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Talwalkars Profile 2011 - 2012 annual reports

Talwalkars Profile 2011 - 2012 annual reports

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  • 1. Promoting fitness enhancesthe health of our memberswhile adding to the wealth ofour shareholders
  • 2. • CorporateI nformation..............................................................................5• Chairman’s Speech ..................................................................................9• Financial Performance ............................................................................10• Management Discussion & Analysis.........................................................12• Director’s Report ....................................................................................28• Report on Corporate Governance............................................................36• FinancialI nformation..............................................................................65Contents
  • 3. 5Board of DirectorsMadhukar Talwalkar - Executive ChairmanPrashant Talwalkar - Managing Director & CEOVinayak Gawande - Whole-time DirectorGirish Talwalkar - Whole-time DirectorHarsha Bhatkal - Whole-time DirectorAnant Gawande - Whole-time Director & CFOManohar Bhide - Independent DirectorRoman Maroo - Independent DirectorMohan Jaykar - Independent DirectorAvinash Phadke - Independent DirectorGlenn Saldanha - Independent DirectorAbhijeet Patil - Independent DirectorCompany SecretaryAvanti SankavStatutory AuditorsSaraf Gurkar & Associates, Chartered Accountants,201 Shreyas, Moghul Lane, Mahim (West), Mumbai - 400 016.BankersUnion Bank of IndiaRegistrar & Share Transfer AgentsLink Intime India Private Ltd, C-13,Pannalal Silk Mills Compound,L.B.S. Marg Bhandup (West), Mumbai - 400 078.Registered Office801-813, Mahalaxmi Chambers,22, Bhulabhai Desai Road, Mumbai - 400 026.Annual Report 2010-2011Corporate Information
  • 4. VIGOROUSEXPANSIOROBUST GHEALTHIESOCIETY.
  • 5. SON.GROWTH.ER _19321932Set up1st health club78 years ago20032003Set up TBVF toexpand rapidlywith systems andtraining academy201020101st IPO by afitness companyin India20112011Market leaderwith 100health clubs in50+ cities
  • 6. Dear Shareholders,Good Morning!This is my greeting to every person I meet regardless of the time of daybecause I truly believe that like the rising Sun we all must fill life’s momentswith sunshine and hope for a better tomorrow. Each day should be aforerunner of good health, wisdom and wealth!“Good health and good sense are two of life’s greatest blessings.”We, at Talwalkars want to spread this awareness and create a “HealthyIndia Fit India”! We have started this year with a total of 63 health clubsin 32 cities and have successfully managed to grow to 100+ health clubsin over 50 cities across the length and breadth of the country.Stress is probably the number one factor today for a large percentage ofailments, both physical, and mental. A healthy body leads to a healthymind and a healthy mind leads to perfection and progress both in materialand spiritual life. Various ancient Indian holistic and spiritual sciences reveal the essential link between the body,mind and soul. Any imbalance in one affects the other, causing suffering. More and more people are now turningto traditional and alternative systems of healing which are in harmony with nature to maintain well being in suchtimes. Your Company strives to make prevention of diseases a mission for its business.I am delighted at your company’s rapid progress. As the Company treads its path to success cautiously it will aimhigher and innovate on its way so as to be the forerunner in the health and wellness space in India!As the year progressed, the Company was able to achieve its dream of reaching the 100 health club mark.Several factors contributed to this momentous occasion which I will briefly enumerate here below.Your Company has been able to sustain momentum by building strong regional teams, decentralizing authorityand being responsive to the needs of the customer. It has been able to react to the changing needs of thecustomer in a proactive and quick manner and has introduced several concepts within the health club space.Your Company has several products such as Kiloburner : for weight loss, PEP training, spin cycle studios etc tocater to its clientele apart from the standardized gym packages. The company has also ventured into Tier III andIV towns in India under its sub brand “ HI FI” gyms which provides fitness and health at lower costs making itaccessible and a value proposition to the lower end of the spectrum.As the Company expands its footprint, we realize the need for providing an integrated sports, fitness andrecreational area where the upper end of the spectrum can derive benefits and utilize it optimally. With thisconcept in mind, your Company has plans of setting up such a development in highly populous urban areas soas to become a holistic provider of fitness and recreation under one roof.I would like to thank each and every employee of our 100+ branches spread all over the country for it is theirunflinching loyalty and hard work which makes your Company a brand leader in India today.I wish to thank each and every one of our shareholders who have shown implicit belief in the Company’s promiseto deliver a healthy bottomline.I conclude by thanking all my colleagues on the Board for their invaluable support and guidance.Last, but not the least, I thank you all for your belief and continued support in the Company.With warm regardsMr Madhukar TalwalkarChairmanChairman’s Speech
  • 7. (onstandalonebasis)2005-06 2006-07 2007-08 2008-09 2009-10 2010-11050010001500200045002500300035004000643.11355.22597.9Rs.(inLacs)Totalturnover(onstandalonebasis)010001017.82240.43808.95951.86611.52005-06 2006-07 2007-08 2008-09 2009-10 2010-112000300040005000600070008000900010000TOTAL TURNOVERRs.(inLacs)8652.03837.51759.0329.0EBITDAEBITDAFinancial Performance
  • 8. 11No. of Gyms2005-06 2006-07 2007-08 2008-09 2009-10 2010-1102001523400600800160010001200140056174599673794PROFIT AFTER TAXRs.(inLacs)Profitaftertax(onstandalonebasis)Annual Report 2010-2011738119Total Number of Health Clubs (as on 30th June, 2011)OwnedSubsidiaryTrademark LicensedFranchisedFinancial Performance
  • 9. Introduction:For years India has been the second-fastest growing major economy in the world. According to WorldBank data that could soon change, with the Indian economy set to expand at a faster pace than theChinese economy in 2012. This is expected to result from continued high demand in India even as itmeasures to combat overheating slow down the Chinese economy.The multilateral agency`s WorldEconomic Outlook has projected that India will grow at 8.7% in 2012 compared to China`s 8.4%.The Indian economy has benefited from strong domestic demand and a revival in investor and consumersentiment although higher interest rates are expected to shave off a few basis points from the overallgrowth rate. Improved external demand and stronger private capital inflows have also played a role.This year, a favourable monsoon has helped the farm sector expand and has in the process boostedrural demand as well. “For us, 8.7% is probably closer to our trend growth,” said Pronab Sen, senioradvisor in the Planning Commission. Currently at a $1.3 trillion economy size, India is poised to growin numbers as well.These factors have had two major positive impacts on the operational performance of the Companyand its future strategy.Firstly, steady acceleration in economic growth has meant that consumer confidence has improvedsignificantly. This has resulted in an increase in membership and the Company has crossed the 1,00,000member mark in its flagship brand, Talwalkars Health clubs. Along with the growth in members, theCompany has developed a strong pipeline for new products for different socio economic segments ofthe market which it plans to implement over the next few years.Secondly, the increasing incidence of lifestyle diseases and increased awareness of health benefits hasmade the Indian consumer across the country demand better facilities in improving their health andfitness levels. This has played an important role in increasing membership for your Company.Market OpportunitiesBeing fit and healthy has never been as popular or as necessary as it is today. With millions of peopleeager to lose weight and get in shape the fitness and wellness industry is one of the fastest growingindustry today.It is important to note that the contribution of the services sector to the Indian economy has beenmanifold: a 55.2 % share in gross domestic product (GDP) growing by 10 per cent annually, contributingto about a quarter of total employment.However, market penetration in India is low compared to several developed and developing countriesof the world. The main reason for this is that the fitness industry in India is highly fragmented sincethe majority of the market appears to be dominated by large number of unorganized gyms. Secondlythe market also appears to have a shortage of talent, since qualified personal trainers; nutritionconsultants and professional managers are scarce.Further due to a strong and sustained growth in the economy, disposable incomes have increased ata significant pace creating a huge demand for fitness centres, health clubs etc. According to a recentresearch by the Mckinsey Global Institute, the number of household earning over 5 lakhs per annumwill increase from 3.6 million in 2005 to 8.8 million in 2015. Studies have shown that rural andsemi-urban population is increasing expenditure towards discretionary and luxury due to increase indisposable income.Management Discussion & Analysis
  • 10. 13Annual Report 2010-2011Company OverviewThe Company has been expanding its reach and today has a presence in over 50 cities across India,including Metros, Mini metros and Tier II & III cities, while maintaining the same level of quality,training and equipments in all its health clubs. From 63 health clubs last year, the Company nowhas over 100 health clubs on a consolidated basis with a customer base of 100000+ members.Your company takes pride in the fact that each health club has the latest imported equipments, awell trained and courteous staff and a welcoming ambience: all making for a facility that will lookafter the health and wellness of its members. Your Company is also working towards flanking itsmain Talwalkars Health Club brand on both sides of the value spectrum by creating a value gymfor smaller towns and a new wellness and sports complex for the rising affluent urban population.* Map not to scaleManagement Discussion & Analysis
  • 11. Your Company has adopted various business models in the process of its growth and its over 100health clubs today is a combination of Company operated health clubs, trademark licensed healthclubs , franchised health clubs and subsidiaries.Performance Driversa. Favourable demographicsAs per a recent study India currently has over 300 mn people in the 25-30 age bracket and by2016, 40% of the population will be in the 20-44 age group. Thus even assuming a modest1% of this population enrolls into a health club, in sheer numbers, the potential addition to thefitness market in India is staggering.b. Rigorous training through an in-house training academy :Your Company is one of the first health clubs in India to have its own residential trainingacademy spread over 25000sq.ft in Thane, near Mumbai. The training academy also includeswell furnished residential accommodation along with the pantry. This ensures that staff recruited
  • 12. 15Annual Report 2010-2011from any part of India can comfortably stay here during the process of training and induction.They are also paid a regular salary, during this period so as to ensure their full attention andparticipation.Imparting training in all aspects of the business has helped your Company to sustain nearlythe same environment between its branches in the metropolitan cities and the Tier II and IIIcounterparts, accounting for standardisation.The training academy includes :• An In-house gym :Your Company has replicated an actual gym floor in its Training Academy equippedwith same quality of equipments, both for cardio, strength and free weights, so as toensure familiarity of usage and achieving maximum results for its users.• Inhouse and visiting facultyYour Company has a In-house faculty as well as experts who come as visiting facultyto train our students on each and every aspect of health club operations from diet andnutrition to exercise techniques.Apart from gym training the staff is trained in grooming and etiquette. This ensuresthat they are trained not only in equipment handling but also in dealing with members,something that is critical in a service industry.• Spa training as a Profit centre :There is a dedicated floor in the training academy that is devoted to training the staff inthe Company’s spas. In order to reduce the cost of the training the spa at the academyalso offers services on a commercial basis to customers under the brand “Sparsh”.c. Hub and Spoke modelThe Company follows a hub and spoke model wherein the day to day operations aredecentralized and headed by local teams. This is then supervised by roaming managers whoensure strict and stringent quality checks and balances. This model has helped the Companyrapidly expand its footprint in smaller towns in India, where the local knowledge of customerprofiles aided by a technical quality check and system control has ensured benefits for both thecustomer and the Company.d. Pan India Presence• Customer Knowledge : Having a pan- India presence helps the Company to know whata customer is looking for in a health club and what his expectations are. The Companyhas been able to take benefits of local traditions and customs of a particular area anduse it effectively to market its product to the customer in that region. For example, inAhmedabad during Uttarayan the local health clubs ran several open air competitionsin the stadium, gave out free branded kites to its members thus using a knowledgeof local customs to effectively widen brand presence in the city during that period.Management Discussion & Analysis
  • 13. With a formidable network of over 100 outlets,Talwalkars’ mission to promote fitness hasgathered momentum. Make no mistake,India is getting healthier!
  • 14. 17Annual Report 2010-2011
  • 15. • AppropriateLocations:TheCompany’shasdevisedsetparameterswhichhelplocatebestpossible location in any new city which ensures brand visibility and high memberships.Further because of the strength of your Company’s reach and brandrecall it has beenable to lock in attractive rental rates for a long tenure.• Fragmented Industry: India has today a fragmented health and fitness industry, whereeven though the demand for quality services is high the supply is largely unorganizedand non-standardized.Your Company benefits immensely due to its pan- India presenceand being a national player with a formidable strength in numbers and reach.e. Proven track record of services offered driven by experienced management teamYour Company is Professionally run with a board comprising of independent directors who arestalwarts in their domain. The Company has a high brand recall , which enables it to be aheadof its competitors.Business StrategyIntroduction of a new business modela.After considerable expansion in Metros, Mini Metros and Tier II cities in India , your Companyis all set to take its expansion to the next level with a new concept in gyms which will enable themiddle income population in the smaller towns and cities across India to avail of high qualitygyms at reasonable prices. The new concept Healthy India Fit India Movement was launchedthrough its new value brand “HI FI”. The first HI FI gym was opened on 9thJune,2011 at Pune,to test this concept.HI FI will make your Company’s dream of making fitness facilities available to the massesacross India a reality. HI FI is an integral part of the way forward, and its development will leadto a Healthy India Fit India movement, will become a part of the national psyche going ahead.HI FI will enable your Company to reach out and gain success in small towns. It will have allthe key facilities of the existing health clubs including imported equipment, air-conditioning,generator back up, excellent ambience, high quality personal trainers etc. though at a lowercapex cost. Considerable research has gone into evolving a model, which aided by the significanteconomies of scale that have been planned for HI FI, will mean that each gym is expected tocost only between ` 75 lakhs to ` 95 lakhs .This will mainly be franchised yet a value added concept. This will enable our Company toconsolidate its position firmly across India and generate high revenues from both royalty andfranchisee fees.Management Discussion & Analysis
  • 16. 19Annual Report 2010-2011Brand Promotion and Enhancementb.After being the Official Fitness partner for the Standard Chartered Mumbai Marathon in 2008and 2009 and the Femina Miss India Contest in 2009, your Company has become the officialfitness partner of one of the most awaited events in India – The Kingfisher Calendar GirlHunt .The Kingfisher Calendar Hunt 2010 was a strategic step towards defining our brandpositioning and enhancing the brand recall. We are looking forward to creating many moresuch brand associations in the rapidly expanding wellness segment in India.Marketingc.This year the marketing approach towards spreading awareness about opening of theCompany’s new health clubs, attractive offers, launch of new products etc. was geared towardsmaking a significant impact in the minds of the target consumer. The idea was to promote thebrand through various interactive media, as well to create many consumer focused events,promotions and branded programmes.Several promotional schemes ran throughout the year associated with national events witha focus on brand building. The Company has actively used web based promotions on socialnetwork sites, TV and print media for its marketing efforts.The New Year’s Resolution offer was targeted to create mass consciousness within consumersabout the benefits of healthy living and there was no better occasion to start that with than theNew Year.Womens Day Offer Café Coffee day Offer New Year OffersKiloburnerDuring the year the Company launched Kiloburner, which is a systematic weightloss programme wherein a group of nutritional and fitness experts assess thephysical condition of the member and taking in to account the member’shabits, preferences and lifestyle and chalk out a special diet-n-exercise routinefor them while monitoring their progress. There are assorted weight loss andweight administration programmes under the Kiloburner brand that wouldsuit different age groups and would reduce weight as per the member’srequirement. Kiloburner is being actively promoted by an array of televisioncommercials, digital media, mobile and sms marketing.Management Discussion & Analysis
  • 17. Market LeadershipScaleability of the modela.Your Company has set up 100+ health clubs in over 50 cities in India in a short span of 7years from inception. It is determined to make its presence felt strongly not only in metros, minimetros but also in Tier – III and IV towns through various formats of its health clubs. Majorityof the health clubs operated by the Company are on a ownership model and some are on ajoint venture franchised and subsidiary models. The Company has acquired a majority stakein its Joint Venture partner companies, so as to ensure consolidation of the business and rapidexpansion into newer locations. This ensures quality controls and standardized formats for allits health clubs across the country.Systems drivenb.Your Company has a lean and efficient organisational structure, which enables it to forgeahead in a competitive environment. Various types of reports such as qualitative, quantitive,organizational, financial etc are generated on a monthly basis which enables the managementto take timely decisions. The Company has a multi layered staffing structure, where regionalmanagers undertake responsibility of a cluster of health clubs and report to the management.Budgets are made at the beginning of each year and any variances are reported immediatelythrough software integration and action is taken on a priority basis, so as to ensure higherrevenues from each health club and revenue generated per member.Internal Auditc.Your Company has a strong internal audit system, which is undertaken on a monthly basis. TheCompany has set up several checks and balances to ensure that there are no leakages in thesystem. Each branch has a independent internal auditor who reports to the management onany irregularities or discrepancies in the systems at branch level.Rapid expansiond.Your Company follows a hub & spoke model for enlarging its footprint in the Indian subcontinent.The has enabled the Company to open over 100 outlets in over 50 cities in a very short span.Plans for further expansion of owned health clubs are on track and consolidation of franchisedoutlets is also on schedule.Value and Volume growth drivene.It is your Company’s motto to “spread fitness” and with this motto, it has grown to over 100locations across India, resulting into both volume growth as well as providing an array ofservices within the health club leading to value growth.Internal Control and their adequacyf.Your Company has its internal controls placed in a structured manner across all the branchesof the Company and provides a high degree of assurance with regard to effectiveness andefficiency of the following:Management Discussion & Analysis
