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Friday, February 20, 2009

Indian insecurity?

With the F1 world focused on the future of the Honda F1 team, a big story making the rounds in the business world could ultimately have an effect on the grid, as well.

Vijay Mallya's United Spirits Ltd. and Kingfisher Airlines Ltd. have made him one of India's wealthiest and most-recognized businessmen -- an image he cultivates with a Formula One auto-racing team, parties with Bollywood actors and liberal use of his nickname. Yet this week, with his airline logging millions of dollars in losses and United Spirits' liquidity dropping sharply, Mr. Mallya and his partners put some of their own shares on the line to keep both businesses afloat. -- U.S. News & World Report

Australian Formula One Grand Prix: Practice

Mallya is prepared to offer a stake of more than 15 percent and board representation in United Spirits to Diageo, the world's largest alcoholic drinks group, Reuters reports.

Diageo would confirm the talks but could not guarantee a deal would be struck.

Reports speculate the proceeds would be used to reduce United Spirits' debt of $1.2 billion from its 2007 purchase of Scottish spirits maker Whyte & Mackay.

The effects on Mallya's Force India team may be remote at the moment, but even at reduced cost, Formula 1 is still dependent on the deep pockets of its owners. Mallya's pockets are only as deep as his businesses are successful.

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