TALWALKARS BETTER VALUE FITNESS LTD

Quarterly Update(Q1 FY 2012-13)

9th Aug 2012

TALWALKARS BETTER VALUE FITNESS LTD (TBVF)

1

Cautionary Statement and Disclaimer

The views expressed here may contain information derived from publicly available sources
that have not been independently verified. No representation or warranty is made as to the
accuracy, completeness or reliability of this information.
Any forward looking information in this presentation has been prepared on the basis of a
number of assumptions which may prove to be incorrect. This presentation should not be
relied upon as a recommendation or forecast by Talwalkars Better Value Fitness Limited.
This presentation may contain 'forward-looking statements - that is, statements related to
future, not past, events. In this context, forward-looking statements often address our
expected future business and financial performance, and often contain words such as
'expects, 'anticipates,' 'intends,' 'plans,' 'believes,' 'seeks,' or 'will.' Forward - looking
statements by their nature address matters that are, to different degrees, uncertain.
For us, uncertainties arise from the behavior of financial markets and change in
consumption patterns; from future integration of acquired businesses; and from numerous
other matters of national, regional and global scale, including those of an environmental,
climatic, natural, political, economic, business, competitive or regulatory nature. These
uncertainties may cause our actual future results to be materially different than those
expressed in our forward-looking statements.
We do not undertake to update our forward-looking statements.

Discussion Summary

1.
2.
3.
4.
5.
6.
7.

Talwalkars (TBVFL) About us

Business Strategy
New Initiatives
Marketing Initiatives
Result Update Q1 FY13
Current Quarter Highlights
Outlook

About us overview

Pioneer in the Fitness Industry India's one of the largest fitness brand Talwalkars & HiFi with 130 health
clubs across 69 cities and towns serving over 1,26,000 members.

Talwalkars Better Value Fitness Ltd. (TBVFL) is the only listed Fitness & Wellness Company on the Indian
bourses.

In India TBVFL is one of the largest health club operating chain with pan-India presence, we are also one of
the largest health club chain in Asia.

TBVFL holds highest market share in the organised health club market in India (approx. 10%).

TBVFL has broaden its scope from being a gym player to a fitness player by introducing new initiatives such
as NuForm gym studios with a focus on weight loss and Zumba fitness program.

TBVFL has a state of the art 25000 sq. ft. residential training academy through which it produces quality
Talwalkars trainers.

TBVFL is proud to be listed in Business Today 500 - November 2011 issue.

Consistent financial performance; achieved CAGR(FY06-12) of 52.36% in Income from Operations, 55.46%
in EBITDA & 80.04% in PAT

Talwalkars is a provider of total health and fitness solutions ranging from weight loss consultation to
nutrition counselling and behaviour modification.
4

About us pan-India brand, and presence

Only organized
Player in listed space

Member base of over

1,26,000

Ludhiana
Panchkula
Amritsar
Dehradhun
Ambala
Meerut
Noid
Delhi/NCR
Ghaziabad
a
Faridabad
Bareilly
Jalandhar

Ajmer

Allahabad

Jamnagar

Ujjain
Bhavnagar

Aurangabad
Solapu
Hyderabad
r
Sangli

Singhgad

Ichalkaranji

Hubli

Mangalore

Bhila
i

Guntur

Bilaspur
Raipur

Bhubaneswar

Vishakhapatnam
Rajahmundry

Bhimavaram
Kakinada
Nellore

Bengaluru
Mysore

Chennai
Trichy

Calicut
Cochin

Coimbatore
Madurai

Thiruvananthapuram

Note
1. Cities in Red indicate more than 1 health club
2.Map not to scale

130 health clubs

spread
in 69 cities and towns
of India

One of the largest gym

chain in India and Asia

Kolkata

Secunderabad

Vijayawada

Belgaum

Pune

Ranchi
Jamshedpur

Jabalpur
Indore
Nagpur

Mumbai

Varanasi

Bhopal

Ahmedabad

Thane

Guwahati

Gwalior

Udaipur
Gandhinagar Kota

Rajkot

Aligarh

Agra Lucknow

Jaipur

Jodhpur

TBVFL

TALWALKARS
MODEL
VALIDATION

Most of the Organized Chains have presence

limited to Tier I cities .
Talwalkars has demonstrated the scalability of
health clubs by establishing presence in
smaller towns of India like Ajmer ,
Ichalkaranji, Ranchi, Jamshedpur, etc.
Talwalkars will further continue to bring
quality fitness at affordable prices across the
country.
5

