full annual report tbvfl

Promoting fi tness enhances the health of our memberswhile adding to the wealth ofour shareholders

• Corporate I nformation ..............................................................................5

• Chairman’s Speech ..................................................................................9

• Financial Performance ............................................................................10

• Management Discussion & Analysis .........................................................12

• Director’s Report ....................................................................................28

• Report on Corporate Governance ............................................................36

• Financial I nformation ..............................................................................65

Contents

5

Board of DirectorsMadhukar Talwalkar - Executive Chairman

Prashant Talwalkar - Managing Director & CEO

Vinayak Gawande - Whole-time Director

Girish Talwalkar - Whole-time Director

Harsha Bhatkal - Whole-time Director

Anant Gawande - Whole-time Director & CFO

Manohar Bhide - Independent Director

Roman Maroo - Independent Director

Mohan Jaykar - Independent Director

Avinash Phadke - Independent Director

Glenn Saldanha - Independent Director

Abhijeet Patil - Independent Director

Company SecretaryAvanti Sankav

Statutory AuditorsSaraf Gurkar & Associates, Chartered Accountants,

201 Shreyas, Moghul Lane, Mahim (West), Mumbai - 400 016.

BankersUnion Bank of India

Registrar & Share Transfer AgentsLink Intime India Private Ltd, C-13,Pannalal Silk Mills Compound,

L.B.S. Marg Bhandup (West), Mumbai - 400 078.

Registered Offi ce801-813, Mahalaxmi Chambers,

22, Bhulabhai Desai Road, Mumbai - 400 026.

Annual Report 2010-2011

Corporate Information

VIGOROUS

EXPANSIO

ROBUST G

HEALTHIE

SOCIETY.

S

ON.

GROWTH.

ER _19321932Set up 1st health club78 years ago

20032003Set up TBVF to expand rapidly with systems and training academy

201020101st IPO by a fitness company in India

20112011Market leader with 100 health clubs in50+ cities

Dear Shareholders,

Good Morning!

This is my greeting to every person I meet regardless of the time of day because I truly believe that like the rising Sun we all must fi ll life’s moments with sunshine and hope for a better tomorrow. Each day should be a forerunner 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 “Healthy India Fit India”! We have started this year with a total of 63 health clubs in 32 cities and have successfully managed to grow to 100+ health clubs in over 50 cities across the length and breadth of the country.

Stress is probably the number one factor today for a large percentage of ailments, both physical, and mental. A healthy body leads to a healthy mind and a healthy mind leads to perfection and progress both in material

and 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 turning to traditional and alternative systems of healing which are in harmony with nature to maintain well being in such times. 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 aim higher 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 briefl y enumerate here below.

Your Company has been able to sustain momentum by building strong regional teams, decentralizing authority and being responsive to the needs of the customer. It has been able to react to the changing needs of the customer 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 to cater to its clientele apart from the standardized gym packages. The company has also ventured into Tier III and IV towns in India under its sub brand “ HI FI” gyms which provides fi tness and health at lower costs making it accessible 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, fi tness and recreational area where the upper end of the spectrum can derive benefi ts and utilize it optimally. With this concept in mind, your Company has plans of setting up such a development in highly populous urban areas so as to become a holistic provider of fi tness 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 their unfl inching 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 promise to 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 regards

Mr Madhukar Talwalkar

Chairman

Chairman’s Speech

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asis

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2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

0

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643.1

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2597.9

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10001017.8

2240.4

3808.9

5951.8

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2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

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TOTAL TURNOVERR

s. (i

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8652.0

3837.5

1759.0

329.0

EBIT

DA

EBITDA

Financial Performance

11

No. of Gyms

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

0

200

1523

400

600

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56

174

599673

794

PROFIT AFTER TAX

Rs.

(in

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)

Prof

it af

ter

tax

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ne b

asis

)

Annual Report 2010-2011

73

811

9

Total Number of Health Clubs (as on 30th June, 2011)

Owned

Subsidiary

Trademark Licensed

Franchised

Financial Performance

Introduction:

For years India has been the second-fastest growing major economy in the world. According to World Bank data that could soon change, with the Indian economy set to expand at a faster pace than the Chinese economy in 2012. This is expected to result from continued high demand in India even as it measures to combat overheating slow down the Chinese economy.The multilateral agency`s World Economic Outlook has projected that India will grow at 8.7% in 2012 compared to China`s 8.4%.

The Indian economy has benefi ted from strong domestic demand and a revival in investor and consumer sentiment although higher interest rates are expected to shave off a few basis points from the overall growth rate. Improved external demand and stronger private capital infl ows have also played a role. This year, a favourable monsoon has helped the farm sector expand and has in the process boosted rural demand as well. “For us, 8.7% is probably closer to our trend growth,” said Pronab Sen, senior advisor in the Planning Commission. Currently at a $1.3 trillion economy size, India is poised to grow in numbers as well.

These factors have had two major positive impacts on the operational performance of the Company and its future strategy.

Firstly, steady acceleration in economic growth has meant that consumer confi dence has improved signifi cantly. This has resulted in an increase in membership and the Company has crossed the 1,00,000 member mark in its fl agship brand, Talwalkars Health clubs. Along with the growth in members, the Company has developed a strong pipeline for new products for different socio economic segments of the market which it plans to implement over the next few years.

Secondly, the increasing incidence of lifestyle diseases and increased awareness of health benefi ts has made the Indian consumer across the country demand better facilities in improving their health and fi tness levels. This has played an important role in increasing membership for your Company.

Market Opportunities

Being fi t and healthy has never been as popular or as necessary as it is today. With millions of people eager to lose weight and get in shape the fi tness and wellness industry is one of the fastest growing industry today.

It is important to note that the contribution of the services sector to the Indian economy has been manifold: a 55.2 % share in gross domestic product (GDP) growing by 10 per cent annually, contributing to about a quarter of total employment.

