It's not often you find companies directing the media to financial results showing they made a hefty loss but in F1 anything can happen.
Last month Pitpass' business editor Chris Sylt revealed that the department of the UK government responsible for company registry would close down the Force India team if it didn't file its 2008 accounts by the end of March. To its credit, the team staved this off by delivering the documents and earlier this month it reported this to a media outlet which claimed that it brings "an end to any talk that its future participation was in doubt." Strangely enough, despite writing about the team's accounts, the media outlet in question didn't report on the actual content of the accounts. If it had done so, it would not have been able to make the claim quoted above as Pitpass' business editor Chris Sylt reveals in the Telegraph today.
The team was bought in October 2007 by Orange India Holdings, the Luxembourg-based company owned by Indian billionaire Vijay Mallya and the former chief executive of Spyker Cars Michiel Mol. The following year Mallya's full beneficial effect was felt as the team's revenue increased 27.3% to £37m with the Indian billionaire's Kingfisher airline directly investing £2.5m in sponsorship and a further £1m coming from Whyte & Mackay, his Scotch whisky company. This boost was far exceeded by its 74.4% rise in total costs of £69.6m which left Force India with an after-tax loss of £33.4m - £21m more than the previous year. This may sound bad but in fact it shows that Mallya isn't cutting corners when it comes to spending on his team.
In the accounts, Grant Thornton, the team's auditor, says that "the continued support of the company's ultimate parent, Orange India Holdings Sarl is necessary if the business is to continue as a going concern. Orange India Holdings Sarl is in turn dependent upon continued financial support from its owners." However, it adds that "the lack of publicly available information about these entities gives rise to a material uncertainty as to whether financial support is available... This may cast significant doubt about the company's ability to continue as a going concern."
During 2008 the Orange India group gave Force India a loan of £27.6m to keep the team on track but even this was not enough as it also took out a £14.9m bank loan. Again, showing his commitment, the loan was personally guaranteed by Mallya. In addition, in 2008 Orange India 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.
The team finished 10th in 2007 and ended in the same penultimate place in the standings the following year. Finishing in the same spot this year would be a big blow since prize money only goes to the top 10 in the standings. However, finishing any higher would finally put the team on the road to being weaned off funding from its owners. The race is on.