About us health club details

Format

No. of Health clubs

Talwalkars Own

92

Talwalkars JV

11

Trademark Licensed

10

Talwalkars Franchise

HiFi

10

Total

130
6

About us acceptance across India

Total no. of Health Clubs

Tier Distribution

10
10
25%

31%

11

92
45%

Own

Subsidiaries

Talwalkars-Franchise

Trade mark licensed

Zonal Distribution
5%
25%

39%

HiFi

Tier I

Tier II

Tier III

Penetration across target customers spread

over tier I,II,III cities through different formats
and price points.
Opened several health clubs in the mini-metros
and mid-India towns like Ajmer, Gandhinagar,
Indore, Jamshedpur, and many more, and the
response has been ahead of our expectation.

30%

East

West

North

South

About us health club growth, membership growth

135

130

No. of Health clubs

120
34

CAGR 33%

105
90

31

75
60

128

9
12

45

94

12

30

15

23

30

FY07

FY08

63

54

42

0
As on result date

FY09

FY10

Additions

FY11

FY12

Q1 FY13

Beginning of the year

140
125

126

FY12

Q1FY13

120
100

CAGR 29%

83

80
55

60
40
20

29
19

21

FY05

FY06

59

38

As on result date

FY07

FY08

FY09
Members(in '000)

FY10

FY11

About us strengths

Consistency

Quality

Trained
manpower

Diverse service
offerings

Across all locations the health club experience remains uniform with similar
Equipment and Infrastructure.
Brand Identity ensures quality in both gym experience and member
numbers.

World Class Equipments from reputed international manufacturer, viz., Precor,

Matrix, Hoist etc.
In House Training ensures quality of the Trainers and improves the Resource
pool for rapid expansion.

Talwalkars has its own 25000 sq ft residential training academy in Thane ,

Mumbai which gives training to existing and newly recruited trainers.
The course duration typically ranges from 30-35 days.
In-house project management team
Critical to scaling up business.
TBVFL has broadened its scope from being a gym player to a fitness player.
NuForm Gym studios is one of the initiatives with a focus on Weight Loss and
Slimming Activity. Other recent initiatives include ZUMBA fitness program .
Besides the standard facilities in the Health club, TBVFL has introduced several
Value added offerings such as Spa , Aerobics , Personal Training etc.
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About us key differentiators

Market Leadership: TBVFL is one of the largest fitness chain in India with a pan- India presence. Brand
Talwalkars is present at 130 locations spread across 69 cities and towns in 18 states, serving over
1,26,000 members. The recently launched HiFi format will hasten our penetration in to the smaller
markets of the country.
Brand Equity: The brand has a strong recall. This factor along with personalized services and competitive
pricing helps in customer retention and breaking the competitive clutter of the industry, dominated by
unorganized sector.
Promoters Experience and Expertise: Company has benefited from the diverse expertise of its
Promoters. While the Talwalkars Group has several decades of experience in the health and fitness
industry, the Gawande Group has vast experience in several areas of business management including
finance marketing and legal.
Diverse service offering: TBVFL has broadened its scope from Fitness to Fitness, Wellness and Slimming
segment. NuForm Gym studios is one of the Initiatives with a focus on Weight Loss and Slimming
Activity. Also apart from the standard facilities in the health club, TBVFL has introduced ZUMBA fitness
program and other several Value added offerings such as Spa, Aerobics, Personal Training etc.
Quality and Consistent health club experience: The company assures a uniform health club experience
for its patrons, across all its locations in the country, including world-class equipments and consistent
quality of the trainers. The in-house academy provides tremendous competitive advantage in an
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industry, with shortage of quality fitness trainers.