However, market penetration in India is low compared to several developed and developing countries of the world. The main reason for this is that the fi tness industry in India is highly fragmented since the majority of the market appears to be dominated by large number of unorganized gyms. Secondly the market also appears to have a shortage of talent, since qualifi ed personal trainers; nutrition consultants and professional managers are scarce.

Further due to a strong and sustained growth in the economy, disposable incomes have increased at a signifi cant pace creating a huge demand for fi tness centres, health clubs etc. According to a recent research by the Mckinsey Global Institute, the number of household earning over 5 lakhs per annum will increase from 3.6 million in 2005 to 8.8 million in 2015. Studies have shown that rural and semi-urban population is increasing expenditure towards discretionary and luxury due to increase in disposable income.

Management Discussion & Analysis

13Annual Report 2010-2011

Company Overview

The 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 now has 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, a well trained and courteous staff and a welcoming ambience: all making for a facility that will look after the health and wellness of its members. Your Company is also working towards fl anking its main Talwalkars Health Club brand on both sides of the value spectrum by creating a value gym for smaller towns and a new wellness and sports complex for the rising affl uent urban population.

* Map not to scale


Your Company has adopted various business models in the process of its growth and its over 100 health clubs today is a combination of Company operated health clubs, trademark licensed health clubs , franchised health clubs and subsidiaries.

Performance Driversa. Favourable demographics

As per a recent study India currently has over 300 mn people in the 25-30 age bracket and by 2016, 40% of the population will be in the 20-44 age group. Thus even assuming a modest 1% of this population enrolls into a health club, in sheer numbers, the potential addition to the fi tness market in India is staggering.

b. Rigorous training through an in-house training academy :

Your Company is one of the fi rst health clubs in India to have its own residential training academy spread over 25000sq.ft in Thane, near Mumbai. The training academy also includes well furnished residential accommodation along with the pantry. This ensures that staff recruited


from 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 and participation.

Imparting training in all aspects of the business has helped your Company to sustain nearly the same environment between its branches in the metropolitan cities and the Tier II and III counterparts, accounting for standardisation.

The training academy includes :

• An In-house gym :

Your Company has replicated an actual gym fl oor in its Training Academy equipped with same quality of equipments, both for cardio, strength and free weights, so as to ensure familiarity of usage and achieving maximum results for its users.

• Inhouse and visiting faculty

Your Company has a In-house faculty as well as experts who come as visiting faculty to train our students on each and every aspect of health club operations from diet and nutrition to exercise techniques.

Apart from gym training the staff is trained in grooming and etiquette. This ensures that 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 Profi t centre :

There is a dedicated fl oor in the training academy that is devoted to training the staff in the Company’s spas. In order to reduce the cost of the training the spa at the academy also offers services on a commercial basis to customers under the brand “Sparsh”.

c. Hub and Spoke model

The Company follows a hub and spoke model wherein the day to day operations are decentralized and headed by local teams. This is then supervised by roaming managers who ensure strict and stringent quality checks and balances. This model has helped the Company rapidly expand its footprint in smaller towns in India, where the local knowledge of customer profi les aided by a technical quality check and system control has ensured benefi ts for both the customer and the Company.

d. Pan India Presence

• Customer Knowledge : Having a pan- India presence helps the Company to know what a customer is looking for in a health club and what his expectations are. The Company has been able to take benefi ts of local traditions and customs of a particular area and use it effectively to market its product to the customer in that region. For example, in Ahmedabad during Uttarayan the local health clubs ran several open air competitions in the stadium, gave out free branded kites to its members thus using a knowledge of local customs to effectively widen brand presence in the city during that period.


With a formidable network of over 100 outlets, Talwalkars’ mission to promote fitness has gathered momentum. Make no mistake, India is getting healthier!

• Appropriate Locations : The Company’s has devised set parameters which help locate best possible 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 been able to lock in attractive rental rates for a long tenure.

• Fragmented Industry: India has today a fragmented health and fi tness industry, where even though the demand for quality services is high the supply is largely unorganized and non-standardized.Your Company benefi ts immensely due to its pan- India presence and being a national player with a formidable strength in numbers and reach.

e. Proven track record of services offered driven by experienced management team

Your Company is Professionally run with a board comprising of independent directors who are stalwarts in their domain. The Company has a high brand recall , which enables it to be ahead of its competitors.

Business Strategy

Introduction of a new business modela.

After considerable expansion in Metros, Mini Metros and Tier II cities in India , your Company is all set to take its expansion to the next level with a new concept in gyms which will enable the middle income population in the smaller towns and cities across India to avail of high quality gyms at reasonable prices. The new concept Healthy India Fit India Movement was launched through its new value brand “HI FI”. The fi rst HI FI gym was opened on 9th June,2011 at Pune, to test this concept.

HI FI will make your Company’s dream of making fi tness facilities available to the masses across India a reality. HI FI is an integral part of the way forward, and its development will lead to 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 all the 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 lower capex cost. Considerable research has gone into evolving a model, which aided by the signifi cant economies of scale that have been planned for HI FI, will mean that each gym is expected to cost only between ` 75 lakhs to ` 95 lakhs .

This will mainly be franchised yet a value added concept. This will enable our Company to consolidate its position fi rmly across India and generate high revenues from both royalty and franchisee fees.



Brand Promotion and Enhancementb.

After being the Offi cial Fitness partner for the Standard Chartered Mumbai Marathon in 2008 and 2009 and the Femina Miss India Contest in 2009, your Company has become the offi cial fi tness partner of one of the most awaited events in India – The Kingfi sher Calendar Girl Hunt .The Kingfi sher Calendar Hunt 2010 was a strategic step towards defi ning our brand positioning and enhancing the brand recall. We are looking forward to creating many more such brand associations in the rapidly expanding wellness segment in India.

