Identity small-cap companies (Market cap <US$500 Million or approx. 3500 Cr ) with excellent corporate governance and capital allocation track record and strong sustainable competitive advantages built around brands, business processes and strategic asset.

Thorough analysis based on two objective steps as mentioned below :

• Objective analysis based on 12 accounting ratios covering income statement (revenue/ earnings manipulation), balance sheet (correct representation of assets/liabilities), cash pilferage and audit quality checks.
• First rank stocks on each of the 12 ratios individually. These ranks then cumulated across parameters to give a final pecking order on accounting quality for stocks.

And, then handing picking companies from the filtered universe after interaction with industry players, competition, channel partners etc.

The 3 attributes for selecting stocks in Little Champs remain the same as in Consistent Compounders strategy:

1) Clean accounting and good corporate governance;
2) Historical evidence of prudent capital allocation; and
3) High barriers to entry so that companies are able to sustainably generate return on capital higher than cost of capital.