Sunday, July 29, 2018

FORCE INDIA FACES A BIGGER FORCE

The Force India F1 team is officially in administration, and the administrators have announced it will be 'business as usual' whilst the financial problems are worked out.



The situation, financial holdings, and cross-holdings are complex, and so are the current list of solutions. The judge hearing the case has a firm grip on the issues, and is likely to ensure there is a successful outcome, which will save team jobs and keep the team in the F1 world championship.

There is a long list of 'possible saviours' - some with real money, and others, many with dodgy balance sheets, however the strongest hand in all this is Mercedes-Benz which not only supplies engines, but also a huge list of sophisticated components. Whatever decisions are made during the period of administration will have to satisfy Mercedes-Benz, before anything proceeds.



In the meantime 'team owner' Vijay Mallya and his jailed partner, Subrata Roy (Sahara) are no longer on the Board of Directors. Mallya has burned through piles of cash not only supporting the team, but also his lavish lifestyle, yacht, parties and staying out of India, where he is wanted on fraud charges.


Vijay Mallya's next appearance in court will be this coming week as Indian authorities apply for his extradition. If that application is successful, I suggest that's the last we will see of the flamboyant Indian around the Formula One paddock.

Back in May 2010 I was commissioned by the Dubai-based business magazine 'TRENDS' to write a feature story about two Indian corporate titans - Ratan Tata and Vijay Mallya.

Both men inherited fortunes, and the heavy responsibilities for maintaining the companies, which had originally been created by their families. 


In Vijay's case he took over running his father's massive holdings when he was just 27. Mallya, Snr, had built an empire off the back of beer brewing, acquisition of the Scottish spirits company, Mackay & Whyte, and several other Indian companies involved in chemicals, agriculture and technology.

I referred to both Tata and Mallya as 'Commercial Princes of India' - sadly, only one has survived with his dignity intact, and of course that is Sir Ratan Tata.

In 2010, Mallya was making a good fist of managing and running his various enterprises under the mantle of the parent company, UB Group, which his father started in the late 1940s.


Sadly, just a couple of years later the whole UB Group conglomerate started to run off the rails. Vijay, started a new beer, and an airline, both named Kingfisher. At first they appeared well-capitalised, but after Vijay got the Formula One bug, which is known for swallowing huge amounts cash, it all got very nasty.

In order to survive, Mallya was forced to sell off big chunks of the beer/spirits division; then the airline went bust; then he teamed up with Subrata Roy of Sahara group, who was apparently intended to be the man who would keep Force India 'alive' and 'Indian'.

Roy was later successfuly charged and jailed over massive corporate fraud.

Mallya no longer owns a controlling interest in UB Group, that has been taken over by Diageo, and Mallya's various chemical, agriculture and technology divisions have all been 'leveraged' to borrow funds to run the F1 team, and keep the party going. I don't think he captains' the 'Indian Empress' any longer either.



When I was writing the original story, a number of my Indian contributors said it would all come tumbling down, because within India, Vijay was considered an irresponsible playboy with expensive tastes.


Vijay and partner, Bollywood starlet Pinky Lalwani
It appears the leopard was able to have several new race team outfits, but couldn't change his spots.

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