Marketingc.

This year the marketing approach towards spreading awareness about opening of the Company’s new health clubs, attractive offers, launch of new products etc. was geared towards making a signifi cant impact in the minds of the target consumer. The idea was to promote the brand 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 with a focus on brand building. The Company has actively used web based promotions on social network sites, TV and print media for its marketing efforts.

The New Year’s Resolution offer was targeted to create mass consciousness within consumers about the benefi ts of healthy living and there was no better occasion to start that with than the New Year.

Womens Day Offer Café Coffee day Offer New Year Offers

Kiloburner

During the year the Company launched Kiloburner, which is a systematic weight loss programme wherein a group of nutritional and fi tness experts assess the physical condition of the member and taking in to account the member’s habits, preferences and lifestyle and chalk out a special diet-n-exercise routine for them while monitoring their progress. There are assorted weight loss and weight administration programmes under the Kiloburner brand that would suit different age groups and would reduce weight as per the member’s requirement. Kiloburner is being actively promoted by an array of television commercials, digital media, mobile and sms marketing.


Market Leadership

Scaleability of the model a.

Your Company has set up 100+ health clubs in over 50 cities in India in a short span of 7 years from inception. It is determined to make its presence felt strongly not only in metros, mini metros but also in Tier – III and IV towns through various formats of its health clubs. Majority of the health clubs operated by the Company are on a ownership model and some are on a joint venture franchised and subsidiary models. The Company has acquired a majority stake in its Joint Venture partner companies, so as to ensure consolidation of the business and rapid expansion into newer locations. This ensures quality controls and standardized formats for all its health clubs across the country.

Systems drivenb.

Your Company has a lean and effi cient organisational structure, which enables it to forge ahead in a competitive environment. Various types of reports such as qualitative, quantitive, organizational, fi nancial etc are generated on a monthly basis which enables the management to take timely decisions. The Company has a multi layered staffi ng structure, where regional managers 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 immediately through software integration and action is taken on a priority basis, so as to ensure higher revenues from each health club and revenue generated per member.

Internal Audit c.

Your Company has a strong internal audit system, which is undertaken on a monthly basis. The Company has set up several checks and balances to ensure that there are no leakages in the system. Each branch has a independent internal auditor who reports to the management on any 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 franchised outlets is also on schedule.

Value and Volume growth drivene.

It is your Company’s motto to “spread fi tness” and with this motto, it has grown to over 100 locations across India, resulting into both volume growth as well as providing an array of services 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 branches of the Company and provides a high degree of assurance with regard to effectiveness and effi ciency of the following:



Business operations �

Safeguarding of Company Assets and �

Compliance with various laws & regulations �

It 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 signifi cant expenditures in addition to regular operations. A quarterly review of the audit fi ndings is conducted by the management, as also the audit committee of the Board.

Discussion on Operational Reporting & Financial Analysis

Operating Performance a.

As a conscious strategy of building a network of branches with effective penetration, your Company continued to enlarge its geographical coverage of centres with potential for growth, especially in untapped areas in Tier – II and Tier- III cities, with a population of at least 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 main Company and has presented results on that basis. Due to a signifi cant improvement in earnings, there has been an all-round improvement in various fi nancial metrics, which is enumerated below in the fi nancial reporting segment.

Financial Reporting on Standalone Basisb.

Total Income :

The Company has registered a total income of ` 8,841.46 lakhs marking a growth of 32.96% in comparison to the last year income of ` 6,649.84 lakhs .This growth can be attributed to the robust expansion of our health clubs across India as also due to new products introduced during the year. Out of this, revenue from operations contribute a growth 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 costs

It is the constant endeavor of the Company to reduce and control costs. The operating cost for the current year is ̀ 5,003. 94 lakhs in comparison to last year’s ̀ 4,051.95 lakhs , even though the number of health clubs has gone up substantially. On a comparative basis to income from operations the costs have actually gone down by 3.5% over last year.

PBDIT

Profi t 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 a signifi cant growth of 47.72%. This is attributable to various factors like stringent internal controls, effective cost cutting strategies, economies of scale etc.

The CAGR of PBDIT over the last 6 years is 63.44%


Financial Expenses

There is noteworthy decline in the weighted average cost of borrowings of around 9%, which is attributable to the constant efforts of the management which is constantly negotiating with the bankers for benefi t of lower interest rates on the advances, negotiating for better LC margins etc. The effect of equity funds raised in the IPO has also had a salutary impact on the overall expense head. The Financial expenses for the current year is ` 808.76 lakhs in comparison to last year’s ` 735.95 lakhs

Depreciation

Depreciation is provided on Straight Line Method at the rates prescribed in Schedule XIV of 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 been set up in the current year.

Profi t Before Tax

Profi t Before tax has accelerated from ` 1,158.91 lakhs in F.Y 2009-10 to ` 2231.76 lakhs in 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%

Profi t after Tax

Profi t after tax has also accelerated from ` 793.69 lakhs in F.Y 2009-10 to ` 1,522.69 lakhs in the current year, resulting an increase of 91.85%. There is an increase in margin of PAT to Income from Operations margin of 5.6% over last year.

The CAGR of PAT over the last 6 years is 93.38%

Human Resources

People are the most important source for your Company. The staff is the Company’s principal point of contact with customers. The Company always believes good staff attracts good business. It has designed practices to attract and retain skilled talent and its HR processes and policies are aligned to enable employees to meet their career objectives. Your Company strives to maintain standardization and upgrades the knowledge base of its manpower through intensive training at its Training academy at Thane, near Mumbai. Your Company also regularly sends its senior personnel to USA and Europe to attend trade fairs and seminars to keep them abreast of latest techniques and to offer them industry insight.



