* Sahara group now co-owns team with Mallya
* Mallya to continue as team principal (Adds byline, details, quotes)
NEW DELHI, Oct 12 (Reuters) - Indian business conglomerate Sahara group has invested $100 million in Force India and taken a 42.5 percent stake in the Formula One team which it now co-owns with liquor baron Vijay Mallya while Dutch entrepreneur Michiel Mol takes a backseat.
The Sahara Group, which has interests in the financial sector, entertainment, housing and sport among others, said in a statement on Wednesday that it had subscribed to new shares in the F1 team and has an equal stake with Mallya.
The Mol family owns the remaining 15 percent.
The flamboyant Mallya will continue as the team principal of India's only Formula One team, to be now known as Sahara Force India, while Sahara group chairman Subrata Roy will be the chairman.
"It is the coming together of two of India's prominent groups, both of whom have supported sports in our country for many years," Mallya said.
"The possibilities are limitless. With this kind of resource in the company Force India will invest in further research and development and upgradation of its facilities and therefore hopes to be a lot more competitive."
Force India was formed in 2007 when a consortium led by Mallya and Mol bought the loss-making Spyker Formula One team and later renamed it Force India.
The F1 team, whose current drivers are German Adrian Sutil and Britain's Paul Di Resta, are sixth in the constructors' standings ahead of Sunday's race in South Korea.
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.
"I have not sold a single share (in Force India). None of the existing shareholders are selling anything," Mallya said.
"My first approach to Sahara was for sponsorship. He (Roy) said I like it... I want to own it."
India is set to host its maiden Grand Prix on Oct. 30 at the 120,000-capacity circuit on the outskirts of Delhi.
The Sahara group, which also sponsors the Indian cricket team, had bid $370 million to become owners of the Pune franchise in cricket's Indian Premier League in October, 2010. (Writing by Sudipto Ganguly in Mumbai; editing by Ken Ferris and Justin Palmer; To query or comment on this story, email email@example.com)