  • 18. 21Annual Report 2010-2011Business operationsSafeguarding of Company Assets andCompliance with various laws & regulationsIt is empowered to examine the adherence to policies and plans, as well as statutory obligations.It also reviews the adequacy of controls in ongoing projects involving significant expendituresin addition to regular operations. A quarterly review of the audit findings is conducted by themanagement, as also the audit committee of the Board.Discussion on Operational Reporting & Financial AnalysisOperating Performancea.As a conscious strategy of building a network of branches with effective penetration, yourCompany continued to enlarge its geographical coverage of centres with potential forgrowth, especially in untapped areas in Tier – II and Tier- III cities, with a population of atleast 5,00,000 and with potential for low-cost rentals, good infrastructure etc.The Company has consolidated all its joint venture franchise company into the mainCompany and has presented results on that basis. Due to a significant improvement inearnings, there has been an all-round improvement in various financial metrics, which isenumerated below in the financial reporting segment.Financial Reporting on Standalone Basisb.Total Income :The Company has registered a total income of ` 8,841.46 lakhs marking a growth of32.96% in comparison to the last year income of ` 6,649.84 lakhs .This growth can beattributed to the robust expansion of our health clubs across India as also due to newproducts introduced during the year. Out of this, revenue from operations contribute agrowth of 30.86% and other income due to treasury management constitutes the balance.The CAGR of the Total Income over the last 6 years is 56.79%Operating costsIt is the constant endeavor of the Company to reduce and control costs. The operating costfor the current year is ` 5,003. 94 lakhs in comparison to last year’s ` 4,051.95 lakhs , eventhough the number of health clubs has gone up substantially. On a comparative basis toincome from operations the costs have actually gone down by 3.5% over last year.PBDITProfit before depreciation, interest and taxes and extraordinary items, increased from` 2,597.89 lakhs in the previous year to ` 3,837.52 lakhs in the current year marking asignificant growth of 47.72%. This is attributable to various factors like stringent internalcontrols, effective cost cutting strategies, economies of scale etc.The CAGR of PBDIT over the last 6 years is 63.44%Management Discussion & Analysis
  • 19. Financial ExpensesThere is noteworthy decline in the weighted average cost of borrowings of around 9%, whichis attributable to the constant efforts of the management which is constantly negotiating withthe bankers for benefit of lower interest rates on the advances, negotiating for better LCmargins etc. The effect of equity funds raised in the IPO has also had a salutary impact onthe overall expense head. The Financial expenses for the current year is ` 808.76 lakhs incomparison to last year’s ` 735.95 lakhsDepreciationDepreciation is provided on Straight Line Method at the rates prescribed in Schedule XIVof the Companies Act,1956. Depreciation is higher at ` 833.36 lakhs in comparison to` 608.90 lakhs in F.Y 2009-10 . The same is on account of new health clubs having beenset up in the current year.Profit Before TaxProfit Before tax has accelerated from ` 1,158.91 lakhs in F.Y 2009-10 to ` 2231.76 lakhsin the current year. It has registered an increase of 92.57% over last year.The CAGR of PBT over the last 6 years is 103.05%Profit after TaxProfit after tax has also accelerated from ` 793.69 lakhs in F.Y 2009-10 to ` 1,522.69lakhs in the current year, resulting an increase of 91.85%. There is an increase in margin ofPAT to Income from Operations margin of 5.6% over last year.The CAGR of PAT over the last 6 years is 93.38%Human ResourcesPeople are the most important source for your Company. The staff is the Company’sprincipal point of contact with customers. The Company always believes good staff attractsgood business. It has designed practices to attract and retain skilled talent and its HRprocesses and policies are aligned to enable employees to meet their career objectives.Your Company strives to maintain standardization and upgrades the knowledge base of itsmanpower through intensive training at its Training academy at Thane, near Mumbai. YourCompany also regularly sends its senior personnel to USA and Europe to attend trade fairsand seminars to keep them abreast of latest techniques and to offer them industry insight.Management Discussion & Analysis
  • 20. 23Annual Report 2010-2011Information TechnologyYour Company continuously endeavors to strengthen its infrastructure and technology. In thistechnology intensive environment any disruption of service could have adverse effects.Risk Management and Internal controlYour Company has a strong risk management framework which is constantly reviewed forits relevance and assessmentof risk. Your Company hasestablished an audit processcomprising internal auditsto ensure adequacy andeffectiveness of the controlsacross IT systems andcompliance with the operatingsystems, internal policies andregulatory requirements.Environment, Health andSafetyEnvironment,HealthandSafety(EHS) is one of the primaryconcerns for your Company.To mitigate risk to its membersand damage to equipmentsfrom serious electricalfluctuations your Companyemploys electronic devices likeUPS and automatic panels.Safety systems and processesdeveloped and implementedacross the sites creates a safeworkplace. Based on periodic safety audits necessary corrective and preventive measures areundertaken on priority basis.Your Company also gives priority and attention to the health and safety of its employees andtrains all its employees to work as per the prescribed procedures.Energy ConservationYour Company is highly committed to the cause of protecting the environment. Consistentefforts are made to conserve energy through use of efficient air conditioners using eco-friendlyrefrigerants and lighting systems. In some of the health clubs of the Company solar panels hasbeen installed for certain part of the power requirements.Management Discussion & Analysis
  • 21. Risk , Concerns, ThreatsGlobal players entering the marketa.Your Company operates in the competitive market and faces stiff competition from other playersoperating both in the organized and the un- organized sector. Some foreign players have alsoentered the Indian market. Pricing plays an important role in the customer’s selection of theCompany’s services. There are several strategies adopted by competitors to increase theirmarket share. A highly competitive market will lead to an adverse effects on the Company’sprofitability.Staff selection in cities across Indiab.Your Company is in the service industry, hence human resources is as a vital factor in its successor failure. Since we are expanding all over India selection of the staff in remote areas becomesa challenge.People are still hesitant to disclose that they are working in a gym, though a bulk of fitnesstrainers came from a less affluent class of society. Further in India fitness is still not a priority forwomen, hence finding women trainers who are fit to pose as examples is difficult. This trendhowever, is changing gradually.Even as staffing challenges persist, recruiting senior management has been anything but easy.In this business, a manager has to look after clients 365 days a year and this is something thatfew people are willing to do.There is a significant need for professionals with skills necessary to perform the services weoffer to clients. We are overcoming this weakness by giving the staff full fledged training at ourTraining Academy. Apart from training on fitness techniques your Company also educates thetrainees with regards to manners, etiquette etc.Government regulations :c.The health and wellness Industry as a whole lacks government support. The services providedby your Company is a cost effective way for the nation to prevent several kinds of diseases.Government backing in terms of subsidies, reduction of duties on import of equipment aresome of the steps the government could take to promote the growth of the industry therebysaving substantial resources on healthcare.Macroeconomic risks:d.Factors such as recession, inflation, deflation, stock market performance and unemploymentinfluence income levels and eventually shape the consumers purchasing patterns therebyinfluencing consumer demand for the company’s products. There is a direct linkage betweenconsumer confidence and spending that is determined by general economic conditions anddiscretionary income levels.The Company has initiated measures to curtail its impact.Management Discussion & Analysis
  • 22. 25Annual Report 2010-2011Operational Risks:e.Operational risks mainly relate to meeting the customer expectations in terms of quality ofservice and maintaining a balance between rapid expansion and membership numbers. Theseassume significance given the importance of quality service offerings.To set up new health clubs your company has identified a pipeline of excellent potential newsites and its strong operational cash flows enable it to continue to open new clubs.f. Financial risks:The Company is involved in setting up health clubs for its operations. These expose the Companyto risks in terms of having adequate funds at competitive rates to finance its growth.The current tight liquidity scenario wherein the RBI is raising the BPLR on a constant basis is anarea of concern for the entire economy.The Company has an A+ rating to mitigate this problem and has also sought better termsfrom its bankers for all transactions.OutlookIt is your Company’s objective to create sustainable long term growth for its business operations.Your Company will strive to maintain its position as the leading player in the fitness and wellnessindustry. We have over the years developed capabilities and acquired strength to take fulladvantage of the opportunities presented in the fitness market. The thrust will remain on healthclub expansion and providing qualitative and standardized services, marketing strategies andachieving overall operational excellence.The customer is the key focus of your organization. An analysis of drivers explain growth factorssuch as increasing health and fitness consciousness amongst Indians, increasing spendingpower, increase in number of sports events, unsaturated market etc, thus presenting a hugeopportunity for the health and fitness industry in over 80 towns having a population greaterthan 500000. Some of the recent measures taken by your Company like providing new offers,launch of the new concept – HI FI, have been important path changing moves. This is viewedas a significant move to make your Company’s network stronger and widely spread across thecountry.The Company has also planned forays into other integrated sports and fitness activity centre indensely populated urban clusters to reach out to the top end of the spectrum.Management Discussion & Analysis
  • 23. As a responsible player in the wellness industry,Talwalkars is more than just a gymnasium chain.We are a provider of total health and fitnesssolutions ranging from weight loss consultation tonutrition counselling and behaviour modification.Spreadingfitness andwellness toevery cornerof India
  • 24. 27Annual Report 2010-2011
  • 25. To,The Members ofTalwalkars Better Value Fitness Limited.Your directors are pleased to present 8th Annual Report together with the audited financial statementsfor the year ended 31stMarch, 2011:Financial Results:The financial performance of the Company for the financial year ended 31stMarch, 2011 is summarisedbelow:Summarised Financial Results (Rs. In Lacs)Standalone Consolidated31stMarch, 2011 31stMarch, 2010 31stMarch, 2011Total Income 8,841.46 6,649.84 10,434.37Profit before interest, depreciation and taxation 3,837.52 2,597.89 4213.68Financial Expenses 735.95 808.76 859.34Depreciation 833.36 608.90 895.47Add: Extraordinary Items (36.44) (21.32) (36.44)Profit before tax 2,231.77 1,158.91 2,421.48Provision for taxation 447.20 212.31 459.19Add/( Less): Deferred Tax 261.88 152.90 277.98Profit after tax but before minority interest 1,522.69 793.70 1,684.31Share of minority interest - - 81.21Profit after tax 1,522.69 793.70 1,603.10Add: Balance brought forward 1,822.44 1522.86 1810.43Total available for appropriation 3,345.13 2,316.56 3,413.53Less: General ReserveEffect of Change in AS-11 - 23.86 -Effect of previous year’s Deferred Tax Liability - 329.19 -Proposed Dividend 241.16 120.58 241.16Corporate Dividend Tax 40.03 20.49 40.03Debenture Redemption reserve 22.60 - 22.60Balance carried forward 3,041.34 1,822.44 3,109.74Director’s Report
  • 26. 29Annual Report 2010-2011Dividend:The directors recommend for consideration of the shareholders at the ensuing annual general meeting,payment of a dividend of Re. 1/- per equity share (10%) for the year ended 31stMarch, 2011. Theamount of dividend and tax thereon aggregates to Rs. 2,81,18,874/-.Operations:The operations of the Company are elaborated in the annexed Management Discussion and AnalysisReport.IPO:The Company made an Initial Public Offer (IPO) of 60,50,000 equity shares of Rs. 10/- each at theprice band of Rs. 123/- to Rs. 128/-. The issue was opened on 21stApril, 2010 and was closed on 23rdApril, 2010. There was overwhelming response from all categories of the investors and the Company’sshares were oversubscribed by 28.21 times. The category wise subscription details are given below:Category No. ofApplicationsReceivedNo. of EquitySharesNo. of timesSubscribedQualified Institutional Buyers 101 10,71,70,250 35.4282Non Institutional Investors 83 4,61,61,200 50.8663Retail Individual Investors 36,204 1,73,58,550 8.1977Total 36,388 17,06,90,000 28.2132The Company, in consultation with India Infoline Limited, Book Running Lead Manager determined theprice of Rs. 128/- per equity share (including a share premium of Rs. 118/- per equity share) for cashaggregating to Rs. 77,44,00,000/-. The issue constituted 25.09% of the fully diluted post issue paid upcapital of the Company.The Company had appointed National Stock Exchange of India Limited (NSE) as its designated stockexchange. The Company applied to National Stock Exchange of India Limited (NSE) and Bombay StockExchange Limited (BSE) for listing approval. The Company’s equity shares were listed on both the StockExchanges on Monday, 10thMay, 2010 at a premium to the Issue Price.Utilization of Public Issue Proceeds:The details of the utilization of funds out of the proceeds of the Issue as on 31stMarch, 2011 are asstated below:Particulars Fund requirement asstated in ProspectusDeployment of Funds as on31st March, 2011(Rs. In Lacs)Setting up of additional health clubs 5,022.00 3,950.00Repayment of unsecured loans 2,059.20 2,059.20Meeting Issue related expenses 662.80 662.80Total 7,744.00 6,672.00Director’s Report
  • 27. Listing of Securities:The Company’s equity shares are listed on the National Stock Exchange of India Limited (NSE) and onthe Bombay Stock Exchange Limited (BSE). Further, the Company’s Non-Convertible Debt Securities(NCDs) are listed on the Bombay Stock Exchange Limited (BSE).Share Capital:The paid-up equity share capital of your Company has been increased from Rs.18,06,56,720 to Rs.24,11,56,720 on account of the Initial Public Offer.Private Placement of Non Convertible Debt Securities (NCDs)The Company pursuant to approvals granted by the Board of Directors and Members, allotted, onPrivate Placement basis, 300 Non-Convertible Debt Securities of Rs. 10,00,000/- each aggregatingto Rs. 30,00,00,000/-. The proceeds of which are utilised for general corporate purpose of theCompany.Subsidiary Companies:Your Company has (03) Three subsidiaries as on 31stMarch, 2011, which are as under:(1) Denovo Enterprises Private Limited(2) Equinox Wellness Private Limited.(3) Aspire Fitness Private Limited.All the above stated subsidiaries are active in the same business of running the health clubs.Denovo Enterprises Private Limited (DEPL).1.Denovo Enterprises Private Limited, incorporated on 8thFebruary, 2005, was the joint ventureCompany. DEPL was converted from the JVC to Subsidiary Company vide approval of the Board ofDirectors granted in the Meeting held on 28th October, 2010.Equinox Wellness Private Limited (EWPL).2.Equinox Wellness Private Limited, incorporated on 8thJune, 2004, is step-down subsidiary of yourCompany (Subsidiary of DEPL). EWPL was converted to subsidiary company vide approval of theBoard of Directors granted in the Meeting held on 28th October, 2010.Aspire Fitness Private Limited (AFPL).3.Aspire Fitness Private Limited, incorporated on 5thDecember, 2009, was the joint venture company.AFPL was converted from JVC to Subsidiary Company vide approval of the Board of Directorsgranted in the Meeting held on 28th October, 2010.Director’s Report
  • 28. 31Annual Report 2010-2011Fixed Deposits:During the year under review Company has not accepted any fixed deposits from the public falling withinthe purview of Section 58A and 58AA of the Companies Act, 1956 and rules framed thereunder.Disclosure under Section 274(1)(G):None of the Directors of the Company are disqualified being appointed as directors as specified u/s274(1) (g) of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000.Directors:In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of theCompany, Mr. Anant Ratnakar Gawande, Mr. Manohar Gopal Bhide and Dr. Avinash Achyut Phadke,Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible,have offered themselves for re-appointment.Directors’ Responsibility Statement:As required under Section 217 (2AA) of the Companies Act, 1956, your Directors hereby state andconfirm that:in preparation of the Annual Accounts, the applicable accounting standards have been followed(a)along with proper explanation relating to material departures;the Directors have selected such accounting policies and applied them consistently and made(b)judgments and estimates that are reasonable and prudent; so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year ended on 31stMarch, 2011 and ofthe profit of the Company for that year;the Directors have taken proper and sufficient care for the maintenance of adequate accounting(c)records for the year ended 31stMarch, 2011 in accordance with the provisions of the CompaniesAct, 1956 for safeguarding the assets of the Company and for prevention and detection of fraudand other irregularities;the Directors have prepared the Annual Accounts on a going concern basis.(d)Information pursuant to Section 217 (2A) of the Companies Act, 1956:The Information regarding particulars of employees as required under Section 217 (2A) of theCompanies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, and Companies(Particulars of Employees) Amendment Rules, 2011 is not applicable to the Company.Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:The particulars as required under Section 217(1)(e) of the Companies Act, 1956 read with CompaniesPart A & B pertaining to conservation of energy and technology absorption are not applicable1.to the Company.(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are as under:Director’s Report
  • 29. Foreign Exchange earnings and outgo:2.Earnings - NILOutgo - Rs. 1113.2 LacsCorporate Governance:Transparency is the cornerstone of your Company’s philosophy and all requirements of CorporateGovernance are adhered to both in letter and spirit. The Audit Committee, shareholders/ Investorsas required in terms of Clause 49 of the Listing Agreement. Your Board of Directors has taken allnecessary steps to ensure compliance with all statutory and listing requirements. The Directors and keymanagement personnel of your Company have complied with the code of conduct which was put inplace by the Board of Directors. Apart from being in compliance with all requirements of clause 49 ofthe Listing Agreement, your Company has voluntarily adopted certain governance principles. Settingup of the Remuneration Committee of Directors and introduction of a Model code for Insider Tradingare some of the initiatives taken by your Company towards this end.The Report on Corporate Governance as required under the Listing Agreement forms part of thisReport. A Certificate from Practicing Company Secretary on compliance with Corporate Governancerequirements along with a certificate from the CEO and CFO as required under Clause 49 of theListing Agreement are annexed with this Report.Auditors:You are requested to appoint the statutory auditors for the ensuing year 2011-12.Reply: The Auditors have qualified their Report stating that the Statements have been consolidated basedon unaudited financial statements. This relates to Denovo Enterprise Private Limited which expressedits inability to provide audited financial accounts as it is not following 31st March as its year end andhence its accounts are not audited as on that date. The Management of the Company, however, hasprovided the accounts of the Subsidiary as on 31stMarch, 2011 duly certified by its management andthe statutory auditors.Acknowledgement:The Board wishes to place on record its appreciation of sincere efforts put in by the employees of theCompany, in helping it reach its current growth level.Grievance, Share Allotement and Share Transfer Committee; of the Board meet at regular intervalClause 2: Unaudited Financial Statements of a Subsidiary:Auditors’ Report on Consolidated Financial Statements:Director’s Report
  • 30. 33Annual Report 2010-2011Your Directors place on record their appreciation for the support and assistance received from theinvestors, customers, vendors, bankers, financial institutions, business associates, regulatory andgovernment authorities.For and on behalf of the BoardTalwalkars Better Value Fitness Limited.Prashant Talwalkar Anant GawandeManaging Director & CEO Whole-time Director & CFODate: 14thJune 2011Place: MumbaiDirector’s Report
  • 31. The scalability of our business model hasdemonstrated a winning formula of acumen andcommitment, and seen Talwalkars set up over100 health clubs in more than 50 towns in India.Add experienceand technicalknow-how toambition tomultiplythe results
  • 32. 35Annual Report 2010-2011
  • 33. The Report on Corporate Governance in compliance with Clause 49 of the Listing Agreement with theStock Exchanges is as follows:Company’s Philosophy on Corporate Governance:Talwalkars Better Value Fitness Limited believes that good Corporate Governance is essential to achievelong-term corporate goals, enhance shareholders’ value and attain highest level of transparency. TheCompany is committed to achieve the highest standard of Corporate Governance, accountability andequity in all facets of its operations and in all interaction with stakeholders. The Company believes thatall its operations and actions must serve the underlined goal of enhancing customers’ satisfaction andshareholders’ value over a sustained period of time.Your Secretarial Compliance Report comprises of the following:I. Board of Directors.II. Board Committees.III. General Body Meetings.IV. Subsidiary Companies.V. Other Disclosures.I. Board of Directors:A. The Board of Directors comprises six Whole-time Directors (one is Executive Chairman; one isManaging Director & CEO and one is Whole-time Director & CFO, three are Whole-time Directors)and six Independent Directors making it optimal combination of knowledge, experience andprofessionalism.During the year, eight Board Meetings were held on 15thApril, 2010, 28thApril, 2010, 4thMay,2010, 7thJuly, 2010, 12thAugust, 2010, 23rdSeptember, 2010, 28thOctober, 2010 and 27thJanuary, 2011.B. The Composition of the Board of Directors, their attendance at the board meeting during the yearand at the last Annual General Meeting along with number of other directorships, committeechairmanship/memberships is as follows:Name of Directors Category of No. ofBoardMeetingsAttendedAttendanceat last AGMheld on23.09.2010No. ofDirectorshipsin all otherCompanies *CommitteeMemberships/Chairmanship in allCompanies **Member ChairmanMr. Madhukar Talwalkar EC 07 Yes Nil Nil NilMr. Prashant Talwalkar MD & CEO 08 Yes Nil Nil NilMr. Vinayak Gawande WTD 07 Yes 01 Nil NilMr. Girish Talwalkar WTD 07 Yes Nil 01 NilMr. Harsha Bhatkal WTD 08 Yes 01 Nil NilMr. Anant Gawande WTD & CFO 08 Yes 01 02 NilDirectorshipReport on Corporate Governance