Information Technology

Your Company continuously endeavors to strengthen its infrastructure and technology. In this technology intensive environment any disruption of service could have adverse effects.

Risk Management and Internal control

Your Company has a strong risk management framework which is constantly reviewed for its relevance and assessment of risk. Your Company has established an audit process comprising internal audits to ensure adequacy and effectiveness of the controls across IT systems and compliance with the operating systems, internal policies and regulatory requirements.

Environment, Health and Safety

Environment, Health and Safety (EHS) is one of the primary concerns for your Company. To mitigate risk to its members and damage to equipments from serious electrical fl uctuations your Company employs electronic devices like UPS and automatic panels. Safety systems and processes developed and implemented across the sites creates a safe workplace. Based on periodic safety audits necessary corrective and preventive measures are undertaken on priority basis.

Your Company also gives priority and attention to the health and safety of its employees and trains all its employees to work as per the prescribed procedures.

Energy Conservation

Your Company is highly committed to the cause of protecting the environment. Consistent efforts are made to conserve energy through use of effi cient air conditioners using eco-friendly refrigerants and lighting systems. In some of the health clubs of the Company solar panels has been installed for certain part of the power requirements.


Risk , Concerns, Threats

Global players entering the market a.

Your Company operates in the competitive market and faces stiff competition from other players operating both in the organized and the unorganized sector. Some foreign players have also entered the Indian market. Pricing plays an important role in the customer’s selection of the Company’s services. There are several strategies adopted by competitors to increase their market share. A highly competitive market will lead to an adverse effects on the Company’s profi tability.

Staff selection in cities across Indiab.

Your Company is in the service industry, hence human resources is as a vital factor in its success or failure. Since we are expanding all over India selection of the staff in remote areas becomes a challenge.

People are still hesitant to disclose that they are working in a gym, though a bulk of fi tness trainers came from a less affl uent class of society. Further in India fi tness is still not a priority for women, hence fi nding women trainers who are fi t to pose as examples is diffi cult. This trend however, is changing gradually.

Even as staffi ng 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 that few people are willing to do.

There is a signifi cant need for professionals with skills necessary to perform the services we offer to clients. We are overcoming this weakness by giving the staff full fl edged training at our Training Academy. Apart from training on fi tness techniques your Company also educates the trainees with regards to manners, etiquette etc.

Government regulations :c.

The health and wellness Industry as a whole lacks government support. The services provided by 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 are some of the steps the government could take to promote the growth of the industry thereby saving substantial resources on healthcare.

Macroeconomic risks: d.

Factors such as recession, infl ation, defl ation, stock market performance and unemployment infl uence income levels and eventually shape the consumers purchasing patterns thereby infl uencing consumer demand for the company’s products. There is a direct linkage between consumer confi dence and spending that is determined by general economic conditions and discretionary income levels.

The Company has initiated measures to curtail its impact.



Operational Risks:e.

Operational risks mainly relate to meeting the customer expectations in terms of quality of service and maintaining a balance between rapid expansion and membership numbers. These assume signifi cance given the importance of quality service offerings.

To set up new health clubs your company has identifi ed a pipeline of excellent potential new sites and its strong operational cash fl ows 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 Company to risks in terms of having adequate funds at competitive rates to fi nance its growth.

The current tight liquidity scenario wherein the RBI is raising the BPLR on a constant basis is an area of concern for the entire economy.

The Company has an A+ rating to mitigate this problem and has also sought better terms from its bankers for all transactions.

Outlook

It 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 fi tness and wellness industry. We have over the years developed capabilities and acquired strength to take full advantage of the opportunities presented in the fi tness market. The thrust will remain on health club expansion and providing qualitative and standardized services, marketing strategies and achieving overall operational excellence.

The customer is the key focus of your organization. An analysis of drivers explain growth factors such as increasing health and fi tness consciousness amongst Indians, increasing spending power, increase in number of sports events, unsaturated market etc, thus presenting a huge opportunity for the health and fi tness industry in over 80 towns having a population greater than 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 viewed as a signifi cant move to make your Company’s network stronger and widely spread across the country.

The Company has also planned forays into other integrated sports and fi tness activity centre in densely populated urban clusters to reach out to the top end of the spectrum.


As a responsible player in the wellness industry, Talwalkars is more than just a gymnasium chain. We are a provider of total health and fitness solutions ranging from weight loss consultation to nutrition counselling and behaviour modification.

Spreading fitness and wellness to every corner of India

To,The Members ofTalwalkars Better Value Fitness Limited.

Your directors are pleased to present 8th Annual Report together with the audited fi nancial statements for the year ended 31st March, 2011:

Financial Results:

The fi nancial performance of the Company for the fi nancial year ended 31st March, 2011 is summarised below:

Summarised Financial Results (Rs. In Lacs)

Standalone Consolidated

31st March, 2011 31st March, 2010 31st March, 2011

Total Income 8,841.46 6,649.84 10,434.37

Profi t before interest, depreciation and taxation 3,837.52 2,597.89 4213.68

Financial Expenses 735.95 808.76 859.34

Depreciation 833.36 608.90 895.47

Add: Extraordinary Items (36.44) (21.32) (36.44)

Profi t before tax 2,231.77 1,158.91 2,421.48

Provision for taxation 447.20 212.31 459.19

Add/( Less): Deferred Tax 261.88 152.90 277.98

Profi t after tax but before minority interest 1,522.69 793.70 1,684.31

Share of minority interest - - 81.21

Profi t after tax 1,522.69 793.70 1,603.10

Add: Balance brought forward 1,822.44 1522.86 1810.43

Total available for appropriation 3,345.13 2,316.56 3,413.53

Less: General Reserve

Effect of Change in AS-11 - 23.86 -

Effect of previous year’s Deferred Tax Liability - 329.19 -

Proposed Dividend 241.16 120.58 241.16

Corporate Dividend Tax 40.03 20.49 40.03

Debenture Redemption reserve 22.60 - 22.60

Balance carried forward 3,041.34 1,822.44 3,109.74

Director’s Report


Dividend:

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 31st March, 2011. The amount 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 Analysis Report.

