Business conglomerate Sahara Group has bought a 42.5% equity stake in India’s first F1 team, Force India. The team has now been renamed to Sahara Force India. Vijay Mallya’s UB group will also own an equal stake in the motor racing team.
Addressing the media in a joint press conference, Mallya and Sahara chairman Subroto Roy said they were both happy about the deal. Sahara Group, also sponsors the national cricket team. Force India was formed in 2007 when a consortium led by Mallya and Dutch entrepreneur Michiel Mol bought the loss-making Spyker Formula One team and later renamed it Force India. India is set to host its maiden Grand Prix on October 30 at the 120,000-capacity circuit on the outskirts of Delhi.
Some media reports last week said Mallya planned to sell the team to the Sahara group, but this was denied by the liquor and aviation baron. “As Team principal, I will continue to run the team and I have no plans whatsoever to exit,” he had said. Mallya has a profitable liquor business, but is facing rough weather in aviation.
His Kingfisher airline, India’s second-largest private airline, which has never reported a profit, recently announced plans to exit the low-cost part of the airline business and focus on the premium model to reduce debt. The auditors of Kingfisher have said that the firm needs extra cash as the airline struggles to survive in a challenging market. Force India, whose current drivers are German Adrian Sutil and Britain’s Paul Di Resta, are currently placed sixth in the Formula One constructor standings. The Sahara group, which also supported the Indian hockey team, had bid $370 million to became owners of the Pune franchise in cricket’s Indian Premier League in October, 2010.