Business Strategy high ROI, scale & low cap-ex

100%
Ownership

51%
Subsidiary

Tier 1 and Tier 2 cities

TBVFL

Franchisee
EXPANSION STRATEGY DRIVEN TO MAXIMIZE ROIC
TYPE

OWNERSHIP

CAP-EX

ROIC IMPLICATION

Talwalkars

100%

Full

Neutral

Talwalkars - Subsidiary

51%

Half

Higher

HiFi

Nil

Nil

Highest

1. Franchise get full support from TBVFL with regards to the set-up of gym, equipment, trainers etc. The
company offers a turnkey solution to its franchise partners for setting up the health club.
2. The franchise agreement entered ensures quality supervision of gym equipment , trainers , ambience
etc. by TBVFL.

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BUSINESS
Subsidiary- Salient features
Business
Strategy STRATEGY subsidiary model
Operate through Brand TALWALKARS

Subsidiary Model

Full Service health club spread over ~5000 sq ft.

Target Customers Tier 1,2 Cities

Lower Cap-ex,
Higher Returns

Low Capex due to 51% holdings in subsidiary health

club
Talwalkars receives a Royalty of 6% of Revenues for 1st
3 yrs which is 8% thereafter
Faster BEP, Higher ROIC

Buyback Option

Option to buyback subsidiary health club at any point

of time @ 3.5x EV/EBITDA multiple

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Business
StrategySTRATEGY
HiFi model
Hi-Fi FRANCHISEE
BUSINESS
from India- Salient
to Bharat
features
CAPEX FOR TALWALKARS

NIL

ROYALTY TO TBVFL ON REVENUE

Affordable

Accelerated
Expansion

Lower cap-ex,
Affordable

Target tier II-III cities

and towns

Faster roll out,

Attractive pricing

Brand
Extension

Reaching
Wider
Customer
Base

Royalty for 1st 3 years (% of Revenue)

6%

ROYALTY THEREAFTER

8%

One time Income to TBVF

One Time Upfront Royalty (`mn)

One Time Equipment Supply Charges

(` mn)

A HiFi health club would typically be a no frills format health club of ~25002800sqft, smaller than the ~5000sqft full service Talwalkars health club and low
on cap-ex.
It is an affordable format rolled out on a Franchise or JV model in the Tier II & III
cities and towns.
There are several Tier II/III cities and towns and select suburbs in large cities where a
full service Talwalkars health club would not be commercially viable.
To tap this huge opportunity, the HiFi brand is being launched in cities like
Porbander, Faridabad etc.
With a small sized format, HiFi health club can be rolled out in 8-10 weeks
against 14- 16 weeks for a typical Talwalkars health club and it would be priced
at 60% of its price points.
13

NuForm Gym Studio Weight loss with just 20mins/week

Miha Bodytec came up with the concept of losing weight through the Electro Muscle Stimulation (EMS)
technology.
Miha machines has been successfully used by thousand of users at more than 1,500 centres across Germany and
the Rest of Europe.
The same, proven German technology is now being introduced as NuForm by Talwalkars in India.
NuForm gym studio

Targeting to
select
audience

Focus on
Slimming
and Weight
Loss

Time Saving,
Convenient
Fitness
Solution

Better
Realizations2-3x normal
Gym
Membership

Standalone
High Street
Studios
Low Capex.
High ROI

Capex (`Mn)

15

Operating Expenses (`Mn)

7.5

Revenue per member (` p.a)

42000

Member Capacity per Studio

500

No. of studios opened

Talwalkars NuForm model Uses various technological tools for focussed weight loss through EMS, Diet
counselling along with food products .The EMS session is just 20 minutes work out once a week.
Target Customer Segment - Nuform is aimed to cater to potential customer that has avoided gyms due to
shortage of time, health and aging issues. Mainly Targeted as Tier- 1 cities with focus on Upwardly mobile and
Affluence class.
Benefits - Total fitness, Weight loss and fat removal, Enhanced muscle formulation and stimulation, Muscular
strength and endurance.
Standalone High Street Studios - Currently 6 NuForm Studios are operational with a member base of about 400
members in Mumbai (Andheri , Bandra , Chembur and Vile Parle) and Thane (Panch Pakhdi and Pokhran road
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Vasantvihar).

