Marcellus Partner’s Bulletin Nov’21


All returns are post fees & net of expenses (TWRR). The returns are as on 29th November,21.

Inception Date & Benchmark:

Consistent Compounders Portfolio: Inception: 1st Dec,2018 Benchmark: Nifty 50 TRI

Little Champs Portfolio: Inception:28th Aug,2019 Benchmark: S&P BSE Small Cap TRI

Kings of Capital Portfolio: Inception:28th July ,2020 Benchmark: Bank Nifty TRI


The Path to Consistent Compounding is Paved with Free Cashflow:


In our June 2021 Partners Bulletin (Click Here), we had discussed how Marcellus portfolio companies have been consistently compounding free cash flow over the years. Our fund manager Rakshit Ranjan in his recent newsletter (Click Here) has taken our discussion forward and  gone deeper to discuss the primary drivers of cashflow and the valuation approach investors should use to value the business.


Below are the 3 types of businesses based on their primary driver of free cashflows.


Type 1: Book value as the primary driver of free cashflows

         Unique manufacturing process – Manufacturing capacity expansion drives free cashflow growth

         Growth in asset base is the primary driver of moats and free cashflows

         P/B multiple is a relevant metric.


Type 2: Profits as the primary driver of free cashflows

         Irreplaceable brand recall + Asset light

         The more it advertises, the more it delivers volume, revenue and eventually profits growth

         P/E multiple is a relevant metric. P/B multiple is NOT relevant; Its P/B multiple will keep rising as the business grows


Type 3: Operating efficiency as the primary driver of free cashflows

         Significantly reduces working capital cycle + increases asset turnover + high pricing power + healthy rate of capital reinvestment

         Free cashflow growth >>> Profits growth and Assets growth

         P/E will keep rising as long as the free cashflow growth >>> Profits growth. P/E is irrelevant. Free cashflow growth is a relevant metric.



Marcellus’ philosophy is based upon the TYPE 3 businesses which adheres to the following criteria:


In-house manufacturing and distribution:

         Distribution of small ticket high volume products to every nook and corner of India = opportunity to compress working capital cycles

         In-house manufacturing = opportunity to expand asset turns


Avoid price hikes—suffocates competition:

         Strategy to cushion the impact of input cost inflation through superior operating efficiencies vs competitors

         Increase volumes through affordability and make price wars ineffective


Tech Investments:

         Productivity improvements through process automation and superior systems help sweat the assets harder

         Supply chain investments such as Auto Replenish Systems, demand forecasting to drive improvement in working capital turnover 

Please find below links to our latest newsletters and presentations:


**For product/sales related queries please write to**













1.      FOS – Form Support Service from Marcellus

To enhance onboarding experience for our channel partners & clients. Marcellus has taken an initiative to extend support on Prefilling of all New Clients PMS & Requisite Demat + others forms by Marcellus Onboarding Team. Through this initiative we expect to solve complexities involve in PMS documentations due to multiple set of accounts to be opened for single client with different entities.


Key benefits of this Process are listed down:

ü  Enable KRA check and identify need for IPV/OSV upfront and filter AML Validation.

ü  Improvise TAT of account opening and enable clients to invest sooner.

ü  Eliminate Re-iteration of seeking information and ratification from client to solve observations.

ü  Service & Operations efficiency at both Marcellus and Business Partner end.


Process Steps for the Marcellus Form Support:

R  Download the Client Information Form [CIF] for Resident Client, NRI & Non individual through links shared below:

Ø  Resident Client:

Ø  All Non-Individual:

Ø  Non-Resident Indian:


R  Fill in complete client (s) details in CIF and refer to supporting KYC documents to be shared along with CIF.

R  Ensure to share CLEAR scan copies of supporting documents & confirm dispatch address details.

R  Email CIF and Supporting KYC documents to for validation.

R  Respective SRM will validate the complete information in CIF and supporting KYC documents.

R  If Validation is complete, team will carry of necessary KRA AML checks and prepare the Prefilled form based on the CIF & KYC documents.

R  In case of need for IPV & OSV respective SRM will reach back to Partners.

R  Prefilled forms will be couriered to the requested address with T+1 days of the complete validation date.

Important Notes:

Ø  All information in CIF is mandatory and will be used in filling of complete form.

Ø  Incomplete CIF, or missing info. or unclear documents will be rejected by SRM at the time of validation process and will not be processed for form preparations.

Ø  Request clients to share clear images of the proof scan copies requested and in the readable format, unclear copies will not be accepted.

Ø  All CIF submitted before 12:00 pm will be considered for validation on same day and dispatch by next working day.

Ø  All CIF Received after 12.00 PM will be considered for dispatch on T+2 working day.

Ø  Ensure to mention the “Dispatchment Address” in the CIF.

**For operational related queries please write to**



Team Marcellus

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