaire did indeed purchase a 42.5 per cent stake in the outfit, but he himself has come under massive financial pressure after the Indian Surpeme Court ordered he repay investors $3.5 billion within three months, plus 15% interest (around $4.4 billion in total) otherwise his assets will be frozen.

That puts the team in a precarious position in terms of its finance. However, whilst alcohol isn’t the answer to life’s problem, it may just be the answer to Force India’s problems.

British multinational Diageo, the world’s largest producer of spirits, has just purchased a controlling 53.4 per cent stake in Mallya’s second, and profitable business, United Breweries – India’s largest producer of beer.

The deal will eventually be worth $2 billion once its completed and will provide Mallya with the money to reboot his ailing airline and hopefully, secure Force India’s long-term future.

 

Source: The F1 Times

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Vijay Mallya’s Kingfisher airline has license suspended

Indian aviation regulator DGCA has suspended the licence of Dr.Vijay Mallya’s carrier, Kingfisher Airlines.
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The license was suspended as the management failed to present a credible revival plan and will remain in place until the carrier can present a convincing financial plan for its future.

The airline currently has a debt of $1.4 billion and never turned a profit since it commenced operations in 2005.

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

Force India pair staying in 2013 confirms Vijay Mallya

Team Principal Dr.Vijay Mallya has played down reports that Sahara Force India is having to draw up a shortlist to fill its two race seats for 2013.
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Paul di Resta is reportedly a leading candidate to replace McLaren’s perhaps Mercedes-bound Lewis Hamilton, while Nico Hulkenberg has been strongly linked with Ferrari.
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“Nico and Paul have contracts for next year and will be with us,” Force India team owner Mallya is quoted by Auto Bild Motorsport. The comments follow deputy team boss Bob Fernley’s recent admission that, while the drivers are tied to Force India for 2013, the Silverstone based team is willing to negotiate commercial deals with any bigger teams that want to poach Paul di Resta or Nico Hulkenberg.

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.

Fifth place unrealistic now, Mallya admits

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Vijay Mallya has admitted that Force India can no longer archive a top five position in this year’s Constructors’ Championship, despite targeting no less than that when the season began. The Indian, Team Principal and Managing Director, puts this down chief to the huge improvement from Lotus – formerly known as Renault.

Force India has improved statistically over every F1 season since it debuted in 2008. Although the team sits eighth, it has enjoyed its strongest ever start with Paul di Resta and Nico Hülkenberg, but has been engulfed by Sauber and Williams as well as Lotus.

“We were sixth in the championship last year and we had the objective this year of coming fifth,” Mallya says on Friday. “However, the improvement of Lotus has been exceptionally dramatic, so I think to target fifth is probably overreaching our capabilities for this year. We should at least target sixth, where we finished last year, and that means getting ahead of both Sauber and Williams.”

The Indian entrepreneur stresses that tyres are still the talking point:

“Sitting on the pit wall and listening to the predictions and guesswork on tyres is unbelievable. The most unpredictable part of this season has been the tyres and, with the high temperatures in Hungary, it was always a debate – two stops or three stops? One thing I was pretty sure of was that nobody was going to try a one-stop…”

For drivers’ honours, di Resta and Hülkenberg sit 13th and 16th overall at present.

Source: GPupdate.net