  • 34. 37Annual Report 2010-2011Mr. Manohar Bhide ID 07 Yes 04 03 01Mr. Raman Maroo ID 07 No 01 Nil NilMr. Mohan Jayakar ID 05 Yes 07 Nil NilDr. Avinash Phadke ID 08 Yes Nil 01 NilMr. Abhijeet Patil ID 06 Yes Nil 02 02Mr. Glenn Saldanha ID 04 No 03 01 NilNote:* Directorships across all the companies excluding Private Companies, Foreign Companies andCompanies registered under Section 25 of the Companies Act, 1956.** Chairmanship and Membership of Audit Committee and Shareholders/ Investors Grievance, ShareAllotment and Share Transfer Committee only for membership across all the companies excludingPrivate Companies, Foreign Companies and Companies registered under Section 25 of the CompaniesAct, 1956.EC – Executive Chairman, MD & CEO – Managing Director & Chief Executive Officer WTD & CFO– Whole-time Director & Chief Financial Officer, WTD – Whole-time Director, ID – IndependentDirectorExcept sitting fees, no other remuneration is paid to Independent Directors. Leave of absence is grantedto the directors absent for meetings.C. Relationship between Directors:Mr. Madhukar Vishnu Talwalkar, Executive Chairman of the Company and Mr. Girish MadhukarTalwalkar, Whole-time Director of the Company, being father and son, are related to each other.Mr. Vinayak Ratnakar Gawande, Whole-time Director and Mr. Anant Ratnakar Gawande, Whole-timeDirector & Chief Financial Officer of the Company being brothers, are related to each other.Mr. Madhukar Vishnu Talwalkar, Executive Chairman of the Company and Mr. Prashant SudhakarTalwalkar, Managing Director and Chief Executive Director, being uncle and nephew, are related toeach other.D. Appointment of Directors retiring by rotation:The following Directors retire by rotation in accordance with the provisions of the Companies Act,1956 and being eligible, have offered themselves for re-appointment at the ensuing Annual GeneralMeeting:Mr. Anant Ratnakar Gawandei)Mr. Manohar Gopal Bhideii)Dr. Avinash Achyut Phadkeiii)Report on Corporate Governance
  • 35. E. Code of Conduct:The Company has adopted a Code of Conduct (“the code”) for Directors and Senior Management on 7thJuly, 2010, which is in compliance with the requirements of Clause 49 of the Listing Agreement enteredinto with the Stock Exchanges. The Code of Conduct is also posted on the Company’s website.All the Directors and Members of the Senior Management have affirmed the compliance with the Codeof Conduct for the year under review. The Declaration to this effect signed by the Managing Director &Chief Executive Officer is annexed to this report.F. Remuneration paid to Managing Director/ Whole-time Directors for the year ended 31stMarch,2011.Details of remuneration paid to Managing Director/ Whole-time Directors is as follows:Names of Managing Director /Whole-time DirectorsGrossSalary(Rs.)Commi-ssion(Rs)Perquisites(Rs.)RetirementBenefits(Rs.)StockOptionMr. Madhukar Vishnu Talwalkar 42,00,000 -- -- -- --Mr. Prashant Sudhakar Talwalkar 42,00,000 -- -- -- --Mr. Vinayak Ratnakar Gawande 42,00,000 -- -- -- --Mr. Girish Madhukar Talwalkar 42,00,000 -- -- -- --Mr. Harsha Ramdas Bhatkal 42,00,000 -- -- -- --Mr. Anant Ratnakar Gawande 42,00,000 -- -- -- --G. Sitting Fees to Independent Directors:The Independent Directors are paid sitting fees @ Rs. 10,000/-per meeting of the Board or itsCommittees. Details of sitting fees paid to Independent Directors for the period from 1stApril, 2010 to31stMarch, 2011 are as follow:Names of the Independent Directors Sitting Fees (In Rs.)Mr. Manohar Gopal Bhide 80,000Mr. Raman Hirji Maroo 70,000Mr. Mohan Motiram Jayakar 50,000Dr. Avinash Achyut Phadke 1,10,000Mr. Abhijeet Rajaram Patil 1,40,000Mr. Glenn Mario Saldanha 40,000Report on Corporate Governance
  • 36. 39Annual Report 2010-2011H. Details of shares held by Independent Directors:Details of Shares held by the Independent Directors as on 31stMarch, 2011 are as follows:Names of the Independent Directors No. of Shares heldMr. Manohar Gopal Bhide 6,296Mr. Raman Hirji Maroo --Mr. Mohan Motiram Jayakar --Dr. Avinash Achyut Phadke 64,000Mr. Abhijeet Rajaram Patil --Mr. Glenn Mario Saldanha --II. Board Committees:The Board has constituted five Committees:1) Audit Committee;2) Remuneration/ Compensation Committee;3) Shareholders/ Investors Grievance, Share Allotment and Share Transfer Committee;4) IPO Committee; and5) Management Committee.1) Audit Committee:The Audit Committee was constituted vide Board Resolution dated 11thNovember, 2009 under theChairmanship of Mr. Abhijeet Rajaram Patil, who comes with finance and accounting background.The terms of reference of the Audit Committee cover the matters specified under Section 292A of theCompanies Act, 1956 and Clause 49 of the Listing Agreement. The Audit Committee consists of thefollowing Directors:Name of the Director Designation in theCommitteeNature of DirectorshipMr. Abhijeet Rajaram Patil Chairman Independent DirectorDr. Avinash Achyut Phadke Member Independent DirectorMr. Anant Ratnakar Gawande Member Whole-time Director and CFOThe Audit Committee enjoys following powers: -To invite such of the executives, as it considers appropriate (and particularly the head of finance1.function) to be present at the meetings of the Committee;To investigate any activity within its terms of reference;2.To seek information from any employee;3.Report on Corporate Governance
  • 37. To obtain outside legal or other professional advice; and4.To secure attendance of outsiders with reasonable expertise, if considered necessary.5.The scope of Audit Committee shall include but shall not be restricted to the following:1) Overseeing Company’s financial reporting process and the disclosure of its financialinformation to ensure that the financial statement is correct, sufficient and credible.2) Recommending to the Board, the appointment, re-appointment and, if required, thereplacement or removal of the statutory auditor and the fixation of audit fees.3) Approval of payment to statutory auditors for any other services rendered by the statutoryauditors.4) Appointment, removal and terms of remuneration of internal auditors.5) Reviewing, with the management, the annual financial statements before submission to theBoard for approval, with particular reference to:• Matters required to be included in the Director’s Responsibility Statement tobe included in the Board’s report in terms of clause (2AA) of Section 217 of theCompanies Act, 1956;• Changes, if any, in accounting policies and practices and reasons for the same;• Major accounting entries involving estimates based on the exercise of judgment bymanagement;• Significant adjustments made in the financial statements arising out of auditfindings;• Compliance with listing and other legal requirements relating to the financialstatements;• Disclosure of any related party transactions;• Qualifications in the draft audit report;6) Reviewing, with the management, the quarterly financial statements before submission tothe Board for approval;7) Reviewing, with the management, the statement of uses / application of funds raisedthrough an issue (public issue, rights issue, preferential issue, etc.), the statement of fundsutilized for purposes other than those stated in the offer document/prospectus/notice andthe report submitted by the monitoring agency monitoring the utilisation of proceeds of apublic or rights issue, and making appropriate recommendations to the Board to take upsteps in this matter;8) Monitoring the use of the proceeds of the proposed initial public offering of theCompany.9) Reviewing, with the management, performance of statutory and internal auditors, andadequacy of the internal control systems;Report on Corporate Governance
  • 38. 41Annual Report 2010-201110) Reviewing the adequacy of internal audit function, if any, including the structure of theinternal audit department, staffing and seniority of the official heading the department,reporting structure, coverage and frequency of internal audit;11) Reviewing management letters / letters of internal control weaknesses issued by the statutoryauditors;12) Discussion with internal and statutory auditors on any significant findings and reviewingfindings of internal investigations by internal auditors, like matters of fraud or irregularityor failure of internal control systems, if any;13) Reviewing the findings of any internal investigations by the internal auditors into matterswhere there is suspected fraud or irregularity or a failure of internal control systems of amaterial nature and reporting the matter to the Board;14) Discussion with the statutory auditors before the audit commences, about the nature andscope of audit as well as post-audit discussion to ascertain any area of concern;15) To look into the reasons for substantial defaults in the payment to the depositors, debentureholders, shareholders (in case of non payment of declared dividends) and creditors;16) To review the functioning of the Whistle Blower mechanism, when the same is adopted bythe Company and is existing;17) Carrying out any other function as may be statutorily required to be carried out by the AuditCommittee;The Audit Committee shall mandatorily review the following information:Management discussion and analysis of financial condition and results of operations;a.Statement of significant related party transactions (as defined by the audit committee),b.submitted by management;Management letters / letters of internal control weaknesses issued by the statutory auditors;c.Internal audit reports relating to internal control weaknesses; andd.The appointment, removal and terms of remuneration of the Chief internal auditor shall bee.subject to review by the Audit Committee.The recommendations of the Audit Committee on any matter relating to financial management, includingthe audit report, are binding on the Board. If the Board is not in agreement with the recommendationsof the Committee, reasons for disagreement shall have to be minuted in the Board Meeting and thesame has to be communicated to the shareholders. The Chairman of the committee has to attendthe Annual General Meetings of the Company to provide clarifications on the matters relating to theaudit.During the year four Audit Committee meetings were held on 24thJune, 2010, 12thAugust, 2010, 28thOctober, 2010 and 27thJanuary, 2011.Report on Corporate Governance
  • 39. The attendance record of the Audit Committee members is given below:Name of the Members No. of MeetingsHeld AttendedMr. Abhijeet Rajaram Patil 04 04Dr. Avinash Achyut Phadke 04 04Mr. Anant Ratnakar Gawande 04 042) Remuneration Committee/ Compensation Committee:For Remuneration of Directors, our Company has constituted Remuneration/ Compensation Committeevide Board Resolution dated 11thNovember, 2009. Committee has powers of recommendingremuneration package to all Directors as per the requirements of the Clause 49 of the Listing Agreementfor Corporate Governance.The composition of the Remuneration / Compensation Committee is as follows:Name of the Director Designation in theCommitteeNature of DirectorshipMr. Manohar Gopal Bhide Chairman Independent DirectorDr. Avinash Achyut Phadke Member Independent DirectorMr. Abhijeet Rajaram Patil Member Independent DirectorThe scope of Remuneration/Compensation Committee shall include but shall not be restricted to thefollowing:To recommend to the Board, the remuneration packages of Company’s Managing/Joint1)Managing/ Deputy Managing/ Whole-time / Executive Directors, including all elements ofremuneration package (i.e. salary, benefits, bonuses, perquisites, commission, incentives,stock options, pension, retirement benefits, details of fixed component and performance linkedincentives along with the performance criteria, service contracts, notice period, severance feesetc.);To be authorised at its duly constituted meeting to determine on behalf of the Board of Directors2)and on behalf of the shareholders with agreed terms of reference, Company’s policy on specificremuneration packages for Company’s Managing/Joint Managing/ Deputy Managing/Wholetime/ Executive Directors, including pension rights and any compensation payment;To implement, supervise and administer any share or stock option scheme of the Company;3)To attend to any other responsibility as may be entrusted by the Board within the terms of4)reference.During the year, no meeting of Remuneration/ Compensation Committee of the Board was held.Report on Corporate Governance
  • 40. 43Annual Report 2010-20113) Shareholders’ / Investors’ Grievance, Share Allotment and Share Transfer Committee:For redressing the Shareholder/ Investor complaints, the Company had first constituted Shareholders’/Investors Grievance, Share Allotment and Share Transfer Committee vide resolution dated 16thNovember, 2009 as per the requirements of the Clause 49 of the Listing Agreement for CorporateGovernance. The present committee consists of the following members:-Name of the Director Designation in theCommitteeNature of DirectorshipMr. Abhijeet Rajaram Patil Chairman Independent DirectorMr. Girish Madhukar Talwalkar Member Whole-time DirectorMr. Anant Ratnakar Gawande Member Whole-time Director and CFOThis committee will address all grievances of Shareholders/Investors in compliance of the provisionsof clause 49 of the Listing Agreements with the Stock Exchanges and its terms of reference include thefollowing:Efficient transfer of shares; including review of cases for refusal of transfer/transmission of1)shares and debentures;Redressing of shareholders and investor complaints such as non-receipt of declared dividend,2)annual report, transfer of Equity Shares and issue of duplicate/split/ consolidated sharecertificates;Monitoring transfers, transmissions, dematerialization, re-materialization, splitting and3)consolidation of Equity Shares and other securities issued by our Company, including review ofcases for refusal of transfer/ transmission of shares and debentures;Allotment and listing of shares in future;4)Review of cases for refusal of transfer / transmission of shares and debentures;5)Reference to statutory and regulatory authorities regarding investor grievances;6)Ensure proper and timely attendance and redressal of investor queries and grievances; and7)To do all such acts, things or deeds as may be necessary or incidental to the exercise of the8)above powers.During the year, four Shareholders/ Investors Grievance, Share Allotment and Share Transfer CommitteeMeetings were held on 15thJune, 2010, 6thJuly, 2010, 28th thOctober, 2010 and 27 January, 2011.Report on Corporate Governance
  • 41. The attendance record of the Shareholders/ Investors Grievance, Share Allotment and Share TransferCommittee members is given below:Name of the Members No. of MeetingsHeld AttendedMr. Abhijeet Rajaram Patil 04 03Mr. Girish Madhukar Talwalkar 04 03Mr. Anant Ratnakar Gawande 04 044) IPO Committee:The IPO Committee was constituted vide Board Resolution dated 9thNovember, 2009 to oversee andinform the Audit Committee when money is raised through prospectus or rights or preferential issuesand shall inform of funds received, utilized, pending for project implementation etc. for the informationof the Stock Exchanges and Investors and shall keep the information up dated through our Company’swebsite. The composition of the IPO Committee is as follows:Name of the Director Designation in theCommitteeNature of DirectorshipMr. Manohar Gopal Bhide Chairman Independent DirectorMr. Vinayak Ratnakar Gawande Member Whole-time DirectorMr. Girish Madhukar Talwalkar Member Whole-time DirectorMr. Anant Ratnakar Gawande Member Whole-time Director and CFOThe terms of reference of the IPO Committee of our Company includes:to decide on the actual size of the Issue, including any reservation shareholders of promoting1)companies or shareholders of group companies and/or any other reservations or firm allotmentsas may be permitted, timing, pricing and all the terms and conditions of the Issue of the shares,including the price, and to accept any amendments, modifications, variations or alterationsthereto;to appoint and enter into arrangements with the Book Running Lead Manager, Co-Managers2)to the Issue, Underwriters to the Issue, Syndicate Members to the Issue, Advisors to the Issue,Stabilizing Agent, Brokers to the Issue, Escrow Collection Bankers to the Issue, Registrars, LegalAdvisors to the Issue, Legal Advisors to our Company, Legal Advisors as to Indian and overseasjurisdictions, advertising and/or promotion or public relations agencies and any other agenciesor persons;to finalize and settle and to execute and deliver or arrange the delivery of the offering3)documents (Draft Red Herring Prospectus, Red Herring Prospectus, Final Prospectus) (includingthe international wrap and final international wrap, if required, for marketing of the Issue injurisdictions outside India), syndicate agreement, underwriting agreement, escrow agreement,stabilization agreement and all other documents, deeds, agreements and instruments as maybe required or desirable in connection with the Issue of shares or the Issue by our Company;Report on Corporate Governance
  • 42. 45Annual Report 2010-2011to open one or more separate current account(s) in such name and style as may be decided,4)with a scheduled bank to receive applications along with application monies in respect of theIssue of the shares of our Company;to open one or more bank account of our Company in such name and style as may be decided5)for the handling of refunds for the Issue;to make any applications to the RBI, FIPB and such other authorities, as may be required, for the6)purpose of Issue of shares by our Company to non-resident investors including but not limitedto NRIs, FIIs, FVCI’s and other non-residents;to make applications for listing of the equity shares of our Company in one or more stock7)exchange(s) and to execute and to deliver or arrange the delivery of the listing agreement(s) orequivalent documentation to the concerned stock exchange(s);to settle all questions, difficulties or doubts that may arise in regard to the Issue or allotment of8)shares as it may, in its absolute discretion deem fit; andto do all such acts, deeds, matters and things as it may, in its absolute discretion, deem necessary9)or desirable for such purpose, or otherwise in relation to the Issue or any matter incidental orancillary in relation to the Issue, including without limitation, allocation and allotment of theshares as permissible in law, issue of share certificates in accordance with the relevant rules.During the year, one IPO Committee Meeting was held on 26thApril, 2010.The attendance record of the IPO Committee members is given below:Name of the Members No. of MeetingsHeld AttendedMr. Manohar Gopal Bhide 01 01Mr. Vinayak Ratnakar Gawande 01 01Mr. Girish Madhukar Talwalkar 01 01Mr. Anant Ratnakar Gawande 01 015) Management Committee:The Management Committee was constituted vide Board Resolution dated 23rdMarch, 2010 to reviewthe operations of the committee. The composition of the Management Committee is as follows:Name of the Director Designation in theCommitteeNature of DirectorshipMr. Madhukar Vishnu Talwalkar Chairman Whole-time DirectorMr. Prashant Sudhakar Talwalkar Member Managing Director and CEOMr. Vinayak Ratnakar Gawande Member Whole-time DirectorMr. Girish Madhukar Talwalkar Member Whole-time Director and CFOMr. Harsha Ramdas Bhatkal Member Whole-time DirectorReport on Corporate Governance
  • 43. Mr. Anant Ratnakar Gawande Member Whole-time DirectorMr. Manohar Gopal Bhide Member Independent DirectorMr. Abhijeet Rajaram Patil Member Independent DirectorThe terms of reference of the Management Committee of the Company includes:To review ongoing operations of the Company.1.To carry out such business as has been delegated by the Board in so far as:2.To open new bank account(s) in the name of the Company or to close any existinga.bank account(s) as and when required and to authorise directors and / or executives tooperate such bank account and with such limits as are approved by the ManagementCommittee from time to time.To open domestic or international Letters of Credit (LC) from time to time, on behalf ofb.the Company for its CAPEX or other requirements.To open or close any Fixed Deposit Account(s) with any of the banks or any otherc.financial institutions.To discuss, negotiate and to give permission to enter into any franchise agreementd.with any of the existing Franchisee to start new gym(s) as a franchisee of the Companyor cancel any existing franchise agreement with any of the existing franchisee for anyreason; or to appoint as franchise.To shortlist and enter into the Leave and License Agreement or Lease Agreement as thee.case may be for the proposed new Gyms as well as guest house for the Company orrenew any expiring licenses / leases for the existing gyms or guest house.To appoint any authorised person and to give authority by execution of Special Powerf.of Attorney on behalf of the Company to enter into and register with the Registrarof Assurances the leave and license or lease agreement as the case may be for theexecution of agreement for new gyms or guest house or for renewal of the existingagreement(s).To authorise or appoint any outside professional or consultant for and on behalf ofg.the Company for such work as the Management Committee may deem fit and fix theirremuneration.During the year one Management Committee Meeting was held on 16thJuly, 2010.Report on Corporate Governance
