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Rakesh Jhunjhunwala is considered to be the greatest investor in Indian Market. He is supposed to have made Rs 5000 crores by just investing Rs 5000 in Indian Stock Market. Rakesh Jhunjhunwala guru mantra to be successful in stock market is as enumerated below:

(a) He advises people to become interested in a stock when none is interested in the same stock. As per him BUY RIGHT & HOLD TIGHT for years to come. He has been holding few stocks for last 10 years and he is still minting money from those stocks.

(b) He further advises that one should not follow big investors blindly as their risk profile and long term goals with time frame may be difficult to be followed by retail investor.

(c) Market is supreme and every thing is reflected in the price and thus their is no point in fighting the trend as market is always right.

(d) One should be able to create a balance between the fear and greed.

(e) As per his words one has to learn the stock market trading as none can teach the market as stock market experience is the best teacher.

Thus follow Rakesh Jhunjhunwala advice in stock market, BE PATIENT and grow big like Warren Buffet or this iconic man from Dalaal Street.

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Tuesday, January 26, 2010

Cash-strapped TV18 bails out Infomedia’s rights issue (Part of Rakesh Jhunjhunwala Portfolio)

It appears that media and entertainment company TV18’s promoters have bailed out its publishing unit Infomedia18’s just-concluded rights issue. A large part of minority shareholders of Infomedia shunned the Rs99.90 crore rights issue. So, the promoters of TV18 decided that the shareholders of TV18 should pony up Rs12 crore towards the expected under-subscription of the rights issue.

The TV18 group had bought Infomedia in 2007, hoping to add print publications to its bouquet of offerings. Infomedia publishes
business directories (Yellow Pages), eight consumer titles and 12 trade titles. The business has been draining cash ever since TV18 took it over. In 2008-09, it lost Rs84.65 crore and in the first nine months of this year, it lost another Rs43.15 crore. To sustain the losses, Infomedia chose to make a rights issue which shareholders were lukewarm to.

While it is all right for the ambitious promoters of TV18 to continue to support and bail out an ill-advised move into print media, it leads to a piquant situation for the shareholders of TV18. Money has been flowing out unabated from the coffers of TV18—for the last six quarters at least. Almost all group companies like Infomedia18, Web18 and IBN18 have been reporting losses, unable to sustain the high-cost operations of businesses that have little edge. Indeed, as we reported yesterday, faced with negative cash flows, the companies are being forced to pile on debt in large quantities. But borrowing has its limits. The group has been making rights issues to keep the businesses afloat. A few months ago, TV18 concluded a rights issue to keep its own business going. Now it has supplied Rs12 crore from its own cash-strapped business to Infomedia18.

Last year, in a very ambitious move, Infomedia launched Forbes magazine in India. The magazine was priced at Rs50 in an inaugural offer, which has not been changed so far. The product was pushed through the traditional and primitive print distribution channels, such as hawkers, at enormous cost. Hawkers were given generous incentives to
stock the copies. It is not clear whether it has been able to create a niche in the crowded business magazine market. Subsequently, it launched Entrepreneur, a magazine for the small business segment priced at Rs75. These initiatives have only added to the losses so far.

While declaring the results of the December quarter, the company management claimed that the company is in the process of introducing new technologies in its product offering, so as to cater to newer markets and de-risk the revenue streams. New lines of business are also being added, which along with consolidation of existing products and introduction of new products in the publishing segment are expected to improve the revenues. However, shareholders obviously remain sceptical about what these new winning products are and whether these would steady the boat.

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DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.

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