Full annual report tbvfl

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Talwalkars Profile 2011 - 2012 annual reports

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Full annual report tbvfl

  1. 1. Promoting fitness enhancesthe health of our memberswhile adding to the wealth ofour shareholders
  2. 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. 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. 4. VIGOROUSEXPANSIOROBUST GHEALTHIESOCIETY.
  5. 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. 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. 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. 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. 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. 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. 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. 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. 13. With a formidable network of over 100 outlets,Talwalkars’ mission to promote fitness hasgathered momentum. Make no mistake,India is getting healthier!
  14. 14. 17Annual Report 2010-2011
  15. 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. 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. 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. 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. 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. 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. 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. 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. 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. 24. 27Annual Report 2010-2011
  25. 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. 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. 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. 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. 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. 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. 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. 32. 35Annual Report 2010-2011
  33. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 58. 61Annual Report 2010-2011Report on Corporate Governance
  59. 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. 60. 63Annual Report 2010-2011
  61. 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. 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

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