  • 44. 47Annual Report 2010-2011The attendance record of the Management Committee members is given below:Name of the Members No. of MeetingsHeld AttendedMr. Madhukar Vishnu Talwalkar 01 01Mr. Prashant Sudhakar Talwalkar 01 01Mr. Vinayak Ratnakar Gawande 01 01Mr. Girish Madhukar Talwalkar 01 01Mr. Harsha Ramdas Bhatkal 01 01Mr. Anant Ratnakar Gawande 01 01Mr. Manohar Gopal Bhide 01 NilMr. Abhijeet Rajaram Patil 01 01III. General Body Meetings:A. Annual General Meeting (AGM):The date, time and venue of the Annual General Meetings held in last three (03) years are as under:FinancialYearDate Time Venue Special Resolutions Passed2007-2008 30thSeptember,200810.30a.m.801-813, MahalaxmiChambers, 22,Bhulabhai Desai Road,Mumbai - 400 026.• Re-organisation ofAuthorised Share Capital.• Sub-division of Shares.• Alteration of ClauseV of Memorandum ofAssociation.2008-2009 10thSeptember,200911.00a.m.801-813, MahalaxmiChambers, 22,Bhulabhai Desai Road,Mumbai - 400 026.• Revision of term ofremuneration, re-designation & re-appointment of ExecutiveDirectors(5 separate resolutions for5 Executive Directors).• Revision of term ofremuneration & re-designation of ManagingDirector.Report on Corporate Governance
  • 45. 2009-2010 23rdSeptember,201011.30a.m.M.C. Ghia Hall,Bhogilal HargovindasBuilding, 2nd FloorKala Ghoda, 18/20, K.Dubash Marg, Mumbai- 400 001.No Special Resolution waspassedB. Extra Ordinary General Meeting (EGM):The date, time and venue of the Extra-Ordinary General Meetings held in last 3 years are as under:FinancialYearDate Time Venue Special Resolutions Passed2009-2010 8thJuly, 2009 11.00 a.m. 801-813, MahalaxmiChambers, 22,Bhulabhai Desai Road,Mumbai - 400 026.• Appointment of ManagingDirector.2009-2010 4thAugust, 2009 11.00 a.m. 801-813, MahalaxmiChambers, 22,Bhulabhai Desai Road,Mumbai - 400 026.• Alteration of Articles ofAssociation by addition ofDepository Clause.2009-2010 24thAugust,200911.00 a.m. 801-813, MahalaxmiChambers, 22,Bhulabhai Desai Road,Mumbai - 400 026.• Alteration / Addition inObject Clause.2009-2010 1stOctober,200911.00 a.m. 801-813, MahalaxmiChambers, 22,Bhulabhai Desai Road,Mumbai - 400 026.• Conversion of Companyfrom Pvt. Ltd. to Public Ltd.2009-2010 9thNovember,200912.00 p.m. 801-813, MahalaxmiChambers, 22,Bhulabhai Desai Road,Mumbai - 400 026.• Approval u/s. 81(1A) of theCompanies Act, 1956.• Investment in Equity Sharesof the Company by FIIs.2009-2010 14thNovember,20091.00 p.m. 801-813, MahalaxmiChambers, 22,Bhulabhai Desai Road,Mumbai - 400 026.• Issue of Bonus Shares.• Increase in Borrowing Limitsof the Company.• Creation of Charge.• Re-appointment ofExecutive Chairman forfurther period of 5 yearsaged above Seventy Years.• Commission to Non-Executive Directors.Report on Corporate Governance
  • 46. 49Annual Report 2010-2011C. Postal Ballot:No special resolution was passed through postal ballot during the year 2010 – 11.IV. Subsidiary Companies:Your Company has three subsidiaries as on 31stMarch, 2011, which are as under:Denovo Enterprises Private Limited1)Equinox Wellness Private Limited.2)Aspire Fitness Private Limited.3)All the above stated subsidiaries are active in the same business of running the health clubs.Denovo Enterprises Private Limited (DEPL).1.Denovo Enterprises Private Limited, incorporated on 8thFebruary, 2005, was the joint venture Company.DEPL was converted from the JVC to 50.1% Subsidiary Company vide approval of the Board of Directorsgranted in the Meeting held on 28thOctober, 2010.As at 31stMarch, 2011, we hold 50,100 equity shares of Rs. 100/- (Rupees One Hundred only) eachi.e. 50.1% of paid-up capital of DEPL.Equinox Wellness Private Limited (EWPL).2.Equinox Wellness Private Limited, incorporated on 8thJune, 2004, is step-down subsidiary of yourCompany. As at 31stMarch, 2011, we hold 50.1% of paid-up capital of Denovo Enterprises PrivateLimited which, in turn, holds 4,00,000 equity shares of Rs. 10/- (Rupees Ten only) each i.e., 66.67% ofthe paid-up capital of Equinox Wellness Private Limited.Accordingly, we 33.4% of the paid-up capital of the Equinox Wellness Private Limited. (50.1% of the66.67% of the paid-up capital). EWPL was converted to subsidiary company vide approval of the Boardof Directors granted in the Meeting held on 28thOctober, 2010Aspire Fitness Private Limited (AFPL).3.Aspire Fitness Private Limited, incorporated on 5thDecember, 2009, was the joint venture company.AFPL was converted from JVC to the 50.001% Subsidiary Company vide approval of the Board ofDirectors granted in the Meeting held on 28thOctober, 2010.As at 31stMarch, 2011, we hold 50,001 equity shares of Rs. 100/- (Rupees One Hundred only) eachi.e., 50.001% of the paid-up capital of AFPL.V. Other Disclosures:A. Disclosure of Related Party Transactions:All related party transactions have been entered into in the ordinary course of business and wereplaced periodically before the Audit Committee and the Board. All transactions with the related partiesor others were on an arm’s length basis.Report on Corporate Governance
  • 47. B. Disclosure of Accounting Treatment:All Accounting Standards mandatorily required have been followed in preparation of financial statementsand no deviation has been made in following the same.C. Risk Management Framework:The company has in place mechanisms to inform the Board Members about the Risk Assessmentand Minimization procedures and periodical reviews to ensure that risk is controlled by the ExecutiveManagement through the means of a properly defined framework.D. Details of Utilisation of the funds out of the proceeds from the Public Issue:The details of the utilization of funds out of the proceeds of the Issue as on 31stMarch, 2011 are asstated below:Particulars Fund requirement as statedin ProspectusDeployment of Funds as on 31stMarch, 2011(Rs. In Lacs)Setting up of additional health clubs 5,022.00 3,950.00Repayment of unsecured loans 2,059.20 2,059.20Meeting Issue related expenses 662.80 662.80Total 7,744.00 6,672.00The Company utilised Rs. 66,72,00,000/- till 31stMarch, 2011 out of the total proceeds from thePublic Issue of Rs. 77,44,00,000/-.E. Details of Unclaimed Shares Allotted in the (IPO) Initial Public OfferingThe Company has in it’s IPO allotted 60,50,000 Equity Shares of Rs. 10/- each at a price of Rs. 128/-per equity share (including a share premium of Rs. 118/- per equity share) to the Shareholders out ofwhich Unclaimed Shares are transferred to a Special Account opened by the Company viz. UnclaimedShares Demat Suspense Account.Details of the Shares in the Unclaimed Shares Demat Suspense Account is as follows:Report on Corporate Governance
  • 48. 51Annual Report 2010-2011The voting rights on the said unclaimed shares shall remain frozen till the rightful owners of such sharesclaims the shares. The respective shareholders may approach the Company Secretary or M/s. LinkIntime India Private Limited, Registrar and Transfer Agents of the Company for claiming their shares.* The unclaimed shares Demat Suspense Account is Opened by the Company on 15thSeptember,2010 and shares have been subsequently transferred to the said account on 21stSeptember, 2010 and23rdSeptember, 2010 respectively.F. Means of Communication:Quarterly and Audited Financial Results are published in the following Newspapers:i)The Economic TimesThe Free Press JournalMaharashtra TimesNavShaktiThe Company’s website at www.talwalkars.net is regularly updated with the financial results.ii)The Management Discussion and Analysis Report, in Compliance with the requirements of Clause 49iii)of the Listing Agreement is annexed to the Annual Report and forms part of this Annual Report.G. General Shareholders Information:i. Annual General MeetingDate and TimeVenue Garware Club House, 1st Main Building,Wankhede Stadium, D Road, Churchgate,Mumbai – 400020ii.Financial Calendar 2011-12(Tentative) ResultsReportingUnaudited Results for the quarter ending30th June, 2011On or before 15thAugust, 2011.Unaudited Results for the quarter ending30th September, 2011On or before 15thNovember, 2011Unaudited Results for the quarter ending31st December, 2011On or before 15thFebruary, 2012Unaudited Results for the quarter and yearending 31st March, 2012On or before 15thMay, 2012Audited Results for the year ending 31stMarch, 2012On or before 15thJuly, 2012AGM for the approval of the Audited ac-counts for the year ended 31st March,2012On or before 30thSeptember, 2012Friday, 12th August, 2011 at 12.00 p.m.Report on Corporate Governance
  • 49. Financial Year 1stApril to 31stMarchiii. Book Closure Date 6th August, 2011 to 12th August, 2011(both days inclusive)iv. Dividend payment date On or after 12thAugust, 2011H. Listing:EquityEquity Shares of the Company are Listed on National Stock Exchange of India Limited (NSE) andBombay Stock Exchange Limited (BSE) with effect from 10th May, 2010.STOCK CODESBSE: 533200NSE: TALWALKARSISIN Number for NSDL and CDSL for Dematerialised Shares: INE502K01016Debt Securities300Non-ConvertibleDebtSecurities(NCDs)ofRs.10,00,000/- eachaggregatingtoRs.30,00,00,000/-issued and allotted on 25th January, 2011 on Private Placement basis are listed with the Bombay StockExchange Limited (BSE) in the List of securities of “F - Group - Debt Instruments” effective from 24thFebruary, 2011STOCK CODESBSE: Scrip Code: 947096 Scrip ID: TBVFL250111ISIN Number for NSDL and CDSL for Dematerialised Shares: INE502K07013The Company has paid the listing fees in full for the year 2011-12 to the aforesaid Stock Exchangeswithin the stipulated time.I. Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion date and likelyimpact on equity:The Company has not issued any GRDs, ADRs, Warrants or any other convertible instruments.Report on Corporate Governance
  • 50. 53Annual Report 2010-2011J. Stock Market price data for the year on NSE & BSE:The Monthly High and Low Prices of the Equity on NSE & BSE during the year are as under:Month NSE(#) BSE(#)High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)April 2010 (*) (*) (*) (*)May 2010 230.20 132.00 203.00 132.00June 2010 196.50 162.35 197.00 162.20July 2010 187.70 164.55 187.50 165.10August 2010 222.00 170.60 222.00 171.15September 2010 259.70 200.55 259.90 200.60October 2010 268.70 218.20 245.00 218.50November 2010 297.90 233.20 297.25 234.50December 2010 306.80 247.05 305.80 247.70January 2011 281.40 197.65 281.95 197.00February 2011 232.30 168.30 233.00 170.00March 2011 233.85 191.00 234.50 191.10(#) Source NSE and BSE web-site.(*) The Company got listed on 10thMay, 2010, hence the figures for said period are not applicable.K. Share Price in Relation to BSE Sensex:180.00220.00260.00300.00340.00380.00May-10Jun-10Jul-10Aug-10Sep-10Oct-10Nov-10Dec-10Jan-11Feb-11Mar-1116000.0017000.0018000.0019000.0020000.0021000.0022000.00TALWALKARS BSE HIGH BSE SensexShare Price in Relation to BSE Sensex for the month of April -2010 is not provided as the Company got listed on10thMay, 2010.Report on Corporate Governance
  • 51. L. Share Transfer System:The share transfers/ transmissions are approved by the Shareholders/ Investors Grievance, ShareAllotment and Share Transfer Committee. There are no share transfer requests pending as on 31stMarch, 2011.The Company’s Shares are required to be compulsorily traded in the Stock Exchanges in thedematerialized form. Shares in the physical mode which are lodged for transfer are processed andreturned within the stipulated time.The Board of Directors of the Company has delegated the power to approve the share transfers toRegistrar and Share Transfer Agents M/s. Link Intime India Private Limited having its office at C-13,Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (West), Mumbai – 400 078.M. Distribution of Shareholding as on 31stMarch, 2011.No. of equity shares held No. of Shareholders No. of Shares held % of Share holdingUpto 500 5,490 4,28,989 1.78501 to 1,000 155 1,24,804 0.521,001 to 2,000 63 1,02,776 0.432,001 to 3,000 19 48,897 0.203,001 to 4,000 20 72,931 0.304,001 to 5,000 15 72,411 0.305,001 to 10,000 37 2,73,316 1.13More than 10,000 90 2,29,91,548 95.34Total 5,889 2,41,15,672 100N. Shareholding Pattern as on 31stMarch, 2011.Category No. of Share held % of Share holdingPromoters & Promoters Group 14,346,656 59.49Other Directors & their relatives 70,296 0.29Clearing Member 80,118 0.33Other Bodies Corporate 14,60,216 6.06Foreign Institutional Investors (FII’s) 13,64,897 5.66Mutual Funds 26,83,472 11.13Non Resident Indians 1,08,233 0.45Non Resident Indians (Non Repatriable) 1,02,979 0.43Public 38,98,805 16.17Total 2,41,15,672 100Report on Corporate Governance
  • 52. 55Annual Report 2010-2011O. Dematerialisation of Shares:As on 31stMarch, 2011, 99.46% of the total paid up capital representing 2,39,85,814 shares, washeld in dematerialized form and the balance 0.54% representing 1,29,858 shares was held in physicalform.P. Address for correspondence:Registered Office Address:Talwalkars Better Value Fitness Limited801-813, Mahalaxmi Chambers,22, Bhulabhai Desai Road,Mumbai - 400 026.Tel. No.: (022) 6612 6300 (324)Fax No.: (022) 6612 6363 / 6612 6314The Company has an exclusive e-mail id viz. ig@talwalkars.net to enable investors to register theircomplaints, if any.Shareholders correspondence may be directed to the Company’s Registrar and Share Transfer Agent,whose address is given below:Link Intime India Private Limited(Unit - Talwalkars Better Value Fitness Ltd.)C-13, Pannalal Silk Mills Compound,L.B.S. Marg, Bhandup (West),Mumbai - 400 078.Tel No: (022) 2594 6970Fax No:(022) 2596 2691E-Mail: rnt.helpdesk@linkintime.co.inReport on Corporate Governance
  • 53. Q. Non-Mandatory Requirements:The Company has an Executive Chairman on its Board.1.The Remuneration/ Compensation Committee is constituted by the Board, the details of which are2.provided under the heading “Remuneration/ Compensation Committee”.Management.For and on behalf of the BoardTalwalkars Better Value Fitness Limited.Prashant Talwalkar Anant GawandeManaging Director & CEO Whole-time Director & CFODate: 14thJune, 2011Place: Mumbai3. The qualification in the Auditors Report for the year 2010-11 has been adequately replied by theReport on Corporate Governance
  • 54. 57Annual Report 2010-2011Certificates under Report on Corporate GovernanceDeclaration on Compliance of the Company’s Code of Conduct.To,The ShareholdersTalwalkars Better Value Fitness LimitedMumbai.The Company has framed a specific Code of Conduct for the members of the Board of Directors andthe Senior Management Personnel of the Company pursuant to Clause 49 of the Listing Agreementwith Stock Exchanges to further strengthen corporate governance practice in the Company.All the members of the Board and Senior Management Personnel of the Company have affirmeddue observance of the said Code of Conduct in so far as it is applicable to them and there is no noncompliance thereof during the year ended 31stMarch, 2011.For and on behalf of the BoardTalwalkars Better Value Fitness Limited.Prashant TalwalkarManaging Director & CEODate: 14thJune, 2011Place: MumbaiReport on Corporate Governance
  • 55. Chief Executive Officer (CEO) and Chief Financial Officer (CFO) CertificationToThe Board of DirectorsTalwalkars Better Value Fitness Limited.Dear Sirs,Sub: CEO/CFO Certificate(Issued in accordance with provisions of clause 49 of the Listing Agreement)We, Prashant Sudhakar Talwalkar, Managing Director & CEO and Anant Ratnakar Gawande, Whole-time Director & CFO of Talwalkars Better Value Fitness Limited, to the best of our knowledge and belief,hereby certify that:We have reviewed the Balance sheet as at 31st March, 2011 and Profit & Loss Account for theyear ended as on that date along with all it’s schedules, notes to the accounts and also theCash Flow statement for the year ended 31st March, 2011 and based on our knowledge andinformation, confirm that:i) these statements do not contain any materially untrue statement or omit any materialfact or contain any statement that may be misleading,ii) these statements together present a true and fair view of the Company’s affairs and arein compliance with existing accounting standards, applicable laws and regulations.Based on our knowledge and information, there are no transactions entered into by theb.Company during the year which are fraudulent, illegal or in violation of the Company’s codeof conduct.We along with Company’s other certifying officers, accept responsibility forc.establishing and maintaining internal controls and that we have:ABCReport on Corporate Governance
  • 56. 59Annual Report 2010-2011i) evaluated the effectiveness of internal control system of the company, andii) disclosed to the Auditors and the Audit Committee, deficiencies, in the design oroperations of internal controls, if any, of which we are aware and steps taken orproposed to be taken for rectifying these deficiencies.We, along with Company’s other certifying officers, have indicated to the Auditors and the AuditD.Committee:Significant changes in the internal control during the year,Significant changes in the accounting policies during the year and that the same have(ii)been disclosed in the notes to the financial statements, andInstances of significant fraud of which they have become aware and the involvement(iii)therein, if any, of the management or an employee having a significant role in theCompany’s internal control system over financial reporting.Yours sincerely,Prashant Talwalkar Anant GawandeManaging Director & CEO Whole-time Director & CFODate: 14thJune, 2011Place: Mumbai(i)Report on Corporate Governance
  • 57. CERTIFICATE ON CORPORATE GOVERNANCETo,The Members ofTalwalkars Better Value Fitness LimitedWe have examined the compliance of conditions of Corporate Governance by Talwalkars Better ValueFitness Limited, for the year ended on 31st March 2011, as stipulated in Clause 49 of the ListingAgreement of the said Company with stock exchanges in India.The compliance of conditions of Corporate Governance is the responsibility of the Management. Ourexamination has been limited to a review of the procedures and implementation thereof adopted bythe Company for ensuring compliance with the conditions of the Corporate Governance as stipulatedin the said Clause. It is neither an audit nor an expression of opinion on the financial statements of theCompany.In our opinion and to the best of our information and according to the explanations given to us, wecertify that the Company has complied with the conditions of Corporate Governance as stipulated inClause 49 of the above-mentioned Listing Agreement.We state that such compliance is neither an assurance as to future viability of the Company nor of theefficiency or effectiveness with which the management has conducted the affairs of the Company.For Geeta Canabar & AssociatesPracticing Company SecretaryACS 22908 CP 8330Geeta CanabarProprietorPlace: MumbaiDate: 10thJune, 2011Report on Corporate Governance
  • 58. 61Annual Report 2010-2011Report on Corporate Governance
  • 59. With an impressive base of over 1,00,000members and 5,00,000 square feet of floorspace across 100 outlets in more than 50 cities,it’s little wonder that Talwalkars is among the top20 health club brands globally.Leadership andwidespreadpresence leadsto undisputedmarketdominance
  • 60. 63Annual Report 2010-2011
  • 61. • Auditors’ Report ....................................................................................... 67• Balance Sheet ......................................................................................... 70• Profit and Loss Account.......................................................................... 71• Cash Flow Statement.............................................................................. 72• Schedules ................................................................................................. 74• Notes to Accounts................................................................................... 79• Balance Sheet Abstract and General Business Profile........................ 91• Auditors’ Report on Consolidated Financial Statements ................... 92• Consolidated Balance Sheet................................................................. 94• Consolidated Profit and Loss Account ................................................. 95• Consolidated Cash Flow Statement ..................................................... 96• Schedules to Consolidated Financial Statements............................... 98• Notes to Consolidated Financial Statements .................................... 103Financial Information
  • 62. 67Annual Report 2010-2011TO THE MEMBERS OF TALWALKARS BETTER VALUE FITNESS LIMITED1. We have audited the attached Balance Sheet of TALWALKARS BETTER VALUE FITNESS LIMITED as at31st March, 2011, the Profit and Loss Account and the Cash Flow Statement of the Company for theyear ended on that date, both annexed thereto. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements basedon our audit.2. We conducted our audit in accordance with auditing standards generally accepted in India. TheseStandards require that we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of Indiain terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure aStatement on the matters specified in paragraphs 4 and 5 of the said Order.4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that:(a) We have obtained all the information and explanations, which to the best of our knowledge and beliefwere necessary for the purposes of our audit;(b) In our opinion, proper books of account, as required by law, have been kept by the Company, so far,as appears from our examination of the books;(c) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this Reportare in agreement with the books of account;(d) In our opinion the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in compliance with the Accounting Standards referred to in sub-section (3C) ofSection 211 of the Companies Act, 1956.(e) On the basis of written representations received from the directors as on 31st March, 2011 andtaken on record by the Board of Directors, we report that none of the directors is disqualified as on31st March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section274 of the Companies Act, 1956;(f) In our opinion and to the best of our information and according to the explanations given to us, thesaid accounts, together with the other notes appearing thereon, give the information required by theCompanies Act, 1956, in the manner so required and give a true and fair view:i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;andii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on thatdate; andiii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended onthat date.For Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafDated: 14th June, 2011 PartnerPlace : Mumbai Membership No. 030866Auditors’ Report