IPO:

The Company made an Initial Public Offer (IPO) of 60,50,000 equity shares of Rs. 10/- each at the price band of Rs. 123/- to Rs. 128/-. The issue was opened on 21st April, 2010 and was closed on 23rd April, 2010. There was overwhelming response from all categories of the investors and the Company’s shares were oversubscribed by 28.21 times. The category wise subscription details are given below:

Category No. of Applications Received

No. of Equity Shares

No. of times Subscribed

Qualifi ed 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 28.2132

The Company, in consultation with India Infoline Limited, Book Running Lead Manager determined the price of Rs. 128/- per equity share (including a share premium of Rs. 118/- per equity share) for cash aggregating to Rs. 77,44,00,000/-. The issue constituted 25.09% of the fully diluted post issue paid up capital of the Company.

The Company had appointed National Stock Exchange of India Limited (NSE) as its designated stock exchange. The Company applied to National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) for listing approval. The Company’s equity shares were listed on both the Stock Exchanges on Monday, 10th May, 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 31st March, 2011 are as stated below:

Particulars Fund requirement as stated in Prospectus

Deployment of Funds as on 31st 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 6,672.00

Director’s Report

Listing of Securities:

The Company’s equity shares are listed on the National Stock Exchange of India Limited (NSE) and on the 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, on Private Placement basis, 300 Non-Convertible Debt Securities of Rs. 10,00,000/- each aggregating to Rs. 30,00,00,000/-. The proceeds of which are utilised for general corporate purpose of the Company.

Subsidiary Companies:

Your Company has (03) Three subsidiaries as on 31st March, 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 8th February, 2005, was the joint venture Company. DEPL was converted from the JVC to Subsidiary Company vide approval of the Board of Directors granted in the Meeting held on 28th October, 2010.

Equinox Wellness Private Limited (EWPL).2.

Equinox Wellness Private Limited, incorporated on 8th June, 2004, is step-down subsidiary of your Company (Subsidiary of DEPL). EWPL was converted to subsidiary company vide approval of the Board of Directors granted in the Meeting held on 28th October, 2010.

Aspire Fitness Private Limited (AFPL).3.

Aspire Fitness Private Limited, incorporated on 5th December, 2009, was the joint venture company. AFPL was converted from JVC to Subsidiary Company vide approval of the Board of Directors granted in the Meeting held on 28th October, 2010.

Director’s Report


Fixed Deposits:

During the year under review Company has not accepted any fi xed deposits from the public falling within the 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 disqualifi ed being appointed as directors as specifi ed u/s 274(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 the Company, 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 and confi rm 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 the state of affairs of the Company at the end of the fi nancial year ended on 31st March, 2011 and of the profi t of the Company for that year;

the Directors have taken proper and suffi cient care for the maintenance of adequate accounting (c) records for the year ended 31st March, 2011 in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for prevention and detection of fraud and 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 the Companies 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 Companies

Part A & B pertaining to conservation of energy and technology absorption are not applicable 1. to the Company.

(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are as under:

Director’s Report

Foreign Exchange earnings and outgo:2.

Earnings - NIL

Outgo - Rs. 1113.2 Lacs

Corporate Governance:

Transparency is the cornerstone of your Company’s philosophy and all requirements of Corporate Governance are adhered to both in letter and spirit. The Audit Committee, shareholders/ Investors

as required in terms of Clause 49 of the Listing Agreement. Your Board of Directors has taken all necessary steps to ensure compliance with all statutory and listing requirements. The Directors and key management personnel of your Company have complied with the code of conduct which was put in place by the Board of Directors. Apart from being in compliance with all requirements of clause 49 of the Listing Agreement, your Company has voluntarily adopted certain governance principles. Setting up of the Remuneration Committee of Directors and introduction of a Model code for Insider Trading are 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 this Report. A Certifi cate from Practicing Company Secretary on compliance with Corporate Governance requirements along with a certifi cate from the CEO and CFO as required under Clause 49 of the Listing 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 qualifi ed their Report stating that the Statements have been consolidated based on unaudited fi nancial statements. This relates to Denovo Enterprise Private Limited which expressed its inability to provide audited fi nancial accounts as it is not following 31st March as its year end and hence its accounts are not audited as on that date. The Management of the Company, however, has provided the accounts of the Subsidiary as on 31st March, 2011 duly certifi ed by its management and the statutory auditors.

Acknowledgement:

The Board wishes to place on record its appreciation of sincere efforts put in by the employees of the Company, in helping it reach its current growth level.

Grievance, Share Allotement and Share Transfer Committee; of the Board meet at regular interval

Clause 2: Unaudited Financial Statements of a Subsidiary:

Auditors’ Report on Consolidated Financial Statements:

Director’s Report


Your Directors place on record their appreciation for the support and assistance received from the investors, customers, vendors, bankers, fi nancial institutions, business associates, regulatory and government authorities.

For and on behalf of the BoardTalwalkars Better Value Fitness Limited.

Prashant Talwalkar Anant GawandeManaging Director & CEO Whole-time Director & CFO

Date: 14th June 2011Place: Mumbai

Director’s Report

The scalability of our business model has demonstrated a winning formula of acumen and commitment, and seen Talwalkars set up over 100 health clubs in more than 50 towns in India.