ZUMBA fitness program

Started in 2001, the ZUMBA fitness program has grown to become

the world's largest and most successful dance-fitness program
DID YOU KNOW ?
ZUMBA fitness program is practised by over more than 12 million people of all
shapes, sizes and ages taking weekly ZUMBA classes in over 110,000 locations
across more than 125 countries.
ZUMBA Fitness started with selling DVDs, then the infomercial which introduced the ZUMBA
Fitness-Party to the public on a wide-scale basis then came the demand for ZUMBA fitness program
and ZUMBA instructors.
Talwalkars has introduced ZUMBA fitness program in Talwalkars health clubs. Currently, ZUMBA
fitness program is offered across 11 location and the company plans to introduce ZUMBA program
across all gyms in a phased manner. Apart from the health clubs Talwalkars also plans to start ZUMBA
fitness program in schools, colleges etc.
Rationale for Talwalkars The launch of ZUMBA Fitness is a move towards widening its customer base
while using the team and infrastructure it already has in place, thereby seeking to consolidate its
position as the leader in the fitness industry in India.
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Marketing national market initiative

Summer Scheme

This year, the summer

season was extended
by one whole month.
Talwalkars announced a
special summer scheme
with a 30 day free
bonus to all the fitness
enthusiasts.

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Marketing
regional
initiativesINITIATIVE
NATIONAL
MARKETING
DECCAN CHARGERS Vizag Branch

Marketing social media properties (new websites)

The
company
has
upgraded its corporate
website and have added
new
websites
for
NuForm and Zumba
fitness program

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Marketing digital marketing initiative

A Webinar is an on-line seminar more of
having a live seminar experience.
The speaker in the webinar is a Consultant
who has vast experience and knowledge
speak on the various subjects.
The webinar acts as a new lead generation
tool for various health clubs. Also, the webinar
can act as a catalyst for up-selling to the
existing members the various services offered
within the gym.

Talwalkars fitness blog

Webinars & presence across social

media

Marketing digital marketing initiative

Videos Social Media Platforms

How a 20 minutes workout once

a week can keep you fit!

Talwalkars fitness blog

Marketing digital marketing initiative

myTalwalkars on Twitter

Google Ads

UNDERSTANDING
SEASONALITY
Understanding
Financial - seasonality
Given the nature of our Business, there exists a strong seasonality and hence our numbers
should be compared on a YoY basis, and not sequentially to derive the true picture
REVENUE
%

PAT %

9%

CHARACTERISTICS

Q1

Apr - Jun

19%

Q2

Jul - Sep

35% 40%

Talwalkars Annual Discount Scheme, A

big Draw

Q3

Oct - Dec

18% 10%

Festivals: Diwali, Ganesh Chaturti,

Pongal, Navratri, Dussera, Christmas

Q4

Jan - Mar

28% 41%

New Year, New resolutions sees uptake in

membership

School vacation, Monsoons

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UNDERSTANDING
Standalone
results profit SEASONALITY
& loss (Q1 FY 12-13)
Unaudited
Apr-Jun
2012

Particulars (` mn)
Income from Operations
Other Operating Income
Total
Expenditure
Personnel Cost
Admin & Other Exp
Service Tax Collected & Paid
Total
EBITDA
Depreciation
EBIT
Interest
PBT
Tax
PAT & before extraordinary Items
PAT