  • 63. ANNEXURE TO THE AUDITOR’S REPORT OF EVEN DATE ON THE ACCOUNTS OF TALWALKARS BETTER VALUE FITNESSLIMITED FOR THE YEAR ENDED 31ST MARCH, 2011(Referred to in Paragraph (3) of the above Report)1. Fixed Assets:(a) The Company is in the process of re-compiling its fixed asset register with a view towards reflecting fullparticulars including quantitative details and situation of its fixed assets.(b) As explained to us, physical verification of fixed assets has been carried out by the Management atmost of the branches in accordance with a program of verification which, in our opinion, providesfor physical verification of all the fixed assets at reasonable intervals. No material discrepancies werenoticed on such physical verification as informed by the management. In view of the fact that the fixedasset register is in the process of re-compilation, the management has informed us that discrepancies,if any, arising between the assets verified and the books and records would be dealt with in the yearin which such re-compilation of the register is completed.(c) The fixed assets disposed off during the year, in our opinion, do not constitute substantial part of thefixed assets of the Company and such disposal has, in our opinion, not affected the going concernstatus of the Company.2. The Company is a service Company primarily rendering services in respect of health and fitness centres.Accordingly it does not hold any inventory. Thus, the provisions of Clause 4(ii) are not applicable to thecompany for the year under review.3. Loans:(a) The Company has granted loans to its subsidiary Company listed in the register maintained underSection 301 of the Companies Act, 1956. The maximum amount involved during the year in respect ofthe said loans was ` 75 Lacs and at the year end the balance outstanding of the said loans taken was` 16.17 Lacs. Other than the above, the Company has not granted any loans, secured or unsecuredto companies, parties or firms covered in the register maintained u/s. 301 of the Act.(b) In our opinion, prima facie, the interest and other terms and conditions of the aforesaid loan grantedare not prejudicial to the interest of the Company.(c) In case of the loan granted to the subsidiary Company listed in the register maintained u/s. 301, theborrower has been regular in the payment of interest as stipulated. The terms of arrangement do notstipulate any repayment schedule and the loan is repayable on demand. Accordingly paragraph4(iii)(c) of the Order is not applicable to the Company in respect of repayment of the principal amount.(d) There are no overdue amounts of more than rupees one lacs in respect of the loan granted to thesubsidiary Company.(e) The Company has taken unsecured loans from 9 companies listed in the register maintained underSection 301 of the Companies Act, 1956. The maximum amount involved during the year in respect ofthe said loans was ` 2663.72 Lacs and at the year end the balance outstanding of the said loans takenwas ` 530.83 Lacs. Other than above, the Company has not taken any loans, secured or unsecured tocompanies, parties or firms covered in the register maintain under Section 301 of the Act.(f) In our opinion, prima facie, the interest and other terms and conditions of the aforesaid loan takenfrom the Companies listed in the register maintained under Section 301 are not prejudicial to theinterest of the Company.(g) As per the information and explanations furnished to us, for loans taken as above, repayment terms ofprincipal amount has not been stipulated/fixed as yet and the loans are repayable on demand. TheCompany has been regular in the payment of interest. Accordingly paragraph 4(iii)(g) of the Order isnot applicable to the Company in respect of repayment of the principal amount.4. In our opinion and based on the information and explanations given to us, the internal control proceduresneed to be strengthened to be commensurate with the size of the Company and the nature of its businesswith regard to purchases of fixed assets and sale of services. The activities of the Company do not involvepurchase of inventory and the sale of goods. We have not observed any major weakness in the internalcontrol system during the course of the audit.5. Transactions:(a) In our opinion and according to the information and explanations given to us, the transactions thatneed to be entered in the register maintained under Section 301 of the Companies Act, 1956 havebeen so entered.(b) Based on the information and explanations given to us, in our opinion these transactions have beenmade at reasonable prices having regard to the prevailing market prices at the relevant time oftransactions.6. The Company has not accepted any deposits from public within the meaning of Sections 58A and 58AAof the Companies Act, 1956 and the rules made under Companies (Acceptance of Deposits) Rules,Annexure to the Auditors’ Report
  • 64. 69Annual Report 2010-20111975. Therefore, the provisions of Clause (vi) of paragraph 4 of the aforesaid Order, in our opinion are notapplicable to the Company for the year under review.7. In our opinion, the scope and coverage of internal audit system need to be increased to make itcommensurate with the size and nature of business of the company.8. According to the information and explanations given to us, the Central Government has not prescribed themaintenance of cost records under clause (d) of sub-clause (1) of Section 209 of the Companies Act, 1956in respect of services carried out by the Company.9. Statutory Dues:(a) According to the records of the Company, Provident Fund, Employees State Insurance, Income tax, Salestax, Customs Duty, Service Tax, Excise Duty, Cess and other statutory dues to the extent applicable to theCompany, have been generally regularly deposited during the year with the appropriate authorities.(b) According to the information and explanations given to us, there are no undisputed amounts payablein respect of Income tax, Customs Duty, Service Tax, Excise Duty, Cess and other statutory duesoutstanding as at 31st March 2011, for a period more than six months from the date they becomepayable.According to the information and explanations given to us, the following dues of Income-tax have notbeen deposited by the Company on account of disputes.Name of theStatuteNature of thedisputed duesAmount of Tax(` in lacs)Period to which theamount relatesForum where dispute ispendingIncome Tax Act,1961Income Tax 19.00 AY 2006-2007 Commissioner of IncomeTax-Appeals10. The Company does not have any accumulated losses at the end of the financial year and has not incurredcash losses in the financial year and in the immediately preceding financial year. Accordingly, paragraph4(x) of the Order is not applicable.11. Based on the information and explanations given to us, we are of the opinion that the Company has notdefaulted in repayment of dues to financial institution and banks.12. In our opinion and according to the information and explanations given to us, the Company has notgranted any loans and advances on the basis of security by way of pledge of shares, debentures andother securities.13. The Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of Clause4(xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.14. The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly,the provisions of Clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to theCompany.15. In our opinion and according to the information and explanations given to us, the terms and conditions ofthe guarantees given by the Company for the loans taken by others from banks or financial institutions arenot prima facie prejudicial to the interests of the Company.16. According to the information and explanations given to us, term loans raised by the Company have beenapplied for the purpose for which they were raised.17. According to the information and explanations given to us, and on the overall examination of the Balancesheet of the Company, we report that the Company has not used funds raised on short term basis for long-term investment.18. According to the information and explanations given to us, the Company has not made any preferentialallotment of shares to parties and companies/ firms covered in the register maintained under Section 301of the Companies Act, 1956 during the year.19. In our opinion and according to the information and explanations given to us, the Company has createdsecurity or charge in respect of the secured debentures issued during the year.20. The Management has disclosed the end use of money raised by public issue at Note 21 of Schedule H (B).We have verified the same to the extent of utilisation by the Company.21. According to the information and explanations given to us, no fraud on or by the Company has beennoticed or reported during the year under review.For Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafDated: 14th June, 2011 PartnerPlace : Mumbai Membership No. 030866Annexure to the Auditors’ Report
  • 65. (` in Lacs)Schedule As at As at31st March, 2011 31st March, 2010SOURCES OF FUNDS:Shareholders’ Funds:Share Capital A1 2,411.57 1,806.57Reserves and Surplus A2 10,066.43 2,398.8912,478.00 4,205.46Deferred Tax Liability 1,048.42 482.09Loan Funds:Secured Loans B 10,211.59 6,285.56Unsecured Loans 926.47 3,434.5211,138.06 9,720.08TOTAL 24,664.48 14,407.63APPLICATIONS OF FUNDS:Fixed Assets: CGross Block 18,904.01 13,219.23Less: Accumulated Depreciation/Amortisation 2,416.12 1,608.16Net Block 16,487.89 11,611.07Capital Work-in-progress 2,742.54 1,301.8719,230.43 12,912.94Investments D 969.14 494.02Current Assets, Loans and Advances:Sundry Debtors E1 1,443.74 328.73Cash and Bank Balances E2 2,795.13 1,248.71Loans and Advances E3 2,224.07 1,087.216,462.94 2,664.65Less: Current Liabilities and ProvisionsCurrent Liabilities F1 881.68 1,182.30Provisions F2 1,116.35 562.151,998.03 1,744.45Net Current Assets 4,464.91 920.20Miscellaneous Expenditure(To the extent not written off or adjusted) G – 80.47TOTAL 24,664.48 14,407.63SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS HSchedules referred to above form an integral part of the Financial StatementsAs per our report of even dateFor Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafPartnerMembership No. 030866Place: MumbaiDate: 14th June, 2011For and on behalf of the BoardMadhukar Talwalkar Executive ChairmanPrashant Talwalkar Managing Director & CEOVinayak Gawande Whole-time DirectorGirish Talwalkar Whole-time DirectorHarsha Bhatkal Whole-time DirectorAnant Gawande Whole-time Director & CFORaman Maroo DirectorManohar Bhide DirectorAbhijeet Patil DirectorMohan Jayakar DirectorAvinash Phadke DirectorAvanti Sankav Company Secretary &Compliance OfficerBalance Sheet as on 31st March, 2011
  • 66. 71Annual Report 2010-2011(` in Lacs)Schedule Year ended Year ended31st March, 2011 31st March, 2010INCOME:Income from Operations I1 8,652.04 6,611.55Other Income I2 189.42 38.298,841.46 6,649.84EXPENDITURE:Personnel Cost J1 1,775.72 1,568.32Administrative and other expenses J2 2,169.96 1,731.12Selling and Marketing Cost J3 271.95 146.69Service Tax Collected and Paid 786.31 605.825,003.94 4,051.95PROFIT BEFORE INTEREST, DEPRECIATION, 3,837.52 2,597.89EXTRA ORDINARY ITEMS and TAXESFinance Cost J4 735.95 808.76PROFIT BEFORE DEPRECIATION, EXTRA 3,101.57 1,789.13ORDINARY ITEMS and TAXESNon-Cash Charges K 833.36 608.90PROFIT BEFORE EXTRA ORDINARY ITEMS and TAXES 2,268.21 1,180.23Profit/(loss) on Sale of Asset (36.44) (21.32)PROFIT BEFORE TAX 2,231.77 1,158.91Taxation (Net) L 447.20 212.31Deferred Tax 261.88 152.90PROFIT AFTER TAX 1,522.69 793.70Balance Brought Forward 1,822.44 1,522.86Profit available for appropriations 3,345.13 2,316.56APPROPRIATIONS:Effect on Change in AS 11 – 23.86Effect of previous year’s Deferred Tax Liability – 329.19Proposed Dividend on Equity Shares 241.16 120.58Tax on Dividend 40.03 20.49Debenture Redemption Reserve 22.60 –BALANCE CARRIED TO BALANCE SHEET 3,041.34 1,822.44Earnings Per Share (`) :Weighted Average 6.46 4.43Diluted 6.46 4.42SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS HSchedules referred to above form an integral part of the Financial StatementsAs per our report of even dateFor Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafPartnerMembership No. 030866Place: MumbaiDate: 14th June, 2011For and on behalf of the BoardMadhukar Talwalkar Executive ChairmanPrashant Talwalkar Managing Director & CEOVinayak Gawande Whole-time DirectorGirish Talwalkar Whole-time DirectorHarsha Bhatkal Whole-time DirectorAnant Gawande Whole-time Director & CFORaman Maroo DirectorManohar Bhide DirectorAbhijeet Patil DirectorMohan Jayakar DirectorAvinash Phadke DirectorAvanti Sankav Company Secretary &Compliance OfficerProfit and Loss Account for the year ended 31st March, 2011
  • 67. (` in Lacs)Year ended Year ended31st March, 2011 31st March, 2010A. CASH FLOW FROM OPERATING ACTIVITIES:Net profit before Taxes 2,231.77 1,158.91Non-cash expenses 833.36 609.50Finance cost (Net) 735.95 808.76Income from Investment activity (108.42) –(Profit)/Loss on sale of assets 36.44 21.321,497.33 1,439.58Operating Profit before Working capital changes 3,729.10 2,598.49(Increase)/Decrease in Current Assets (409.19) (125.65)(Increase)/Decrease in Trade and other receivables (1,115.02) (269.07)Increase/(Decrease) in Trade and other payables (303.51) 34.03(1,827.72) (360.69)Cash generated from operations 1,901.38 2,237.80Direct taxes paid (519.02) (106.75)Net cash from operating activities 1,382.36 2,131.05B. CASH FLOW FROM INVESTING ACTIVITES:Investment in Joint Venture (106.09) (84.27)Payment towards purchase of Fixed Assets, CWIP (7,054.11) (3,200.80)Proceeds from sale of fixed assets 1.00 1.72Dividend received 99.89 –Purchase of Short Term Investments (12,406.00) –Proceeds from sale of Short Term Investments 12,059.74 –Net cash (used in)/from Investing activities (7,405.57) (3,283.35)Cash Flow for the year ended 31st March, 2011
  • 68. 73Annual Report 2010-2011(` in Lacs)Year ended Year ended31st March, 2011 31st March, 2010C. CASH FLOW FROM FINANCING ACTIVITIES:Share issue Proceeds (net of refund including security premium) 7,693.75 1,850.00Issue proceeds from Non-Convertible Debentures 3,000.00 –IPO related expenses (582.24) (80.47)Borrowings done 2,166.16 8,565.65Repayment of Long-term and other borrowings (3,556.52) (7,198.84)Finance cost paid (992.84) (808.76)Dividend Paid (120.58) (1.97)Dividend Tax Paid (20.49) (0.33)Net cash used in Financing Activities 7,587.24 2,325.28NET INCREASE IN CASH AND CASH EQUIVALENTS (A + B + C) 1,564.03 1,172.98CASH AND CASH EQUIVALENTS AT THE BEGINING OF THE PERIOD 1,174.56 1.58Cash and Bank Balance including Fixed Deposits 2,795.13 1,248.71Balance in Cash Credit facility (56.54) (74.15)CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 2,738.59 1,174.56As per our report of even dateFor Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafPartnerMembership No. 030866Place: MumbaiDate: 14th June, 2011For and on behalf of the BoardMadhukar Talwalkar Executive ChairmanPrashant Talwalkar Managing Director & CEOVinayak Gawande Whole-time DirectorGirish Talwalkar Whole-time DirectorHarsha Bhatkal Whole-time DirectorAnant Gawande Whole-time Director & CFORaman Maroo DirectorManohar Bhide DirectorAbhijeet Patil DirectorMohan Jayakar DirectorAvinash Phadke DirectorAvanti Sankav Company Secretary &Compliance OfficerCash Flow for the year ended 31st March, 2011
  • 69. (` in Lacs)As at As at31st March, 2011 31st March, 2010SCHEDULE“A1” SHARE CAPITALAUTHORISED:30,000,000 Equity Shares of ` 10/- each[Previous year 30,000,000 Equity Shares of ` 10/- each]3,000.00 3,000.003,000.00 3,000.00ISSUED, SUBSCRIBED & PAID-UP:24,115,672 Equity shares of ` 10 each Fully Paid-up 2,411.57 1,806.57(Previous year 18,065,672 Equity shares of ` 10 each FullyPaid-up)(a) of the above, 550,000 shares were allotted as Fullypaid-up pursuant to the Agreement for takeover ofbusiness and issued in consideration received other thanin cash. [Previous year 550,000 Equity Shares of `10 each](b) of the above, 70,260 Equity Shares were allotted againstredemption of Preference Shares [Previous year 70,260Equity Shares of ` 10 each](c) of the above, 15,807,463 Equity Shares have been issuedby way of bonus by capitalising Reserves (Previous year -15,807,463 Equity Shares)2,411.57 1,806.57“A2” RESERVES and SURPLUS(a) Securities PremiumBalance in Securities Premium 576.45Add: Securities Premium received on Issue of shares 7,139.007,715.45Less: Adjustment Share issue expenses* 662.71Less: Adjustment Debenture issue expenses* 50.25712.96 7,002.49 576.45(b) Balance in Profit and Loss Account 3,041.34 1,822.44(c) Debenture Redemption ReserveAs per last Balance Sheet – –Add: Transferred from Profit and Loss Account 22.60 –10,066.43 2,398.89* Adjustment as per the provisions of Section 78 of theCompanies Act, 1956“B” SECURED LOANSFrom Bank(a) Term Loans (including interest accrued and due) 5,833.57 4,972.77(b) Cash Credit Facility 56.55 74.15(c) Acceptances 1,321.47 1,238.64(For details of Security offered refer to Note ‘B2’ of Schedule Hof Notes to Accounts)(d) Redeemable Secured Non-Convertible Debentures 3,000.00 –10,211.59 6,285.56Schedules forming part of the Balance Sheet
  • 70. 75Annual Report 2010-2011SCHEDULE “C”FIXED ASSETS(` in Lacs)Description Gross Block Depreciation Net BlockAs on1st April,2010Additionsduring theYearDeduc-tionsAs on31st March,2011As on1st April,2010For theYearDeduc-tionsAs on31st March,2011As on31st March,2011As on31st March,2010Intangible AssetsGoodwill 566.03 – – 566.03 78.54 28.63 – 107.17 458.86 487.49Tangible AssetsImmovable Property 561.76 – – 561.76 55.27 9.16 – 64.43 497.33 506.49Computers 134.66 50.67 185.33 50.43 24.46 – 74.89 110.44 84.23Air-Conditioners 852.42 429.80 14.28 1,267.94 92.42 45.36 4.73 133.05 1,134.89 760.00Furniture and Fittings 5,245.68 1,972.71 33.71 7,184.68 711.00 368.31 14.71 1,064.60 6,120.08 4,534.68Electrical fittings 1,138.14 556.03 7.05 1,687.12 109.76 73.80 2.65 180.91 1,506.21 1,028.38Gym Equipment 4,424.57 2,546.46 9.94 6,961.09 481.77 264.44 3.31 742.90 6,218.19 3,942.80Office Equipment 295.97 194.09 - 490.06 28.97 19.20 – 48.17 441.89 267.0013,219.23 5,749.76 64.98 18,904.01 1,608.16 833.36 25.40 2,416.12 16,487.89 11,611.07Previous Year 11,088.62 2,164.11 33.50 13,219.23 1,009.72 608.90 10.46 1,608.16 11,611.07 10,078.90(` in Lacs)As at As at31st March, 2011 31st March, 2010SCHEDULES “D”INVESTMENTSA] Long-term Non-Trade Unquoted (at cost):Investment In Joint Ventures:Splendor Fitness Private Limited 500.00 100.00(formerly known as Talwalkars Pantaloon Fitness Pvt. Ltd.)[140,000 (Previous year 100,000) Equity Shares of` 100/- each fully paid ]Investment in Subsidaries:Denovo Enterprises Private Limited 50.10 50.00[50,101 (Previous year 50,000) Equity Shares of` 100/- each fully paid ]Aspire Fitness Private Limited 50.00 0.50[50,001 (Previous year 500) Equity Shares of` 100/- each fully paid ]B] Share Application Money in Joint Ventures (pending allotment)Splendor Fitness Private Limited – 293.31(formerly known as Talwalkars Pantaloon Fitness Pvt. Ltd.)Aspire Fitness Pvt. Ltd. – 50.21C] Current, short-term, trade(valued at cost or market value whichever is lower)Axis Liquid Fund 362.00 –UTI Treasury Advantage Fund 7.04 –969.14 494.02Schedules forming part of the Balance Sheet
  • 71. (` in Lacs)As at As at31st March, 2011 31st March, 2010SCHEDULE“E1” SUNDRY DEBTORS[ Unsecured and Considered Good ](a) More than Six months 64.19 –(b) Others 1,379.55 328.731,443.74 328.73“E2” CASH AND BANK BALANCES(a) Cash in hand (as certified) 151.08 450.51(b) Balances with Scheduled Bank- in current a/c 779.35 286.08- in Fixed Deposit Accounts (including interest accrued ) 1,864.70 512.122,795.13 1,248.71“E3” LOANS AND ADVANCES[Unsecured and considered good](a) Advances recoverable in Cash or Kind for value to bereceived 37.06 14.08(b) Deposits 1,031.94 748.36(c) Input Credit Service Tax Carried forward 116.08 46.52(d) Income Tax and FBT paid 650.21 226.99(e) Prepaid expenses 34.38 24.15(f) Unavailed Service Tax Cenvat Credit 49.95 27.11(g) Minimum Alternate Tax credit entitlement 304.45 –2,224.07 1,087.21“F1” CURRENT LIABILITIES(a) Liabilities for expenses 414.03 354.98(b) Duties and Taxes payable 212.54 574.96(c ) Liabilities for Capital goods 254.51 251.32(d) Membership fees refundable 0.60 1.04881.68 1,182.30“F2” PROVISIONS(a) Provision for Income Tax 752.24 400.85(b) Provision for Fringe Benefit Tax 19.63 19.63(c) Proposed Dividend on Equity Shares 241.16 120.58(d) Provision for Tax on Dividend 40.03 20.49(e) Provision for Contribution to Group Gratuity Scheme 0.91 0.60(f) Provision for Interest on Non-Convertible Debenture 62.38 –1,116.35 562.15“G” MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)Share Issue ExpensesOpening 80.47 –Expenses Incurred during the year 582.24 80.47662.71 80.47Less: Adjusted against Securities premium 662.71 –– 80.47Schedules forming part of the Balance Sheet
  • 72. 77Annual Report 2010-2011(` in Lacs)Year ended Year ended31st March, 2011 31st March, 2010SCHEDULE“I1” INCOME FROM OPERATIONSGross Fees including Service Tax 7,779.17 6,356.26Franchisee Fees including Service tax 641.18 129.80Input Credit Service Tax 231.69 125.498,652.04 6,611.55“I2” OTHER INCOMEIncome from Juice Centre and Food and Supplements 4.10 6.37Sundry Credit balances no longer payable 8.51 13.41Profit/(loss) on Sale of Asset/ Investments 8.53 –Dividend From Mutual Funds 99.89 –Interest on Bank Term Deposits 54.74 12.49Miscellaneous Income 13.65 6.02189.42 38.29“J1” PERSONNEL COSTPayments to Outsourcing Agencies 1,680.03 1,513.47Director’s Remuneration, Sitting fees 60.81 42.42Salaries 33.48 11.83Contribution to group gratuity scheme 1.40 0.601,775.72 1,568.32“J2” ADMINISTRATIVE AND OTHER EXPENSESStatutory Audit Fees 12.50 6.07Internal Audit Fees 19.60 13.69AGM Meeting Expenses 1.58 –Consumables, Food and Supplements 72.36 55.55Electricity and Fuel expenses 584.20 461.38Insurance Charges 10.15 3.59Juice Centre & Spa Expenses 5.51 7.56Pooja and Special Function Expenses 9.17 7.95Printing and Stationery 23.78 36.99Professional Fees 35.35 90.04Rates and Taxes 31.35 20.11Interest on late payment of Service Tax 28.04 23.28Rent 1,071.71 780.36Repairs and Maintenance- Building and Gym Equipment 67.88 53.53- Others 65.22 54.25ROC Expenses 0.61 10.34Telephone Expenses 44.56 37.35Travelling and Conveyance Expenses 20.76 26.48Water Charges 29.50 26.67Miscellaneous Expenses 36.13 15.932,169.96 1,731.12Schedules forming part of the Profit and Loss Account