Add experience

and technical

know-how to

ambition to

multiply

the results

The Report on Corporate Governance in compliance with Clause 49 of the Listing Agreement with the Stock Exchanges is as follows:

Company’s Philosophy on Corporate Governance:

Talwalkars Better Value Fitness Limited believes that good Corporate Governance is essential to achieve long-term corporate goals, enhance shareholders’ value and attain highest level of transparency. The Company is committed to achieve the highest standard of Corporate Governance, accountability and equity in all facets of its operations and in all interaction with stakeholders. The Company believes that all its operations and actions must serve the underlined goal of enhancing customers’ satisfaction and shareholders’ 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 is Managing 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 and professionalism.

During the year, eight Board Meetings were held on 15th April, 2010, 28th April, 2010, 4th May, 2010, 7th July, 2010, 12th August, 2010, 23rd September, 2010, 28th October, 2010 and 27th January, 2011.

B. The Composition of the Board of Directors, their attendance at the board meeting during the year and at the last Annual General Meeting along with number of other directorships, committee chairmanship/memberships is as follows:

Name of Directors

Category of No. of Board Meetings Attended

Attendance at last AGM held on 23.09.2010

No. of Directorships in all other Companies *

Committee Memberships/ Chairmanship in all Companies **

Member Chairman

Mr. Madhukar Talwalkar EC 07 Yes Nil Nil Nil

Mr. Prashant Talwalkar MD & CEO 08 Yes Nil Nil Nil

Mr. Vinayak Gawande WTD 07 Yes 01 Nil Nil

Mr. Girish Talwalkar WTD 07 Yes Nil 01 Nil

Mr. Harsha Bhatkal WTD 08 Yes 01 Nil Nil

Mr. Anant Gawande WTD & CFO 08 Yes 01 02 Nil

Directorship

Report on Corporate Governance


Mr. Manohar Bhide ID 07 Yes 04 03 01

Mr. Raman Maroo ID 07 No 01 Nil Nil

Mr. Mohan Jayakar ID 05 Yes 07 Nil Nil

Dr. Avinash Phadke ID 08 Yes Nil 01 Nil

Mr. Abhijeet Patil ID 06 Yes Nil 02 02

Mr. Glenn Saldanha ID 04 No 03 01 Nil

Note:

* Directorships across all the companies excluding Private Companies, Foreign Companies and Companies registered under Section 25 of the Companies Act, 1956.

** Chairmanship and Membership of Audit Committee and Shareholders/ Investors Grievance, Share Allotment and Share Transfer Committee only for membership across all the companies excluding Private Companies, Foreign Companies and Companies registered under Section 25 of the Companies Act, 1956.

EC – Executive Chairman, MD & CEO – Managing Director & Chief Executive Offi cer WTD & CFO – Whole-time Director & Chief Financial Offi cer, WTD – Whole-time Director, ID – Independent Director

Except sitting fees, no other remuneration is paid to Independent Directors. Leave of absence is granted to the directors absent for meetings.

C. Relationship between Directors:

Mr. Madhukar Vishnu Talwalkar, Executive Chairman of the Company and Mr. Girish Madhukar Talwalkar, 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-time Director & Chief Financial Offi cer of the Company being brothers, are related to each other.

Mr. Madhukar Vishnu Talwalkar, Executive Chairman of the Company and Mr. Prashant Sudhakar Talwalkar, Managing Director and Chief Executive Director, being uncle and nephew, are related to each 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 General Meeting:

Mr. Anant Ratnakar Gawandei)

Mr. Manohar Gopal Bhide ii)

Dr. Avinash Achyut Phadkeiii)


E. Code of Conduct:

The Company has adopted a Code of Conduct (“the code”) for Directors and Senior Management on 7th July, 2010, which is in compliance with the requirements of Clause 49 of the Listing Agreement entered into 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 affi rmed the compliance with the Code of Conduct for the year under review. The Declaration to this effect signed by the Managing Director & Chief Executive Offi cer is annexed to this report.

F. Remuneration paid to Managing Director/ Whole-time Directors for the year ended 31st March, 2011.

Details of remuneration paid to Managing Director/ Whole-time Directors is as follows:

Names of Managing Director / Whole-time Directors

Gross Salary

(Rs.)

Commi-ssion

(Rs)

Perquisites

(Rs.)

Retirement Benefi ts

(Rs.)

Stock Option

Mr. 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 its Committees. Details of sitting fees paid to Independent Directors for the period from 1st April, 2010 to 31st March, 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 40,000



H. Details of shares held by Independent Directors:

Details of Shares held by the Independent Directors as on 31st March, 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 fi ve Committees:

1) Audit Committee;

2) Remuneration/ Compensation Committee;

3) Shareholders/ Investors Grievance, Share Allotment and Share Transfer Committee;

4) IPO Committee; and

5) Management Committee.

1) Audit Committee:

The Audit Committee was constituted vide Board Resolution dated 11th November, 2009 under the Chairmanship of Mr. Abhijeet Rajaram Patil, who comes with fi nance and accounting background. The terms of reference of the Audit Committee cover the matters specifi ed under Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement. The Audit Committee consists of the following Directors:

Name of the Director Designation in the Committee

Nature of Directorship

Mr. Abhijeet Rajaram Patil Chairman Independent DirectorDr. Avinash Achyut Phadke Member Independent DirectorMr. Anant Ratnakar Gawande Member Whole-time Director and CFO

The Audit Committee enjoys following powers: -

To invite such of the executives, as it considers appropriate (and particularly the head of fi nance 1. 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.


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 fi nancial reporting process and the disclosure of its fi nancial information to ensure that the fi nancial statement is correct, suffi cient and credible.

2) Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fi xation of audit fees.

3) Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

4) Appointment, removal and terms of remuneration of internal auditors.

5) Reviewing, with the management, the annual fi nancial statements before submission to the Board for approval, with particular reference to:

• Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of Section 217 of the Companies 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 by management;

• Signifi cant adjustments made in the fi nancial statements arising out of audit fi ndings;

• Compliance with listing and other legal requirements relating to the fi nancial statements;

• Disclosure of any related party transactions;

• Qualifi cations in the draft audit report;

6) Reviewing, with the management, the quarterly fi nancial statements before submission to the Board for approval;

7) Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;

8) Monitoring the use of the proceeds of the proposed initial public offering of the Company.

9) Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal control systems;



10) Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffi ng and seniority of the offi cial heading the department, reporting structure, coverage and frequency of internal audit;

11) Reviewing management letters / letters of internal control weaknesses issued by the statutory auditors;

12) Discussion with internal and statutory auditors on any signifi cant fi ndings and reviewing fi ndings of internal investigations by internal auditors, like matters of fraud or irregularity or failure of internal control systems, if any;

13) Reviewing the fi ndings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;

14) Discussion with the statutory auditors before the audit commences, about the nature and scope 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, debenture holders, 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 by the Company and is existing;

17) Carrying out any other function as may be statutorily required to be carried out by the Audit Committee;

The Audit Committee shall mandatorily review the following information:

Management discussion and analysis of fi nancial condition and results of operations;a.

Statement of signifi cant related party transactions (as defi ned 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 be e. subject to review by the Audit Committee.

The recommendations of the Audit Committee on any matter relating to fi nancial management, including the audit report, are binding on the Board. If the Board is not in agreement with the recommendations of the Committee, reasons for disagreement shall have to be minuted in the Board Meeting and the same has to be communicated to the shareholders. The Chairman of the committee has to attend the Annual General Meetings of the Company to provide clarifi cations on the matters relating to the audit.

During the year four Audit Committee meetings were held on 24th June, 2010, 12th August, 2010, 28th

October, 2010 and 27th January, 2011.


The attendance record of the Audit Committee members is given below:

Name of the Members No. of MeetingsHeld Attended

Mr. Abhijeet Rajaram Patil 04 04Dr. Avinash Achyut Phadke 04 04Mr. Anant Ratnakar Gawande 04 04

2) Remuneration Committee/ Compensation Committee:

For Remuneration of Directors, our Company has constituted Remuneration/ Compensation Committee vide Board Resolution dated 11th November, 2009. Committee has powers of recommending remuneration package to all Directors as per the requirements of the Clause 49 of the Listing Agreement for Corporate Governance.

The composition of the Remuneration / Compensation Committee is as follows:



Mr. Manohar Gopal Bhide Chairman Independent DirectorDr. Avinash Achyut Phadke Member Independent DirectorMr. Abhijeet Rajaram Patil Member Independent Director

The scope of Remuneration/Compensation Committee shall include but shall not be restricted to the following:

To recommend to the Board, the remuneration packages of Company’s Managing/Joint 1) Managing/ Deputy Managing/ Whole-time / Executive Directors, including all elements of remuneration package (i.e. salary, benefi ts, bonuses, perquisites, commission, incentives, stock options, pension, retirement benefi ts, details of fi xed component and performance linked incentives along with the performance criteria, service contracts, notice period, severance fees etc.);

To be authorised at its duly constituted meeting to determine on behalf of the Board of Directors 2) and on behalf of the shareholders with agreed terms of reference, Company’s policy on specifi c remuneration 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 of 4) reference.

During the year, no meeting of Remuneration/ Compensation Committee of the Board was held.



3) Shareholders’ / Investors’ Grievance, Share Allotment and Share Transfer Committee:

For redressing the Shareholder/ Investor complaints, the Company had fi rst constituted Shareholders’/Investors Grievance, Share Allotment and Share Transfer Committee vide resolution dated 16th November, 2009 as per the requirements of the Clause 49 of the Listing Agreement for Corporate Governance. The present committee consists of the following members:-



Mr. Abhijeet Rajaram Patil Chairman Independent DirectorMr. Girish Madhukar Talwalkar Member Whole-time Director Mr. Anant Ratnakar Gawande Member Whole-time Director and CFO

This committee will address all grievances of Shareholders/Investors in compliance of the provisions of clause 49 of the Listing Agreements with the Stock Exchanges and its terms of reference include the following:

Effi cient transfer of shares; including review of cases for refusal of transfer/transmission of 1) 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 share certifi cates;

Monitoring transfers, transmissions, dematerialization, re-materialization, splitting and 3) consolidation of Equity Shares and other securities issued by our Company, including review of cases 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 the 8) above powers.

During the year, four Shareholders/ Investors Grievance, Share Allotment and Share Transfer Committee Meetings were held on 15th June, 2010, 6th July, 2010, 28th thOctober, 2010 and 27 January, 2011.


The attendance record of the Shareholders/ Investors Grievance, Share Allotment and Share Transfer Committee members is given below:

Name of the Members No. of Meetings Held AttendedMr. Abhijeet Rajaram Patil 04 03Mr. Girish Madhukar Talwalkar 04 03Mr. Anant Ratnakar Gawande 04 04

4) IPO Committee:

The IPO Committee was constituted vide Board Resolution dated 9th November, 2009 to oversee and inform the Audit Committee when money is raised through prospectus or rights or preferential issues and shall inform of funds received, utilized, pending for project implementation etc. for the information of the Stock Exchanges and Investors and shall keep the information up dated through our Company’s website. The composition of the IPO Committee is as follows:



Mr. 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 CFO

The 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 promoting 1) companies or shareholders of group companies and/or any other reservations or fi rm allotments as 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, modifi cations, variations or alterations thereto;

to appoint and enter into arrangements with the Book Running Lead Manager, Co-Managers 2) 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, Legal Advisors to the Issue, Legal Advisors to our Company, Legal Advisors as to Indian and overseas jurisdictions, advertising and/or promotion or public relations agencies and any other agencies or persons;

to fi nalize and settle and to execute and deliver or arrange the delivery of the offering 3) documents (Draft Red Herring Prospectus, Red Herring Prospectus, Final Prospectus) (including the international wrap and fi nal international wrap, if required, for marketing of the Issue in jurisdictions outside India), syndicate agreement, underwriting agreement, escrow agreement, stabilization agreement and all other documents, deeds, agreements and instruments as may be required or desirable in connection with the Issue of shares or the Issue by our Company;



to 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 the Issue of the shares of our Company;

to open one or more bank account of our Company in such name and style as may be decided 5) 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 the 6) purpose of Issue of shares by our Company to non-resident investors including but not limited to NRIs, FIIs, FVCI’s and other non-residents;

to make applications for listing of the equity shares of our Company in one or more stock 7) exchange(s) and to execute and to deliver or arrange the delivery of the listing agreement(s) or equivalent documentation to the concerned stock exchange(s);

to settle all questions, diffi culties or doubts that may arise in regard to the Issue or allotment of 8) shares as it may, in its absolute discretion deem fi t; and

to do all such acts, deeds, matters and things as it may, in its absolute discretion, deem necessary 9) or desirable for such purpose, or otherwise in relation to the Issue or any matter incidental or ancillary in relation to the Issue, including without limitation, allocation and allotment of the shares as permissible in law, issue of share certifi cates in accordance with the relevant rules.

During the year, one IPO Committee Meeting was held on 26th April, 2010.

The attendance record of the IPO Committee members is given below:

Name of the Members No. of Meetings Held AttendedMr. Manohar Gopal Bhide 01 01Mr. Vinayak Ratnakar Gawande 01 01Mr. Girish Madhukar Talwalkar 01 01Mr. Anant Ratnakar Gawande 01 01

5) Management Committee:

The Management Committee was constituted vide Board Resolution dated 23rd March, 2010 to review the operations of the committee. The composition of the Management Committee is as follows:



Mr. Madhukar Vishnu Talwalkar Chairman Whole-time DirectorMr. Prashant Sudhakar Talwalkar Member Managing Director and CEO Mr. Vinayak Ratnakar Gawande Member Whole-time DirectorMr. Girish Madhukar Talwalkar Member Whole-time Director and CFOMr. Harsha Ramdas Bhatkal Member Whole-time Director


Mr. Anant Ratnakar Gawande Member Whole-time DirectorMr. Manohar Gopal Bhide Member Independent DirectorMr. Abhijeet Rajaram Patil Member Independent Director

The 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 existing a. bank account(s) as and when required and to authorise directors and / or executives to operate such bank account and with such limits as are approved by the Management Committee from time to time.

To open domestic or international Letters of Credit (LC) from time to time, on behalf of b. the Company for its CAPEX or other requirements.

To open or close any Fixed Deposit Account(s) with any of the banks or any other c. fi nancial institutions.

To discuss, negotiate and to give permission to enter into any franchise agreement d. with any of the existing Franchisee to start new gym(s) as a franchisee of the Company or cancel any existing franchise agreement with any of the existing franchisee for any reason; or to appoint as franchise.

To shortlist and enter into the Leave and License Agreement or Lease Agreement as the e. case may be for the proposed new Gyms as well as guest house for the Company or renew any expiring licenses / leases for the existing gyms or guest house.

To appoint any authorised person and to give authority by execution of Special Power f. of Attorney on behalf of the Company to enter into and register with the Registrar of Assurances the leave and license or lease agreement as the case may be for the execution of agreement for new gyms or guest house or for renewal of the existing agreement(s).

To authorise or appoint any outside professional or consultant for and on behalf of g. the Company for such work as the Management Committee may deem fi t and fi x their remuneration.

During the year one Management Committee Meeting was held on 16th July, 2010.



The attendance record of the Management Committee members is given below:

Name of the Members No. of Meetings Held 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 01

III. 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:

Financial Year

Date Time Venue Special Resolutions Passed

2007-2008 30th September, 2008

10.30 a.m.

801-813, Mahalaxmi Chambers, 22, Bhulabhai Desai Road, Mumbai - 400 026.

• Re-organisation of Authorised Share Capital.

• Sub-division of Shares.

• Alteration of Clause V of Memorandum of Association.

2008-2009 10th September, 2009

11.00 a.m.

801-813, Mahalaxmi Chambers, 22, Bhulabhai Desai Road, Mumbai - 400 026.

• Revision of term of remuneration, re-designation & re-appointment of Executive Directors

(5 separate resolutions for 5 Executive Directors).

• Revision of term of remuneration & re-designation of Managing Director.


2009-2010 23rd September, 2010

11.30 a.m.

M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd Floor Kala Ghoda, 18/20, K. Dubash Marg, Mumbai - 400 001.

No Special Resolution was passed

B. Extra Ordinary General Meeting (EGM):

The date, time and venue of the Extra-Ordinary General Meetings held in last 3 years are as under:

Financial Year

Date Time Venue Special Resolutions Passed

2009-2010 8th July, 2009 11.00 a.m. 801-813, Mahalaxmi Chambers, 22, Bhulabhai Desai Road, Mumbai - 400 026.

• Appointment of Managing Director.

2009-2010 4th August, 2009 11.00 a.m. 801-813, Mahalaxmi Chambers, 22, Bhulabhai Desai Road, Mumbai - 400 026.

• Alteration of Articles of Association by addition of Depository Clause.

2009-2010 24th August, 2009

11.00 a.m. 801-813, Mahalaxmi Chambers, 22, Bhulabhai Desai Road, Mumbai - 400 026.

• Alteration / Addition in Object Clause.

2009-2010 1st October, 2009

11.00 a.m. 801-813, Mahalaxmi Chambers, 22, Bhulabhai Desai Road, Mumbai - 400 026.

• Conversion of Company from Pvt. Ltd. to Public Ltd.

2009-2010 9th November, 2009

12.00 p.m. 801-813, