Mallya ensures funding for Force India for five years

Though Vijay Mallya has resigned as chairman from the Diageo-owned United Spirits' board, he has managed to secure a five-year sponsorship for his F1 team from Smirnoff worth USD 75 million over the next five years.

Vijay Mallya... is his future as Force India's team principal secure?   -  REUTERS

Despite Vijay Mallya’s exit from United Spirits, a company founded by his family, he has managed to secure a steady source of funding for his Formula One team, Sahara Force India, for the next five years.

On Thursday, Mallya resigned as chairman from the Diageo-owned United Spirits’ board. He, however, managed to secure a five-year sponsorship for his F1 team from Smirnoff worth USD 75 million over the next five years.

In a statement, the company said: “Diageo has also extended Smirnoff’s sponsorship of the Force India Formula 1 team of which Dr. Mallya is team principal and part-owner for the next five seasons. The cost of this sponsorship continues to be USD 15 million (approximately GBP 11 million) per season.”

Force India finished fifth in the Constructors’ Championship in 2015, its best effort since it entered the sport in 2008.

While the funding should help the team in its pursuit of progress, it remains to be seen how long Mallya will remain at the helm after a loan taken by Watson Limited — a company associated with Mallya and Force India — from Standard Chartered Bank was paid by Diageo, which had guaranteed the loan amount. The company in the statement said, “Watson remains liable for all amounts paid pursuant to the guarantee.”

Diageo has also reduced Mallya’s role in his other high profile sporting venture, Royal Challengers Bangalore of IPL, making him the honorary chief mentor while his son Siddharth Mallya will remain on the board of the USL Group of Company, which owns the Royal Challengers Bangalore franchise for two years.

Vijay Mallya bought Force India in 2008 and sold 42.5 per cent stake to Sahara in 2011 while retaining the same percentage, with the Dutch businessman, Michiel Mol, owning the remaining 15 per cent.

Recently, Sahara had sought the permission of the Supreme Court of India to sell its shares in the F1 team to help raise money to bail its chairman Subrata Roy, who is in Tihar Jail.