Jan-Mar
2012

Apr-Jun
2011

YoY%

252
2
254

307
4
311

202
5
206

25%
-55%
23%

57
86
26
170
85
31
54
23
31
5
26
26

44
81
28
152
159
26
133
23
113
39
74
74

49
72
18
139
67
26
41
19
22
4
17
17

16%
20%
44%
22%
26%
18%
31%
20%
41%
16%
47%
47%

23

Consolidated results profit & loss (Q1 FY 12-13)

Unaudited
Apr-Jun
2012

Particulars (` mn)
Income from Operations
Other Operating Income
Total
Expenditure
Personnel Cost
Admin & Other Exp
Service Tax Collected & Paid
Total
EBITDA
Depreciation
EBIT
Interest
PBT
Tax
PAT & before extraordinary Items
PAT before Minority Interest
Minority Interest
Net Profit After Minority Interest

Jan-Mar
2012

Apr-Jun
2011

YoY%

285
2
287

412
5
417

232
5
236

23%
-55%
21%

65
98
30
193
94
33
61
25
36
5
31
31
3
28

56
117
30
203
214
29
185
28
160
45
115
115
20
95

55
81
21
157
79
28
51
22
29
6
23
23
3
20

18%
21%
42%
23%
19%
17%
20%
14%
24%
-11%
33%
33%
-12%
40%

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UNDERSTANDING
Consolidated
results profitSEASONALITY
& loss (Q1 FY 12-13)
Notes
1 The above results were reviewed by the Audit Committee and approved by the Board of Directors at their meeting held on 9th August,
2012.
2 The Statutory Auditors have carried out a limited review of the results for the quarter ended 30th June, 2012.
3 The above financial results are in accordance with the accounting policies followed by the Company in preparation of its statutory
accounts.
4 Consolidated financial results have been prepared in accordance with Accounting Standard 21 - "Consolidated Financial Statements"
and Accounting Standard 23 - "Accounting for Investment in Associates in Consolidated Financial Statements".
5 There are no qualifications raised by the Auditors in the Limited Review Report.
6 There are no separate reportable segments as per Accounting Standards (AS17) Segment Reporting.
7 The company has 130 Healthclub and Gyms across 69 cities and towns in India. The company has started Zumba classes in 11 centres
across 8 towns in India.
Status of Investors complaints for the quarter ended 30th June, 2012:
Remaining unresolved at the end of the
Received during
Disposed Off
Pending at the beginning of the quarter
quarter
quarter
during the quarter
Nil
Nil
8
Nil
Nil
9 The Consolidated results includes the financial results of the subsidiaries Aspire Fitness Private Limited, Denovo Enterprises Private
Limited, Equinox Wellness Private Limited and Jyotsna Fitness Private Limited
10 Information of Standalone Accounts as per Clause 41 of Listing Agreement.
Year ended
Quarter ended
Particulars
30.06.2011
31.03.2012
30.06.2012
31.03.2012
Unaudited
Audited
Unaudited
Unaudited
1,880.18
10,088.02
2,277.63
2,835.64
Turnover
217.13
2,810.96
305.95
1,131.16
Profit before Tax
173.71
1,919.67
255.76
737.70
Profit after Tax
11 The Company has opted to publish only the Consolidated financial results. The standalone results of the Company will be available for
Investors at www.talwalkars.net, www.nseindia.com and www.bseindia.com.
12 The current period figures in this statement have been reported in the amended format as per the SEBI circular dated 16th April 2012,
25
accordingly previous period / year figures have also been regrouped / reclassified to confirm with the current period presentation.

UNDERSTANDING
SEASONALITY
Highlights
Financial (Consolidated)
The financials vary quarter on quarter because of strong seasonal variations as explained.
The current quarter being a subdued quarter is not comparable with the previous quarter
results.