  • 73. (` in Lacs)Year ended Year ended31st March, 2011 31st March, 2010SCHEDULE“J3” SELLING AND MARKETING COSTAdvertising Expenses 232.48 119.90Business Promotion expenses 39.47 26.79271.95 146.69“J4” FINANCE COSTInterest on Secured Loan 388.11 376.56Interest on Unsecured Loan 185.83 354.26Interest on Letter of credit 43.58 33.86Bank Charges 16.20 11.22Credit Card Charges 39.64 32.86Interest on Non-Convertible Debentures 62.59 –735.95 808.76“K” NON-CASH CHARGESDepreciation 833.36 608.90833.36 608.90“L” TAXATION (NET)Provision for Current Tax 442.44 212.29Prior period Tax Adjustments 4.76 0.02447.20 212.31Schedules forming part of the Profit and Loss Account
  • 74. 79Annual Report 2010-2011SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2011.SCHEDULE “H”:A) STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES:(a) Basis of preparation of financial statements:• The financial statements are prepared in accordance with Indian Generally Accepted AccountingPrinciples (“GAAP”) under the historical cost convention on the accrual basis. GAAP comprisesmandatory accounting standards as specified in the Companies (Accounting Standards) Rules,2006, the provisions of the Companies Act, 1956.(b) Use of Estimates:• The preparation of financial statements in conformity with generally accepted accountingprinciples requires that management makes estimates and assumptions that affect the reportedamounts of income and expenses of the year. The reported balance of assets and liabilities andthe disclosure relating to contingent liabilities as at the date of the financial statements. Theseestimates are based upon management’s best knowledge of current events and actions. Thedifference between the actual results and estimates are recognized in the period in which theresults are known/materialised.(c) Fixed assets:• Fixed assets are stated at original cost, net of tax/duty credits availed if any, less accumulateddepreciation/amortisation. Costs include all expenses incurred to bring the assets to its presentlocation and condition. Assets acquired by way of slump sale are recorded at book value in thebooks of the transferor as on the date of transfer. Revenue expenses incurred in connection withproject implementation in so far as such expenses relate to the period prior to the commencementof commercial activity are treated as part of the fixed assets and capitalised.• Capital work-in-progress comprises outstanding advances paid to acquire fixed assets, and thecost of fixed assets that are not yet ready for their intended use at the balance sheet date.• Intangible assets are recorded at the consideration paid for acquisition and are carried at costless accumulated amortisation.(d) Depreciation/Amortisation:• Depreciation on all fixed assets is provided pro-rata from/upto the date of acquisition/disposalusing the straight line method at the rates prescribed by Schedule XIV of the Companies Act,1956.• In case of Goodwill, the amount is amortised @4.75% p.a. using the straight-line method.(e) Provisions, Contingent Liabilities and Contingent Assets:• Provisions involving substantial degree of estimation in measurement are recognised if there isa present obligation as a result of past events and it is probable that there will be an outflow ofresources.• Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets areneither recognised nor disclosed in the financial statements.(f) Revenue Recognition:• Income from Fees and subscriptions, recorded net of discounts and rebates have been recognisedas income for the year irrespective of the period, for which these are received. However, the Feesreceivable from existing members as at the end of the year has been recognised as income forthe year.• The costs relating to rendering of these services being unascertainable are charged off to revenuein the year in which they become legally payable.• Input credit availed on Service Tax through revenue expenses paid are accounted for separatelyas income, thus accounting the expenses at their gross values inclusive of service tax. Expenses onNotes to Accounts
  • 75. which service tax is paid in subsequent year are booked net of the Un-availed Service Tax at endof the year.• Income by way of Franchise Fees (including up-front fees) received pursuant to franchiseagreements entered are recognised as income of the period in accordance with terms of theagreement, and as per data submitted by the franchisees.• Interest income is recognised on a time proportion basis taking into account the amountoutstanding and the rate applicable.• Any other income i.e. from juice bar sales, consumables, etc are recognised on receipt basis sincethe realizations there-from are immediate and no credit is allowed to the customers/members.(g) Impairment of Assets:• The management periodically assesses using, external and internal sources, whether there is anindication that an asset may be impaired.• An impairment loss is charged to the Profit and Loss Account in the year in which the asset isidentified as impaired.• At each balance sheet date, the management reviews the carrying amounts of its assets includedin each cash generating unit to determine whether there is any indication that those assets wereimpaired. If any such indication exists, the recoverable amount of the asset is estimated in orderto determine the extent of impairment loss.• The impairment loss recognised in prior accounting periods is reversed if there has been a changein the estimate of recoverable amount.(h) Employee benefits:• All employee benefits payable wholly within twelve months of rendering the service are classifiedas a short-term employee benefits. Benefits such as salaries, wages, contractual labour chargesand short-term compensated absences, etc. is recognised in the period in which the employee/contractual labour renders the related service.• The gratuity liability is provided and charged off as revenue expenditure based on actuarialvaluation. The Company has subscribed to the group gratuity scheme policy of LIC of India.• Any other payments under the relevant labour statutes, wherever applicable are reimbursed tothe Outsourced Agency as and when applicable.(i) Borrowing Cost:• Borrowing cost incurred for qualifying assets is capitalized up to the date the asset is ready forintended use, based on borrowings incurred specifically for financing the asset. In determining theamount of borrowing cost eligible for capitalisation during a period, any income earned on thetemporary investment on those borrowings is deducted from the borrowing cost incurred.• Other Borrowing costs are charged off to Revenue Account in the year in which they are incurred.(j) Foreign Currency Transactions:• Exchange differences are recorded on initial recognition in the reporting currency, using theexchange rate at the date of the transaction. At each balance sheet date, foreign currencymonetary items are reported using the closing rate.• Exchange differences that arise on settlement of monetary items or on reporting at each balancesheet date of the Company’s monetary items at the closing rate are:i. Upto 31st March, 2008, recognised as income or expense in the period in which they arise andii. Thereafter adjusted in the cost of fixed assets specifically financed by the borrowings to whichthe exchange differences relate.Notes to Accounts
  • 76. 81Annual Report 2010-2011(k) Earnings per share:• Basic and diluted earnings per share is computed by dividing the net profit attributable to equityshareholders for the year, by weighted average number of equity shares outstanding during theyear.(l) Taxes on Income:• Current Tax is the amount of tax payable on the taxable income for the year as determined inaccordance with the provisions of the Income Tax Act, 1961.• Deferred Taxation is recognised for all timing differences between accounting income andtaxable income and is quantified using enacted/substantial enacted tax rates as at balancesheet date. Deferred Tax asset are recognised subject to the management’s judgement that therealization is virtually/reasonably certain.• Tax credit is recognised in respect of Minimum Alternate Tax (MAT) paid in terms of Section 115JAAof the Income Tax Act, 1961 based on convincing evidence that the Company will pay normalincome tax within the statutory time frame and the same is reviewed at each balance sheet date.(m) Investments:• Long-term Investments are stated at cost, less provision for other than temporary diminution invalue. Current investments comprising investments in Mutual Funds are stated at the lower of costand fair value determined on an individual investment basis.(n) Cash Flow Statement :• The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard(AS) 3 on Cash Flow Statements and presents the cash flows by operating, investing and financingactivities of the Company.• Cash and Cash equivalents presented in the Cash Flow Statement consist of Cash on hand,balances in Current, Fixed Deposit and Cash Credit Accounts with Bank.(o) Transfer to Debenture Redemption Reserve is made pro-rata over the life of Debentures in terms of therequirement of provisions of Companies Act, 1956.(p) Segment Reporting:• There is only one reportable business segment as envisaged by Accounting Standard (AS) 17Segment Reporting. Accordingly, no separate disclosure for the segment reporting is required tobe made in the financial statement of the Company.• Secondary segmentation based on geography has not been presented as the Company operatesprimarily in India and the Company perceives that there is no significant difference in its risk andreturns in operating from different geographic areas within India.B) NOTES TO THE ACCOUNTS:1. Contingent Liabilities :Contingent liabilities not provided for in respect of (` in lacs)2010-11 2009-10Income Tax demands (net of amount paid in protest) AY 2006-07 19.00 19.00Bank Guarantee given on behalf of Joint Ventures / Subsidaries 472.50 1,245.50Claim from a landlord, case pending before the Judiciary- Hyderabad- Koramangala306.5072.11Not ascertainableClaim by Advertising agency # 6.39 5.97# 8800 GBP @` 72.59 (as on 31.03.2011)Notes to Accounts
  • 77. 2. Security against Secured Loans Availed: [Refer Schedule B to accounts]• All loans, which include sub-limit of Inland and Foreign Letter of credit and cash credit facility aresanctioned by Union Bank of India are secured primarily against the first hypothecation/ mortgagecharge on the entire movable and immovable Fixed Assets and Current Assets of the Companyincluding Gymnasium Equipments, Furniture and Fixtures and any other equipment installed inthe Gymnasiums, equitable mortgage of immovable premises of the Company, corporateguarantee and collateral security by way of equitable mortgage of premises situated at Tardeoand Mahalaxmi, Mumbai of third parties and the personal guarantee of three Directors of theCompany.(Amount repayable in the next 12 months ` 1,293.00 lacs, Previous year ` 849.58 lacs)• The abovementioned Foreign/Inland Letters of Credit availed by the Company have been shownunder “Acceptances” under the head “SECURED LOANS”.3. Disclosure pursuant to Accounting Standard (AS) 11:In line with the amendment to Accounting Standard (AS) 11 as per the Notification No. G.S.R. 225 (E)dated 31st March, 2009, the foreign exchange gains has been adjusted to the cost of the fixed assetsas on 31st March, 2011.4. Disclosure pursuant to Accounting Standard (AS) 13:The Details of Joint Venture Agreements entered by the Company are as follows:Name of the Company Ownership InterestDenovo Enterprises Private Limited 50.10%Equinox Wellness Private Limited 33.33% *Aspire Fitness Private Limited 50.001%* effective ownership due to 66.67% holding of Denovo Enterprises Private Limited in Equinox WellnessPrivate Limited.5. Disclosure pursuant to Accounting Standard (AS) 15 (Revised):The Company’s liability towards Gratuity as per provision of Accounting Standard (AS) 15 (Revised) onthe basis of actuarial valuation has been covered by a LIC Group Gratuity Scheme. The Companydoes not allow carry forward of compensated absences to employees. Accordingly, no provision hasbeen made for compensated absences.A. During the year additional provisions were created in respect of Gratuity, Ex-Gratia and OtherTerminal Benefits as detailed below:-During the year: (Amount in `)Particulars Gratuity LeaveSalaryEx-Gratia Other TerminalbenefitsTotalOpening Balance 60,124 N.A NIL NIL 60,124Less: Paid/Adjusting duringthe yearNIL N.A NIL NIL NILAdd: Provision made duringthe year1,87,966 N.A NIL NIL 1,87,966Closing Balance 2,48,090 N.A NIL NIL 2,48,090Notes to Accounts
  • 78. 83Annual Report 2010-2011During the Previous year:Particulars Gratuity Leave Salary Ex-Gratia OtherTerminalbenefitsTotalOpening Balance NIL N.A NIL NIL NILLess: Paid/AdjustingDuring the yearNIL N.A NIL NIL NILAdd: Provision madeduring the year60,124 N.A NIL NIL 60,124Closing Balance 60,124 N.A NIL NIL 60,124B. The employees long-term benefits like Gratuity, Ex-Gratia and other terminal benefits are valuedon actuarial basis and recognised in the Profit and Loss account. The assumption in the actuarialValuation of the gratuity provision is as under:i) Nature of Gratuity - Gratuity is payable to all eligible employees at the rate of 15 days of lastdrawn salary for each completed year of service subject to the maximum of ` 10 Lacs for allemployees who were on the roll as on 31.03.2011.ii) The retirement age is taken as 60 years.iii) Progression of future salary is taken into account while calculating the liability.iv) Valuation Method: Projected unit credit method.v) Basis of Valuation:1 Mortality Rate LIC (1994-96)2 Withdrawal Rate 1% to 3% depending on age3 Discount rate 8% p.a.4 Salary Escalation 5%6. Earnings per share:The Following table sets forth the computation of basic and diluted earnings per share:(` in Lacs)2011 2010Net profit after tax 1,522.69 793.70Weighted average number of equity shares 2,35,68,686 1,79,15,612Nominal value of shares [`] 10 10Earnings per share – Basic [`] 6.46 4.43Earnings per share – Diluted [`] 6.46 4.427. Details of Investments purchased and sold during the year:Nature of Transaction For the year ended31st March, 2011For the year ended31st March, 2010Quantity (‘000) Value (` lacs) Quantity (‘000) Value (` lacs)Purchases 36,717 12,506 NIL NILSales 36,683 12,160 NIL NIL8. Disclosure pursuant to Accounting Standard (AS) 17:• There is only one reportable business segment as envisaged by AS-17 Segment Reporting. Accordingly,no separate disclosure for the segment reporting is required to be made in the financial statement ofthe Company.Notes to Accounts
  • 79. • Secondary segmentation based on geography has not been presented as the company operatesprimarily in India and the Company perceives that there is no significant difference in its risk and returnsin operating from different geographic areas within India.9. Details of Deferred Tax Asset/ (Liability) are as under: (` In Lacs)Nature of timing difference Deferred Tax Asset /(Liability)as on 1st April, 2010(Charge) / creditto the Profit andLoss AccountDeferred Tax Asset /(Liability) as on31st March, 2011Deferred Tax LiabilitiesDepreciation (786.54) (279.75)(1048.42)Re-statement of figures at currenttax rates – 17.88Deferred Tax AssetsNet Amount and consequentincrease/decrease in Net Profitand Reserves (786.54) (261.88) (1048.42)10. Related Party Disclosures:Disclosure as required by the Accounting Standard 18, “Related Party Disclosure” is given below:List of Related Parties:Key Management Personnel● Mr. Madhukar Talwalkar (Executive Chairman)● Mr. Prashant Talwalkar (Managing Director & Chief Executive Officer)● Mr. Girish Talwalkar (Whole-time Director)● Mr. Vinayak Gawande (Whole-time Director)● Mr. Harsha Bhatkal (Whole-time Director)● Mr. Anant Gawande (Whole-time Director & Chief Financial Officer)Relatives of Key Management Personnel● Mrs. Yamini Anant Gawande● Mr. Sudhakar TalwalkarSubsidaries/Associates● Denovo Enterprises Private Limited● Equinox Wellness Private Limited● Aspire Fitness Private LimitedEnterprises over which Key Management Personnel and their relatives exercise significant influence:● Anfin Investments Private Limited● Better Value Leasing & Finance Ltd.● Better Value Brands Private Limited● Better Value Properties Private Limited● Brainworks Learning Systems Private Limited● Gawande Consultants Private Limited● Life Fitness India Private Limited● Popular Prakashan Private LimitedNotes to Accounts
  • 80. 85Annual Report 2010-2011● Popular Institute of Arts Private Limited● Radhika Hotels Private Limited● Pinnacle Fitness Private Limited● Talwalkars Fitness Club● Talwalkars Health & Leisure● Talwalkars Health Club● Talwalkars Health Complex● Talwalkars Health Commune● Talwalkars Nutrition Centre● Talwalkars● Anant Gawande (HUF)● Vinayak Gawande (HUF)● Nitin Gawande (HUF)● R2 Infrastructure Private Limited● R2 Spa Systems● Indian Cookery.com Private Limited● India Cookery Private Limited● Splendor Fitness Private Limiteda) Transactions with Related Parties:(` in lacs)Nature of transactions Subsidaries Associates KeyManagerialPersonnelOthers TotalIncomes 100.14 21.81 – – 121.95Expenses – 62.42 19.19 – 81.61Interest on Unsecured Loans – 121.30 – – 121.30Purchase of Equipments – 66.08 – – 66.08Directors Remuneration – – 252.00 – 252.00Transfer of Members Fees 0.13 1.26 – – 1.39Investments incl. Share Appln Money 51.24 – – 106.69 157.93Loans repaid/ (taken) Net 15.00 1,371.69 – – 1,386.70Loans and Advances (given)/ repaid Net – 4.30 – – 4.30Balance as at 31st March, 2011:Nature of transactions Subsidaries Associates KeyManagerialPersonnelOthers TotalInvestments incl. Share ApplicationMoney 101.28 – – 500.00 601.28Sundry Debtors 13.85 5.24 – – 19.09Deposits – 6.13 13.05 – 19.19Loans and Advances (0.76) 9.17 – – 8.41Unsecured Loans – 13.89 – – 13.89Notes to Accounts
  • 81. Transactions with Related Parties pursuant to Accounting Standard-18Key management personnel and their Relatives:Name of the party Nature of transaction 31st March,201131st March,2010Mr. Madhukar Talwalkar Directors Remuneration 42.00 36.82Mr. Prashant Talwalkar Directors Remuneration 42.00 26.52Rent for Premises 19.19 19.19Deposit outstanding as on 13.05 13.05Mr. Girish Talwalkar Directors Remuneration 42.00 26.52Loans and Advances given/(taken) Net – 0.11Loan outstanding as on – –Mr. Vinayak Gawande Directors Remuneration 42.00 17.68Loans and Advances repaid/(taken) Net – 73.12Interest on Unsecured Loans – 7.15Loan outstanding as on – –Mr. Harsha Bhatkal Directors Remuneration 42.00 17.68Mr. Anant Gawande Directors Remuneration 42.00 17.68Transactions with Related Parties pursuant to Accounting Standard-18Others:Name of the party Nature of transaction 31st March,201131st March,2010Mrs. Yamini Gawande Loans and Advances repaid/(taken) Net – 25.01Interest on Unsecured Loans – 1.66Loan outstanding as on – –Mr. Sudhakar Talwalkar Professional fees paid – 3.00Joint Ventures/ Associates/Subsidaries :Name of the party Nature of transaction 31st March,201131st March,2010Splendor Fitness Pvt. Ltd. (formerlyknown as Talwalkars PantaloonFitness Pvt. Ltd.)Share Application Money given 106.69 33.56Investment in Equity Shares as on 500.00 100.00Share Application Money as on NIL 293.31Denovo Enterprises Pvt. Ltd. Franchise fee Income 37.57 28.75Investment during the year 0.101 –Transfer of Members Fees 0.13 0.13Loans and Advances given/(taken) Net – 0.38Investment in Equity Shares as on 50.10 50.00Loan outstanding as on (0.76) 0.62Notes to Accounts
  • 82. 87Annual Report 2010-2011Joint Ventures/ Associates/Subsidaries (Contd.) :Name of the party Nature of transaction 31st March,201131st March,2010Aspire Fitness Private Limited Investment in Equity Shares in the year 49.501 0.50Share Application Money given 49.501 50.21Loans & Advances given/ (taken) Net 13.83 –Loan outstanding as on 13.83 –Franchisee Income 50.00 –Interest income on Unsecure Loan 3.38 –Investment in Equity Shares as on 50.001 0.50Share Application Money as on – 50.21Equinox Wellness Pvt. Ltd. Franchise fee Income 9.19 9.23Franchise fee receivable as on 13.85 4.66Associate Companies/Firms:Name of the party Nature of transaction 31st March,201131st March,2010Better Value Leasing & Finance Ltd Loans and Advances given/(taken) Net (390.18) (15.43)Office expenses 0.48 1.17Interest on Unsecured Loans 63.56 161.53Loan outstanding as on (265.27) (1123.58)Gawande Consultants Pvt. Ltd. Loans and Advances given/(taken) Net 242.77 (64.45)Electricity expenses 1.74 3.60Interest on Unsecured Loans 22.10 39.46Loan outstanding as on (115.34) (358.11)Popular Prakashan Pvt. Ltd. Loans and Advances given/(taken) Net (506.02) (76.28)Interest on Unsecured Loans 12.64 70.22Loan outstanding as on (29.79) (535.82)Radhika Hotels Pvt. Ltd. Loans and Advances given/(taken) Net 95.60 (95.14)Interest on Unsecured Loans 5.82 8.48Loan outstanding as on (30.49) (126.09)Popular Institute of Art Pvt Ltd Loans and Advances repaid/(taken) Net 72.14 20.52Interest on Unsecured Loans – 11.33Loan outstanding as on – (72.14)Anfin Investments Pvt. Ltd. Loans and Advances given/(taken) Net 173.89 (180.52)Interest on Unsecured Loans 11.48 8.80Loan outstanding as on (69.63) (243.52)Better Value Brands Pvt. Ltd Loans and Advances given/(taken) Net 14.26 (1.60)Interest on Unsecured Loans 0.29 2.01Loan outstanding as on – (14.26)Better Value Properties Pvt. Ltd. Loans and Advances given/(taken) Net 2.96 18.18Interest on Unsecured Loans 1.03 (1.93)Loan outstanding as on (6.14) (9.10)Deposit outstanding as on 37.08 37.08Rent for Premises 60.19 57.33Notes to Accounts
  • 83. Associate Companies/Firms (Contd.) :Name of the party Nature of transaction 31st March,201131st March,2010Life Fitness India Pvt. Ltd. Loan outstanding as on (0.12) (0.12)Pinnacle Fitness Private Limited Loans and Advances given/(repaid) Net – (0.38)Transfer of Members Fees (0.71) (0.86)Loan outstanding as on (2.20) (1.49)Franchise fee Income 21.81 23.45Franchise fee receivable as on 4.05 4.25Talwalkars Fitness Club Loans and Advances given/(repaid) Net 0.65 2.82Transfer of Members Fees (0.11) (0.60)Loan outstanding as on 5.12 4.58Talwalkars Health & Leisure Loans and Advances given/(repaid) Net 1.29 (3.02)Transfer of Members Fees (0.44) (0.35)Loan outstanding as on 1.73 0.88Talwalkars Health Club Loans and Advances given/(repaid) Net (0.44) (0.66)Transfer of Members Fees – (0.30)Loan outstanding as on (0.31) (0.13)Talwalkars Health Complex Loans and Advances given/(repaid) Net (0.65) (1.42)Transfer of Members Fees – (0.20)Loan outstanding as on 2.50 1.85Talwalkars Health Commune Members Fees receivable – 0.83Membership fee receivable as on 0.83 0.83Talwalkars Loans and Advances given/(repaid) Net 0.12 0.20Loan outstanding as on 0.33 0.20Talwalkars Nutrition Centre Loans and Advances given/(repaid) Net 1.16 (0.72)Transfer of Members Fees – (0.11)Loan outstanding as on 1.50 0.34Club Business Systems Members Fees receivable – 0.36Membership fee receivable as on 0.36 0.36Vinayak Gawande (HUF) Loans and Advances given/(taken) Net – 25.02Interest on Unsecured Loans – 2.39Loan outstanding as on – –Anant Gawande (HUF) Loans and Advances given/(taken) Net – 25.02Interest on Unsecured Loans – 0.17Loan outstanding as on – –Nitin Gawande (HUF) Loans and Advances given/(taken) Net – 25.02Interest on Unsecured Loans – 1.30Loan outstanding as on – –b) Corporate Guarantees given:i) Denovo Enterprises Private LimitedThe Company has given a Corporate Guarantee amounting to ` 235 lacs to the said Joint VentureCompany (Previous year ` 125 lacs)Notes to Accounts
