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Force India remains under financial pressure
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08 March 2010 @ 06:30 GMT - Ian de Beer The Force India team has lost a lot of money the outfit's accounts revealed recently. The 2008 statements showed that team owner Vijay Mallya and co-owner Michiel Mol gave the team a loan of £27.6m to keep it going. Mol is the former Spyker Cars chief executive. The two bought the team in October 2007 and the following year its turnover increased from 27.3pc to 37m. However, this boost was far exceeded by the 74.4pc rise in total costs of £69.6m. |
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The outfit's bank loan increased by £14.9m to makeup the gap, but that was not enough. Mallya's Kingfisher airline also invested £2.5m in sponsorship and a further £1m coming from Whyte & Mackay, his Scotch whisky company.
The increased spending did not improve the outfit's results by much and they are under pressure to perform this season. In 2008 the two owners' Luxembourg-based vehicle, Orange India Holdings, converted to equity a £48m loan it provided to the team in 2007.
This retrospectively reduced its net liabilities and shareholders' deficit from £47m to a surplus of £1m in 2007. Despite this positive manoeuvre, the team's net liabilities and shareholders' deficit still fell to £4.8m in 2008 as its loans increased.
The British media says it casts a cloud over the future of the team and they filed their accounts four months late at the end of February. The delay shed light on the team's complex funding structure which could have caused it.
The auditor Grand Thornton says that the continued support from the company's parent Orange India Holdings Sarl might be necessary if the team continues. The team also lost Icici bank and Kanyan Capital who have paid a total of $6m. This year the loss of Indian conglomerate Reliance from its sponsorship roster will also put a big dent in its revenues and may mean it needs even more money from its owners.