The Income from operations has increased by 23% and stood at ` 287 mn while PAT after
minority interest has increased by 40% over Q1 of previous year. The Profit after minority
interest for the current quarter is ` 28 mn. The company was also able to generate
additional revenue by offering additional facilities such as Nu-form.
PAT as percentage of turnover has increased by 100 basis points over same quarter of
previous year. Historically Q2 is a better quarter and generally 30-35% of annual PAT is
generated in this quarter. We have received robust response in the first 8 days of the
August scheme and have achieved the initial target.
In spite of high inflation and increase in service tax rates the company was able to maintain
its EBITDA at 33% as compared to same quarter previous year aided by new initiatives.
The increase in Personnel cost and Administration and other expenses is mainly on account
of increase in number of gyms.
26

BUSINESS
STRATEGY- Subsidiary- Salient features
Highlights
- General

Total number of Health clubs has increased to 130. Currently present in 69 cities and towns
of India.

Total number of members increased to over 1,26,000 as on date with strong demand seen in
Tier 2-3 towns which have seen a significant trend of becoming members of gym and fitness
activity.

New Initiatives introduced by TBVFL

NuForm is a new category of health and fitness studios which focuses primarily on
weight loss and caters to upwardly mobile and affluence class of audience.

Currently 6 NuForm Studios with a member base of about 400 are operational in
Mumbai (Andheri, Bandra, Chembur and Vile Parle) and Thane (Panch Pakhdi and
Pokhran road Vasantvihar).

TBVFL has launched ZUMBA fitness program in India and plans to introduce across all
gyms in a phased manner. Currently, the ZUMBA fitness program is offered across 11
gyms. Apart from the gyms Talwalkars also plans to start ZUMBA fitness program in
schools, colleges etc.

On-Ground Performance: - The Talwalkars Ichalkaranji health club received a great response
with 350 members enrolling in health club in less than one month itself and in Ajmer also
around 250 members enrolled during the first month on its inauguration.
27

Growth Strategy- Same Store Growth

The company introduced spa services in 4 of its locations, enhancing the same store sales
growth. The spa services are launched as premium services thereby increasing the
revenue generated per member. The company has spa services in 13 locations across
India.
There has been an increasing demand for personal training and the company with its
quality trainers has been able to cater this demand and enhance revenue from members
availing such services to the tune of 30-40% per member.

The recent initiative of the company NuForm gym studios has received satisfactory
response which generates a higher realisation than the normal gym membership. The
NuForm fees is ` 42000/- per annum. The company has also launched other weight loss
initiative to leverage on the current customer base which have also been introduced in
gym.
The company has launched Zumba fitness program in 11 locations. Average fee charged
for aerobics is around ` 750 per month while that for Zumba classes is ` 2500 per
month generating about 3x more of aerobics fee. The positive response for the Zumba
classes will enable the company to increase rates for Zumba classes along with
increasing the number of centres for Zumba classes.
Diet food under the brand Reduce has been introduced on trial basis in the Bangaluru
28
based health clubs. The initial fees is about ` 20,000 per Quarter.

UNDERSTANDING SEASONALITY
Outlook
TBVFL continues to dominate the health an fitness industry with 130 health
clubs spread across 69 cities and towns. TBVFL has proved its credentials in
running successful health club not only in larger cities but also smaller towns.
The company sees strong demand and potential in tier II-III cities and towns of
India with increased awareness. The company is focussed in penetrating in to
these cities and towns to reach a wider customer base and enhance profitability.
Increasing Focus on Optimizing Product offerings and introducing New Services
to Leverage the Current Asset base and Customer portfolio.
The company new initiatives - NuForm and Zumba fitness program has
received satisfactory response. The company believes these initiatives will help
in increasing average revenue per member and also widen the customer base.
The Company has shown a robust increase in Turnover and profitability on an
annualized basis commensurate to its existing growth pattern. The Company
expects to maintain the margins in the current year both at EBIDTA and PAT
level.
29

THANK YOU!
FOR FURTHER INFORMATION, CONTACT

Anant Gawande, Promoter and Director

Talwalkars Better Value Fitness Limited
anantg@talwalkars.net
+91 22 66126300

Prashant Desai, Founder

Seagull Value Consultants LLP
prashant@theseagull.in
+919820063106
30