  • 84. 89Annual Report 2010-2011ii) Equinox Wellness Private LimitedThe Company has given a Corporate Guarantee amounting to ` 37.50 lacs to the said JointVenture Company (Previous year ` 37.50 lacs)iii) Aspire Fitness Private LimitedThe Company has given a Corporate Guarantee amounting to ` 200.00 lacs to the said JointVenture Company (Previous year ` NIL)11. Events occurring after Balance Sheet date:• The Company launched a low cost gym concept – Healthy India Fit India (HiFi) in April 2011. Unlikea typical full service Talwalkar Health Gym Format, the Hi-Fi Gyms is a “no-frills” gym providingquality and affordable health and fitness solution catering to the Tier III and Tier IV cities/towns. TheCompany depending on location and space availability may set up Hi-Fi Gyms in Tier I and Tier IIcities. A Hi-Fi Gym would typically be smaller in size, with an average area of 2,500 to 2,800 sq ft. AHi-Fi gym will have all the key facilities of the existing gyms including imported fitness equipments,air-conditioning, generator back up, excellent ambience and high quality personal trainers.12. Auditors’ Remuneration (inclusive of service tax):(` in lacs)2010-11 2009-10- Audit Fees (Incl. Tax Audit Fee) 13.79 6.07- Other Services 1.99 4.69- Out of Pocket expenses 0.09 Nil13. Estimated amounts of contracts remaining to beexecuted on capital accounts and not provided for 586.05 134.8914. Directors’ Remuneration: includes paid to Six Directors of the Company, amounting to ` 252.00 lacs.(Previous year ` 142.90 lacs)15. Additional information as prescribed under Part II of Schedule VI of the Companies Act, 1956 in respectof production /inventories are not applicable since the Company does not undertake any trading ormanufacturing activity.(` in lacs)Year ended2010-11Year ended2009-1016. Value of Imports on CIF Basis -Gymnasium EquipmentsFurniture and Fixtures1,055.9755.65838.72NIL17. Earnings in Foreign Currency NIL NIL18. Expenditure in Foreign CurrencyTravelling Expenses 1.58 NIL19. Non-Convertible Debentures:The Company has issued 11.5% Redeemable Secured Non-Convertible Debentures, Face Value` 10 lacs each aggregating to ` 30 Crores through private placement. The principal amount of theNon-Convertible Debentures, interest due and any other monies payable by the Company in respectof the Non-Convertible Debentures will be secured by first pari passu charge on the specified assetsof the Company as identified in the Debenture Trust Deed such that a fixed asset cover of 1.25 times ismaintained at all times during the tenor of the Non-Convertible Debentures.Notes to Accounts
  • 85. 20. Based on the intimations regarding their status under Micro, Small and Medium Enterprises DevelopmentAct, 2006 there are no amounts due and payable to suppliers covered under the above category.21. The Company made an Initial Public Offer of 60,50,000 equity shares of ` 10 each for cash at a premiumof ` 118 per equity share, aggregating to ` 7,744 lacs of which ` 6,672 lacs have been spent towards theobject of the issue (` 3,950 lacs were utilised for setting up additional health clubs, ` 2,059.20 towardsrepayment of unsecured loans and ` 662.80 lacs towards issue expenses) and the balance has beeninvested in debt schemes of mutual fund.22. The operations of the Belgaum and Koramangala Branches have been temporarily suspended dueto some disputes. The Company has already filed legal cases against the same and on the basisof advice of its legal counsel, is confident of favourable outcome and early recommencement ofoperations of the branches.23. Previous year’s figures have been regrouped/re-arranged wherever necessary to confirm to thecurrent year’s classification.As per our report of even dateFor Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafPartnerMembership No. 030866Place: MumbaiDate: 14th June, 2011For and on behalf of the BoardMadhukar Talwalkar Executive ChairmanPrashant Talwalkar Managing Director & CEOVinayak Gawande Whole-time DirectorGirish Talwalkar Whole-time DirectorHarsha Bhatkal Whole-time DirectorAnant Gawande Whole-time Director & CFORaman Maroo DirectorManohar Bhide DirectorAbhijeet Patil DirectorMohan Jayakar DirectorAvinash Phadke DirectorAvanti Sankav Company Secretary &Compliance OfficerNotes to Accounts
  • 86. 91Annual Report 2010-20111. COMPANY’S REGISTRATION DETAILS:Registration No. 140134State Code 11Balance Sheet Date 31st March, 2011(` in Lacs)2. CAPITAL RAISED DURING THE YEAR:Public Issue 605.00Right Issue NilBonus Issue NilPrivate Placement Nil3. DETAILS OF MOBILISATION AND DEPLOYMENT OF FUNDS:Total Liabilities 24,664Total Assets 24,664SOURCES OF FUNDS:Paid-up Capital 2,412Reserves and Surplus 10,066Secured Loans 10,212Unsecured Loans 926Defered tax liability 1,048APPLICATION OF FUNDS:Net Fixed Assets 19,230Investments 969Net Current Assets 4,465Miscellaneous Expenditure NilAccumulated Losses Nil4 PERFORMANCE OF COMPANY:Turnover 8,841Total Expenditure 6,610Profit before Tax 2,232Profit after Tax 1,523Earnings per share Weighted Average (`) 6.46Diluted (`) 6.46Statutory Dividend rate % 10.00%5 GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANY (AS PER MONETARY TERMS):Item Code No. N.A.Service Description GYMNASIUMSFor and on behalf of the BoardMadhukar Talwalkar Executive ChairmanPrashant Talwalkar Managing Director & CEOVinayak Gawande Whole-time DirectorGirish Talwalkar Whole-time DirectorHarsha Bhatkal Whole-time DirectorAnant Gawande Whole-time Director & CFORaman Maroo DirectorManohar Bhide DirectorAbhijeet Patil DirectorMohan Jayakar DirectorAvinash Phadke DirectorAvanti Sankav Company Secretary &Compliance OfficerPlace: MumbaiDate: 14th June, 2011Balance Sheet Abstract and Company’s General Business Profile
  • 87. TO THE BOARD OF DIRECTORS OF TALWALKARS BETTER VALUE FITNESS LIMITEDWe have audited the attached Consolidated Balance Sheet of Talwalkars Better Value Fitness Limited (theCompany) and its s ubsidiaries (collectively referred to as “the Group”) as at 31st March, 2011, and theConsolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on thatdate annexed thereto. These financial statements are the responsibility of the Company’s management andhave been prepared by the Management on the basis of separate financial statements and other financialinformation regarding components. Our responsibility is to express an opinion on these Consolidated financialstatements based on our audit.We conducted our audit in accordance with the auditing standards generally accepted in India. ThoseStandards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatements. An audit includes examining, on a test basis, evidencesupporting the amounts and the disclosures in the financial statements. An audit also includes assessing theaccounting principles used and the significant estimates made by the Management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.1. We did not audit the financial statements of Aspire Fitness Private Ltd. and Equinox Wellness Private Limited,subsidiaries, whose financial statements reflect total assets of ` 911.10 Lacs as at 31st March, 2011, totalrevenue of ` 498.22 Lacs and cash flows amounting to ` 66.42 Lacs for the year ended. These financialstatements and other financial information have been audited by other auditors whose reports have beenfurnished to us, and our opinion is based solely on the report of other auditors.2. We have relied on the unaudited financial statements of Denovo Enterprises Private Limited, a subsidiarywhose consolidated financial statements reflect total assets of `1,417.45 Lacs as at 31st March, 2011, totalrevenue of ` 1,035.30 Lacs, cash flows amounting to ` 6.47 Lacs for the year then ended. These unauditedfinancial statements as approved by the Board of Directors of the said company have been furnishedto us by the Management and our report in so far as it relates to the amounts included in respect ofthe said Subsidiary Company is based solely on such approved unaudited financial statements. The saidsubsidiary has not made any provision for deferred Tax in accordance with Accounting Standard (AS) 22,the consequential impact thereof on the profit of the Subsidiary for the year ended 31st March, 2011 andon the Reserves as on 31st March, 2011 cannot be ascertained.3. We report that the Consolidated Financial Statements have been prepared by the Company’smanagement in accordance with the requirements of Accounting Standard 21 (Consolidated FinancialStatements), as notified under the Companies (Accounting Standards) Rules, 2006;4. Based on our audit and on consideration of reports of other auditors on separate financial statements of theCompany and on other financial information of the components, subject to our comments in paragraph 2above and to the best of our information and according to the explanations given to us, in our opinion, theConsolidated Financial Statements give a true and fair view in conformity with the accounting principlesgenerally accepted in India:Auditors’ Report on Consolidated Financial Statements
  • 88. 93Annual Report 2010-2011(i) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at March 31,2011;(ii) in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year endedon that date; and(iii) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the yearended on that date.For Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafDated: 14th June, 2011 PartnerPlace : Mumbai Membership No. 030866Auditors’ Report on Consolidated Financial Statements
  • 89. (` in Lacs)Schedule As at31st March, 2011I. SOURCES OF FUNDS:1. Shareholders’ FundsShare Capital 1 2,411.57Reserves and Surplus 2 10,146.84Capital Reserve on Consolidation 19.3412,577.752. Minority Interest 216.993. Loan FundsSecured Loans 3 10,743.45Unsecured Loans 4 1,371.0312,114.484. Deferred Tax Liabilities (net) 1,091.84TOTAL 26,001.06II. APPLICATION OF FUNDS:1. Fixed Assets 5(a) Gross Block 20,482.17(b) Less: Accumulated Depreciation/Amortisation 2,628.60(c) Net Block 17,853.57Capital Work-in-progress 2,742.5220,596.092. Investments 6 869.043. Current Assets, Loans and Advances(a) Sundry Debtors 7 2,026.99(b) Cash and Bank Balances 8 2,915.22(c) Loans and Advances 9 2,427.817,370.02Less: Current Liabilities and Provisions 10(a) Current Liabilities 1,727.92(b) Provisions 1,134.332,862.25Net Current Assets 4,507.774. Miscellaneous Expenditure(to the extent not written off or adjusted)Preliminary Expenses 28.16TOTAL 26,001.06SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS 19Schedules referred to above form an integral part of the Financial StatementsAs per our report of even dateFor Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafPartnerMembership No. 030866Place: MumbaiDate: 14th June, 2011For and on behalf of the BoardMadhukar Talwalkar Executive ChairmanPrashant Talwalkar Managing Director & CEOVinayak Gawande Whole-time DirectorGirish Talwalkar Whole-time DirectorHarsha Bhatkal Whole-time DirectorAnant Gawande Whole-time Director & CFORaman Maroo DirectorManohar Bhide DirectorAbhijeet Patil DirectorMohan Jayakar DirectorAvinash Phadke DirectorAvanti Sankav Company Secretary &Compliance OfficerConsolidated Balance Sheet as at 31st March, 2011
  • 90. 95Annual Report 2010-2011(` in Lacs)Schedule Year ended31st March, 2011INCOMEIncome from Operations 11 10,226.89Other Income 12 207.4810,434.37Personnel Cost 13 2,024.40Administrative and other expenses 14 2,903.15Selling and Marketing Cost 15 350.73Service Tax Collected and Paid 942.416,220.69PROFIT BEFORE INTEREST, DEPRECIATION, EXTRAORDINARY ITEMS AND TAXES 4,213.68Finance Cost 16 859.34PROFIT BEFORE DEPRECIATION , EXTRAORDINARY ITEMS AND TAXES 3,354.34Non-Cash Charges 17 896.42PROFIT BEFORE EXTRAORDINARY ITEMS AND TAXES 2,457.92Profit/(loss) on Sale of Asset (36.44)PROFIT BEFORE TAX 2,421.48Taxation (Net) 18 459.19Deferred Tax 277.98PROFIT AFTER TAX BUT BEFORE MINORITY INTEREST 1,684.31Share of Minority Interest 81.21PROFIT AFTER TAXATION 1,603.10Profit Brought Forward from Previous Year 1,810.43Profit available for appropriations 3,413.53APPROPRIATIONS:Debenture Redemption Reserve 22.60Proposed Dividend on Equity Shares 241.15Tax on Dividend 40.03Balance carried to Balance Sheet 3,109.75Earnings Per Share (`) :Basic 6.80Diluted 6.80SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS 19Schedules referred to above form an integral part of the Financial StatementsAs per our report of even dateFor Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafPartnerMembership No. 030866Place: MumbaiDate: 14th June, 2011For and on behalf of the BoardMadhukar Talwalkar Executive ChairmanPrashant Talwalkar Managing Director & CEOVinayak Gawande Whole-time DirectorGirish Talwalkar Whole-time DirectorHarsha Bhatkal Whole-time DirectorAnant Gawande Whole-time Director & CFORaman Maroo DirectorManohar Bhide DirectorAbhijeet Patil DirectorMohan Jayakar DirectorAvinash Phadke DirectorAvanti Sankav Company Secretary &Compliance OfficerConsolidated Income Statement for the year ended 31st March, 2011
  • 91. (` in Lacs)Year ended31st March, 2011A. CASH FLOW FROM OPERATING ACTIVITIES:Net profit before Taxes 2,421.48Non-cash expenses 909.50Finance cost (Net) 859.34Income from Investment activity (108.42)(Profit)/Loss on sale of assets 36.441,696.86Operating Profit before Working capital changes 4,118.34(Increase)/Decrease in Current Assets (493.16)(Increase)/Decrease in Trade and other receivables (1,677.25)Increase/(Decrease) in Trade and other payables 459.05(1,711.36)Cash generated from operations 2,406.98Direct taxes paid (522.59)Share of Minority Interest (256.98)Net cash from operating activities 1,627.41B. CASH FLOW FROM INVESTING ACTIVITES:Investment in Joint Venture (106.09)Payment towards purchase of Fixed Assets, CWIP (7,916.80)Proceeds from sale of fixed assets 1.00Dividend Received 99.89Purchase of Short Term Investments (12,406.00)Proceeds from sale of Short Term Investments 12,059.74Share of Minority Interest 435.75Net cash (used in)/from Investing activities (7,832.51)Consolidated Cash Flow for the year ended 31st March, 2011
  • 92. 97Annual Report 2010-2011(` in Lacs)Year ended31st March, 2011C. CASH FLOW FROM FINANCING ACTIVITIES:Share issue Proceeds (net of refund including security premium) 7,718.54Issue proceeds from Non-Convertible Debentures 3,000.00IPO related expenses (587.47)Borrowings done 3,017.64Repayment of Long-term and other borrowings (3,883.53)Finance cost paid (1,116.25)Dividend Paid (120.58)Dividend Tax Paid (20.49)Share of Minority Interest (210.48)Net cash used in Financing Activities 7,797.38NET INCREASE IN CASH AND CASH EQUIVALENTS (A + B + C) 1,592.28CASH AND CASH EQUIVALENTS AT THE BEGINING OF THE PERIOD AFTER MINORITY INTEREST 1,204.13Cash and Bank Balance including Fixed Deposits 2,915.22Balance in Cash Credit facility (56.54)Less : Share of Minority Interest (62.27)CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD AFTER MINORITY INTEREST 2,796.41As per our report of even dateFor Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafPartnerMembership No. 030866Place: MumbaiDate: 14th June, 2011For and on behalf of the BoardMadhukar Talwalkar Executive ChairmanPrashant Talwalkar Managing Director & CEOVinayak Gawande Whole-time DirectorGirish Talwalkar Whole-time DirectorHarsha Bhatkal Whole-time DirectorAnant Gawande Whole-time Director & CFORaman Maroo DirectorManohar Bhide DirectorAbhijeet Patil DirectorMohan Jayakar DirectorAvinash Phadke DirectorAvanti Sankav Company Secretary &Compliance OfficerConsolidated Cash Flow for the year ended 31st March, 2011
  • 93. (` in Lacs)As at31st March, 2011SCHEDULE 1SHARE CAPITALAuthorised:30,000,000 Equity Shares of ` 10/- each 3,000.003,000.00Issued, Subscribed and Paid-upEquity Shares24,115,672 Equity shares of ` 10 each Fully Paid-up 2,411.57(a) of the above, 550,000 shares were allotted as Fully paid up pursuant to theAgreement for takeover of business and issued in consideration receivedother than in cash.(b) of the above, 70,260 Equity Shares were allotted against redemption ofPreference Shares(c) of the above, 15,807,463 Equity Shares have been issued by way of bonusby capitalising Reserves2,411.57SCHEDULE 2RESERVES AND SURPLUS(a) Securities PremiumBalance in Securities Premium 588.45Add: Securities Premium received on Issue of shares 7,139.007,727.45Less: Adjustments of Share issue/Debenture issue expenses 712.967,014.49(b) Debenture Redemption Reserve 22.60(c) Balance in Profit and Loss Account 3,109.7510,146.84SCHEDULE 3SECURED LOANS(a) Secured Loans (Term loan and acceptances) 7,686.91(b) Cash Credit Facility 56.54(c) Redeemable Secured Non-Convertible Debentures 3,000.0010,743.45SCHEDULE 4UNSECURED LOANS 1,371.031,371.03Schedules forming part of the ConsolidatedBalance Sheet as at 31st March, 2011
  • 94. 99Annual Report 2010-2011SCHEDULE 5FIXED ASSETS(` in Lacs)Particulars Gross Block Depreciation Net BlockAs at1st April,2010Additionduring theyearDeletionduring theyearAs at31st March,2011As at1st April,2010For the year Adjustmentfor the yearAs at31st March,2011As at31st March,2011Goodwill 566.03 – – 566.03 78.54 28.63 – 107.17 458.86Immovable Property 715.35 29.37 – 744.72 76.76 15.32 – 92.08 652.64Furniture and Fixtures 5,410.22 2,228.22 33.76 7,604.68 775.47 391.00 14.71 1,151.76 6,452.92Gym and Office Equipments 5,089.04 3,189.53 9.94 8,268.63 566.84 310.70 3.31 874.23 7,394.40Computer and Software 143.45 71.21 – 214.66 57.07 27.44 – 84.51 130.15Franchisee License Fees 3.00 – – 3.00 1.67 0.33 – 2.00 1.00Other Equipments – 7.96 – 7.96 – 0.21 – 0.21 7.75Air-conditioners 852.42 485.20 14.28 1,323.34 92.42 46.71 4.73 134.40 1,188.94Electrical Installations 1,138.14 618.06 7.05 1,749.15 109.76 75.13 2.65 182.24 1,566.91Total 13,917.65 6,629.55 65.03 20,482.17 1,758.53 895.47 25.40 2,628.60 17,853.57(` in Lacs)As at31st March, 2011SCHEDULE 6INVESTMENTSA. Long term Non-Trade Unquoted (at cost) :Investment In Joint Ventures:Fully paid Equity Shares In Joint VenturesSplender Fitness Pvt. Ltd. 500.00(Formerly known as Talwalkars Pantaloon Fitness Pvt. Ltd.)[140,000 Equity Shares of `100/- each fully paid at premium aggregating 3,60,00,000]B. Current, short-term, trade(valued at cost or market value whichever is lower)Axis Liquid Fund 362.00UTI Treasury Advantage Fund 7.04869.04SCHEDULE 7SUNDRY DEBTORS(Unsecured, considered good)Debts outstanding for a period of(a) More than Six months 64.19(b) Others 1,962.802,026.99Schedules forming part of the ConsolidatedBalance Sheet as at 31st March, 2011
  • 95. (` in Lacs)As at31st March, 2011SCHEDULE 8CASH AND BANK BALANCES(a) Cash in hand 159.61(b) Balances with Scheduled BanksIn Current Accounts 890.92In Fixed Deposits 1,864.692,915.22SCHEDULE 9LOANS AND ADVANCES(Unsecured, considered good, unless otherwise stated)(a) Advances recoverable in cash or in kind or for value to be received 97.00(b) Deposits 1,167.30(c) Input Credit Service Tax Carried forward 116.08(d) Income Tax and FBT paid 650.90(e) Prepaid Expenses 35.45(f) Unavailed Service Tax Cenvat Credit 56.63(g) MAT Credit 304.452,427.81SCHEDULE 10CURRENT LIABILITIES AND PROVISIONS(A) CURRENT LIABILITIES(a) Liabilities for expenses 1,246.24(b) Duties and Taxes payable 226.57(c) Liabilities for Capital goods 254.51(d) Membership fees refundable 0.60(a) 1,727.92(B) PROVISIONS(a) Provision for Taxation 770.01(b) Provision for Fringe Benefit Tax 19.84(c) Proposed Dividend on Equity Shares 241.16(d) Provision for Tax on Dividend 40.03(e) Provision for Contribution to Group Gratuity Scheme 0.91(f) Provision for Interest on Non-convertible Debentures 62.38(b) 1,134.33(a) + (b) 2,862.25Schedules forming part of the ConsolidatedBalance Sheet as at 31st March, 2011
  • 96. 101Annual Report 2010-2011(` in Lacs)Year ended31st March, 2011SCHEDULE 11INCOME FROM OPERATIONSGross Fees including Service Tax 9,354.03Franchisee Fees including Service tax 641.18Input Credit Service Tax 231.6810,226.89SCHEDULE 12OTHER INCOMEIncome from Juice Centre and Food & Supplements 4.10Profit/(loss) on Sale of Asset/Investments 8.53Sundry Credit balances no longer payable 8.52Dividend From Mutual Funds 99.89Miscellaneous Income 31.48Interest on Bank Term Deposits 54.96207.48SCHEDULE 13PERSONNEL COSTSalaries, wages and Bonus 259.09Contract fees for Labour/ Security/ Housekeeping 1,688.75Director’s Remuneration, Sitting fees 67.53Staff Welfare and Other Amenities 7.63Contribution towards Group Gratuity Scheme 1.402,024.40SCHEDULE 14ADMINISTRATIVE AND OTHER EXPENSESStatutory Audit Fees 16.27Internal Audit Fees 19.60AGM Meeting Expenses 1.58Consumables, Food and Supplements 79.72Electricity and Fuel expenses 643.45Insurance Charges 10.82Juice Centre and Spa Expenses 6.10Miscellaneous Expenses 53.28Pooja and Special Function Expenses 9.17Printing and Stationery 35.00Professional Fees 97.80Rates and Taxes 33.51Interest on late payment of Service Tax 28.04Rent 1,190.09Repairs and Maintenance- Building, Gym Equip. & Machinery 152.73- Others 3.65ROC Expenses 0.61Telephone Expenses 50.63Travelling and Conveyance Expenses 30.39Turnkey Project Expenses 410.86Water Charges 29.852,903.15Schedules forming part of the ConsolidatedProfit and Loss Account for the year ended 31st March, 2011
  • 97. (` in Lacs)Year ended31st March, 2011SCHEDULE 15SELLING AND MARKETING COSTAdvertising Expenses 263.49Business Promotion expenses 87.24350.73SCHEDULE 16FINANCE COSTInterest on Secured Loan 457.25Interest on Unsecured Loan 230.36Interest on Letter of credit 43.58Processing Fees 5.93Bank Charges 16.28Interest Non-Convertible Debentures 62.59Credit Card Charges 43.35859.34SCHEDULE 17NON-CASH CHARGESPreliminary Expenses w/off 0.95Depreciation 895.47896.42SCHEDULE 18TAXATION (NET)Provision for Current Tax 459.19459.19Schedules forming part of the ConsolidatedProfit and Loss Account for the year ended 31st March, 2011
  • 98. 103Annual Report 2010-2011SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS TO THE CONSOLIDATED STATEMENT OF BALANCESHEET AS AT 31ST MARCH, 2011 AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011.SCHEDULE 19 :A) STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES:1. Basis of Accounting:a) Basis of preparation:The individual Balance Sheet as at 31st March, 2011 and Profit and Loss Account for the year ended31st March, 2011 of Talwalkars Better Value Fitness Limited (“the Company”) and its subsidiaries,collectively referred to as ‘Group’, have been consolidated as per principle of consolidationenunciated in Accounting Standard (AS) 21- ‘Consolidated Financial Statements’ issued by theCouncil of The Institute of Chartered Accountants of India. The financial statements are preparedunder the historical cost convention on an accrual basis of accounting in accordance with thegenerally accepted accounting principles in India, Accounting Standards notified under Section211 (3C) of the Companies Act, 1956 and the relevant provisions thereof.b) Use of estimates:The preparation of financial statements required management to make judgements, estimatesand assumptions, that affect the application of accounting policies and the reported amounts ofassets and liabilities and disclosure of contingent liabilities at the date of the financial statementsand the reported amount of revenues and expenditure for the years represented. Actual resultsmay differ from these estimates. Estimates and underlying assumptions are reviewed on anongoing basis. Revisions to accounting estimates are recognised in the year in which the estimateis revised and future years are affected.c) Principles of Consolidation:The consolidated financial statements relate to the Company and its three partially ownedsubsidiaries. The financial statements of the subsidiary company used in consolidation are drawnup to the same reporting date as of the Company.The consolidated financial statements have been prepared on the following basis:1. The financial statements of the Company and its partially owned subsidiaries have beencombined on a line-by-line basis by adding together the book values of like items of assets,liabilities, income and expenses, after fully eliminating intra-group balances and intra-grouptransactions resulting in unrealized profits or losses.2. The consolidated financial statements have been prepared using uniform accountingpolicies for like transactions and other events in similar circumstances and are presented tothe extent possible, in the same manner, as the Company’s separate financial statements.The Company’s standalone income has been presented by way of the aggregate of grossfees including Service Tax. However, the subsidiaries have presented income by way of feesexcluding Service Tax. Thus, for the purpose of consolidation, the group’s income has beencomputed by the former method.Notes to Accounts
  • 99. 3. The subsidiaries considered in the consolidated financial statement are:Name of Company Country of Incorporation % ownership interest as at31st March, 2011Denovo Enterprises Private Limited India 50.10%Equinox Wellness Private Limited India 33.33% *Aspire Fitness Private Limited India 50.001%* effective ownership due to 66.67% holding of Denovo Enterprises Private Limited in EquinoxWellness Private Limited.2. Fixed Assets:● Fixed assets are stated at original cost, net of tax/duty credits availed if any, less accumulateddepreciation/amortisation. Costs include all expenses incurred to bring the assets to its presentlocation and condition. Assets acquired by way of slump sale are recorded at book value in thebooks of the transferor as on the date of transfer. Revenue expenses incurred in connection withproject implementation in so far as such expenses relate to the period prior to the commencementof commercial activity are treated as part of the fixed assets and capitalized.● Capital work-in-progress comprises outstanding advances paid to acquire fixed assets, and thecost of fixed assets that are not yet ready for their intended use at the balance sheet date.● Intangible assets are recorded at the consideration paid for acquisition and are carried at costless accumulated amortization.3. Depreciation/Amortisation:● Depreciation on all fixed assets is provided pro-rata from/up to the date of acquisition/disposalusing the straight-line method at the rates prescribed by Schedule XIV of the Companies Act,1956.4. Provisions, Contingent Liabilities and Contingent Assets:● Provisions involving substantial degree of estimation in measurement are recognised if there isa present obligation as a result of past events and it is probable that there will be an outflow ofresources.● Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets areneither recognised nor disclosed in the financial statements.5. Revenue Recognition:● Income from Fees and subscriptions, recorded net of discounts and rebates have been recognisedas income for the year irrespective of the period, for which these are received. However, the Feesreceivable from existing members as at the end of the year has been recognised as income forthe year.● The costs relating to rendering of these services being unascertainable are charged off to revenuein the year in which they become legally payable.● Input credit availed on Service Tax through revenue expenses paid are accounted for separatelyas income, thus accounting the expenses at their gross values inclusive of service tax. Expenses onwhich service tax is paid in subsequent year are booked net of the Un-availed Service Tax at endof the year.Notes to Accounts
  • 100. 105Annual Report 2010-2011● Income by way of Franchise Fees (including up-front fees) received pursuant to franchiseagreements entered are recognised as income of the period in accordance with terms of theagreement, and as per data submitted by the franchisees.● Interest income is recognised on a time proportion basis taking into account the amountoutstanding and the rate applicable.● Any other income i.e. from juice bar sales, consumables etc. are recognised on receipt basis sincethe realizations there-from are immediate and no credit is allowed to the customers/members.6. Impairment of Assets:● The management periodically assesses using, external and internal sources, whether there is anindication that an asset may be impaired.● An impairment loss is charged to the Profit and Loss Account in the year in which the asset isidentified as impaired.● At each balance sheet date, the management reviews the carrying amounts of its assets includedin each cash generating unit to determine whether there is any indication that those assets wereimpaired. If any such indication exists, the recoverable amount of the asset is estimated in orderto determine the extent of impairment loss.● The impairment loss recognised in prior accounting periods is reversed if there has been a changein the estimate of recoverable amount.7. Employees benefits:● All employee benefits payable wholly within twelve months of rendering the service are classifiedas a short-term employee benefits. Benefits such as salaries, wages, contractual labour chargesand short-term compensated absences, etc is recognised in the period in which the employee/contractual labour renders the related service.● The gratuity liability is provided and charged off as revenue expenditure based on actuarialvaluation. The company has subscribed to the group gratuity scheme policy of LIC of India.● Any other payments under the relevant labour statutes, wherever applicable are reimbursed tothe Outsourced Agency as and when applicable.8. Borrowing Cost:● Borrowing cost incurred for qualifying assets is capitalised up to the date the asset is ready forintended use, based on borrowings incurred specifically for financing the asset. In determining theamount of borrowing cost eligible for capitalisation during a period, any income earned on thetemporary investment on those borrowings is deducted from the borrowing cost incurred.● Other financing/borrowing costs are charged to the Profit and Loss Account.9. Foreign Currency Transactions:● Exchange differences are recorded on initial recognition in the reporting currency, using theexchange rate at the date of the transaction. At each Balance Sheet date, foreign currencymonetary items are reported using the closing rate.● Exchange differences that arise on settlement of monetary items or on reporting at each BalanceSheet date of the Company’s monetary items at the closing rate are:Notes to Accounts
  • 101. ● Up to 31st March, 2008, the same were recognised as income or expense in the period in whichthey arise and,● Thereafter, were adjusted in the cost of fixed assets specifically financed by the borrowings towhich the exchange differences relate.10. Taxes on Income :● Current Tax is the amount of tax payable on the taxable income for the year as determined inaccordance with the provisions of the Income Tax Act, 1961.● Deferred Taxation is recognised for all timing differences between accounting income andtaxable income and is quantified using enacted/substantial enacted tax rates as at balancesheet date. Deferred Tax asset are recognised subject to the management’s judgment that therealization is virtually/reasonably certain.11. Investments:● Long-term investments are stated at cost, less any provision for diminution (other than temporary)in value. Current investments are stated at lower of cost and fair value.12. Segment Reporting:● In the opinion of the management, there is only one reportable business segment as envisagedby Accounting Standard (AS) 17 Segment Reporting. Accordingly, no separate disclosure for thesegment reporting is required to be made in the financial statement of the Company.● Secondary segmentation based on geography has not been presented as the Company operatesprimarily in India and the Company perceives that there is no significant difference in its risk andreturns in operating from different geographic areas within India.13. Leases:● Lease rentals/License fees in respect of assets under operating lease are charged to the Profit andLoss account.14. Earnings per share:● Basic and diluted earnings per share is computed by dividing the net profit attributable to equityshareholders for the year, by weighted average number of equity shares outstanding during theyear.15. Cash Flow Statement:● The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard(AS) 3 on Cash Flow Statements and presents the cash flows by operating, investing and financingactivities of the Company.● Cash and Cash equivalents presented in the cash flow Statement consist of cash on hand,balances in Current, Fixed Deposit and Cash Credit Accounts with Bank.Notes to Accounts
  • 102. 107Annual Report 2010-2011B) NOTES TO CONSOLIDATED FINANCIAL STATEMENT:1. Contingent Liabilities :Contingent liabilities not provided for in respect of (` in Lacs)2010-11Income Tax demands (net of amount paid in protest) AY 2006-07 19.00Bank Guarantee given on behalf of Joint Ventures 472.50Claim from a landlord, appeal pending before the Judiciary- Hyderabad 306.50- Koramangala 72.11Claim by Advertising agency # 6.39# 8800 GBP @ ` 72.59 (as on 31.03.2011)2. Security against Secured Loans Availed: [Refer Schedule ‘B’ to accounts]A) Talwalkars Better Value Fitness Ltd.● All loans, which include sub limit of Inland and Foreign Letter of credit and cash credit facilityare sanctioned by Union Bank of India are secured primarily against the first hypothecation/mortgage charge on the entire movable and immovable Fixed Assets and Current Assetsof the Company including Gymnasium Equipments, Furniture and Fixtures and any otherequipment installed in the Gymnasiums, equitable mortgage of immovable premises ofthe Company, corporate guarantee and collateral security by way of equitable mortgageof premises situated at Tardeo and Mahalaxmi, Mumbai of third parties and the personalguarantee of three Directors of the Company.● The abovementioned Foreign/Inland Letters of Credit availed by the Company have beenshown under “Acceptances” under the head “SECURED LOANS”.B) Aspire Fitness Pvt. Ltd.All loans, which include sub limit of Inland and Foreign Letter of credit and cash credit facility aresanctioned by Axis Bank are secured primarily against the first hypothecation/mortgage chargeon the entire movable and immovable Fixed Assets of the Company including GymnasiumEquipments, Furniture and Fixtures and any other equipment installed in the Gymnasiums and thepersonal guarantee of two Directors of the Company.C) Equinox Wellness Pvt. Ltd.All loans are sanctioned by Axis Bank are secured primarily against the first hypothecation chargeon the entire movable Fixed Assets of the Company including Gymnasium Equipments, Furnitureand Fixtures and any other equipment installed in the Gymnasiums.D) Denovo Enterprises Pvt. Ltd.All loans are sanctioned by Axis Bank are secured primarily against the first hypothecation chargeon the entire movable Fixed Assets of the Company including Gymnasium Equipments, Furnitureand Fixtures and any other equipment installed in the Gymnasiums.3. Disclosure pursuant to Accounting Standard (AS) 11:In line with the amendment to Accounting Standard (AS) 11 as per the Notification No. G.S.R. 225 (E)dated 31st March, 2009, the foreign exchange gains has been adjusted to the cost of the fixed assetsas on 31st March, 2011.Notes to Accounts
  • 103. 4. Related Party Disclosures:Disclosure as required by the Accounting Standard 18, “Related Party Disclosure” is given below:List of Related Parties:Key Management Personnel● Talwalkars Better Value Fitness Ltd. (Holding Company)■ Mr. Madhukar Talwalkar (Executive Chairman)■ Mr. Prashant Talwalkar (Managing Director & Chief Executive Officer)■ Mr. Girish Talwalkar (Whole-time Director)■ Mr. Vinayak Gawande (Whole-time Director)■ Mr. Harsha Bhatkal (Whole-time Director)■ Mr. Anant Gawande (Whole-time Director & Chief Financial Officer)● Denovo Enterprises Pvt. Ltd.■ Late Mr. Vikram Maheshwary (Ex – Whole-time Director)■ Mr. Harsh Maheshwary (Whole-time Director)● Equinox Wellness Pvt. Ltd.■ Mr. Abhishek Sharma (Whole-time Director)● Aspire Fitness Pvt. Ltd.■ Mr. Virendra Sherlekar (Whole-time Director)Relatives of Key Management Personnel● Mrs. Yamini Anant Gawande● Mr. Sudhakar Talwalkar● Mr. Kedar SherlekarEnterprises over which Key Management Personnel and their relatives exercise significant influence:● Anfin Investments Private Limited● Better Value Leasing & Finance Ltd.● Better Value Brands Private Limited● Better Value Properties Private Limited● Brainworks Learning Systems Private Limited● Gawande Consultants Private Limited● Life Fitness India Private Limited● Popular Prakashan Private Limited● Popular Institute of Arts Private Limited● Radhika Hotels Private Limited● Pinnacle Fitness Private Limited● Talwalkars Fitness Club● Talwalkars Health & Leisure● Talwalkars Health Club● Talwalkars Health Complex● Talwalkars Health Commune● Talwalkars Nutrition Centre● Talwalkars● Anant Gawande (HUF)● Vinayak Gawande (HUF)● Nitin Gawande (HUF)● R2 Infrastructure Private Limited● R2 Spa Systems● Indian Cookery.com Private Limited● Indian Cookery Private Limited● Splendor Fitness Private LimitedNotes to Accounts
  • 104. 109Annual Report 2010-2011Transactions with Related Parties:(` in Lacs)Nature of transactions Associates Key ManagerialPersonnelOthers TotalIncomes 21.81 – – 21.81Expenses 62.42 19.19 – 81.61Interest on Unsecured Loans 121.30 3.80 6.40 134.53Purchase of Equipments 66.08 – – 66.08Director’s Remuneration – 262.29 – 262.29Transfer of Members Fees 1.26 – – 1.26Investments incl. Share Application Money – – 106.69 106.69Loans repaid/ (taken) Net 1,371.69 0.96 – 1,372.65Loans and Advances (given)/repaid Net 4.30 – – 4.30Balance as at 31st March, 2011 :(` in Lacs)Nature of transactions Associates Key ManagerialPersonnelOthers TotalInvestments incl. Share Application Money – – 500.00 500.00Sundry Debtors 5.24 – – 5.24Deposits 6.13 13.05 – 19.19Loans and Advances 9.17 – – 9.17Unsecured Loans 13.89 – (15) (1.11)Transactions with Related Parties pursuant to Accounting Standard-18Key management personnel and their Relatives :(` in Lacs)Name of the party Nature of transaction 31st March, 2011Mr. Madhukar Talwalkar Director’s Remuneration 42.00Mr. Prashant Talwalkar Director’s Remuneration 42.00Rent for Premises 19.19Deposit for premises –Deposit outstanding as on 13.05Mr. Girish Talwalkar Director’s Remuneration 42.00Gym Equipment sold –Loans and Advances given/(taken) Net –Loan outstanding as on –Mr. Vinayak Gawande Director’s Remuneration 42.00Loans and Advances repaid/(taken) Net –Interest on Unsecured Loans –Loan outstanding as on –Mr. Harsha Bhatkal Director’s Remuneration 42.00Mr. Anant Gawande Director’s Remuneration 42.00Mr. Abhishek Sharma Director’s Remuneration 6.72Interest on Loan 0.66Loan outstanding as on 4.55Late Mr. Vikram Maheshwary Director’s Remuneration 3.57Notes to Accounts
  • 105. 6. Basic and Diluted Earning per Share has been computed as under :(` in Lacs)Particulars 2010-11Profit After Tax - Before Exceptional Item 1,603.10Weighted Average No. of Shares Outstanding 2,35,68,686Basic/Diluted EPS - Before Exceptional Item ` 6.80Profit After Tax - After Exceptional Item 1,603.10Weighted Average No. of Shares outstanding 2,35,68,686Basic/Diluted EPS - After Exceptional Item ` 6.80Face value per share ` 10 per share7. Details of Deferred Tax Asset/(Liability) are as under:(` in Lacs)Nature of timing difference Deferred Tax Asset/(Liability)as on 1st April, 2010(Charge) / credit tothe Profit and LossAccountDeferred Tax Asset/(Liability) as on31st March, 2011Deferred Tax LiabilitiesDepreciation (813.86) (295.85) (1109.71)Re-statement of figures atCurrent tax rates – 17.88 17.88Deferred Tax Assets – – –Net Amount and consequent increase/decrease in Net Profit and Reserves(813.86) (277.97) (1091.84)Denovo Enterprises Pvt. Ltd. one of the subsidiaries, has not computed and provided Deferred Tax forthe year ended 31st March, 2011. Hence, the consequential impact on the profits of the Group for theyear ended 31st March, 2011 and on the reserves as on 31st March, 2011 cannot be ascertained8. Based on the intimations regarding their status under Micro, Small and Medium Enterprises DevelopmentAct, 2006 there are no amounts due and payable to suppliers covered under the above category.9. The operations of the Belgaum and Koramangala Branches have been temporarily suspended due tosome disputes. The company has already filed legal cases against the same and on the basis of adviceof its legal counsel, is confident of favourable outcome and early recommencement of operations ofthe branches.10. The Previous year’s figures have not been given as the consolidated Financial statements have beenprepared for the first time for the financial year ended 31st March, 2011.As per our report of even dateFor Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafPartnerMembership No. 030866Place: MumbaiDate: 14th June, 2011For and on behalf of the BoardMadhukar Talwalkar Executive ChairmanPrashant Talwalkar Managing Director & CEOVinayak Gawande Whole-time DirectorGirish Talwalkar Whole-time DirectorHarsha Bhatkal Whole-time DirectorAnant Gawande Whole-time Director & CFORaman Maroo DirectorManohar Bhide DirectorAbhijeet Patil DirectorMohan Jayakar DirectorAvinash Phadke DirectorAvanti Sankav Company Secretary &Compliance OfficerNotes to Accounts
  • 106. 111Annual Report 2010-2011STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TOSUBSIDIARY COMPANIES ANNEXED TO THE BALANCE SHEET AS AT 31ST MARCH, 2011(` in Lacs)Name of theSubsidiaryCompanyTheFinancialYear of theCompanyended onHolding Company’s Interestas at close of financial year ofsubsidiary companyNet aggregateamount of subsidiarycompany’s profitafter deducting itslosses or vice-versa,so far as it concernsmembers of theHolding Companywhich are not dealtwithin the Company’saccountNet Aggregateamount of subsidiarycompany’s profitafter deducting itslosses or vice-versa,dealt within theCompany’s accountShareholding Extent ofHolding%ageFor thecurrentfinancialyearFor thepreviousfinancialyearFor thecurrentfinancialyearFor thepreviousfinancialyearDenovoEnterprisesPrivate Limited31st March,201150,100 Equity sharesof ` 100/- each50.1% – – 63.42 **EquinoxWellnessPrivate Limited31st March,2011* 2,00,400 Equityshares of ` 10/-each33.4% – – 1.08 **Aspire FitnessPrivate Limited31st March,201150,001 Equity sharesof ` 100/- each50.001% – – 15.90 *** Holding Company holds 50.1% of the paid-up capital of Denovo Enterprises Private Limited which, inturn, holds 66.67% of the paid-up capital of Equinox Wellness Private Limited of 6,00,000 Equity shares of` 10/- each. Accordingly, Holding Company holds 33.4% of the paid-up capital of the Equinox WellnessPrivate Limited. (50.1% of the 66.67% of the paid-up capital)** The Company has published the Consolidated Financial results for the first time and hence the comparativefigures for the corresponding period in the previous year are not provided.
  • 107. FINANCIAL INFORMATION RELATING TO SUBSIDIARY COMPANIES FOR THE YE AR ENDED31ST MARCH, 2011(` in Lacs)Name oftheSubsidiaryCapital Reserve TotalAssetsTotalLiabilitiesInvestment* Turnover** ProfitbeforeTaxProvisionfor taxProfitaftertaxProposeddividendGovern-mentSecuritiesShares,Debentures,Bonds &OthersUnits ofMutualFundsAssociateDenovoEnterprisesPrivateLimited 100 172 1377 1145 – 40 – – 1141 126 (1) 127 –EquinoxWellnessPrivateLimited 60 (29) 208 177 – – – – 115 1 (2) 3 –AspireFitnessPrivateLimited 100 25 703 578 – – – – 433 63 31 32 –* Excluding Investment in Subsidiaries** The above turnover of the subsidiary is inclusive of Service Tax so as to be in conformity with the accounting policies ofthe holding company.Note:The Ministry of Corporate Affairs, Government of India vide its General Circular No. 2/2011 No. 51/12/2007-CL-III dated8th February, 2011 and General Circular No. 3/2011 dated 21st February, 2011 issued under Section 212(8) of the CompaniesAct, 1956, has granted general exemptions to the Companies from attaching the documents of the Company’s subsidiaries,required to be attached under Section 212(1) of the Companies Act, 1956. However annual accounts of the SubsidiaryCompanies and the related detailed information will be made available to the investors of the Company and Subsidiaries ofthe Company, seeking such information, at any point of time at the Registered Office of the Company and the concernedSubsidiary of the Company.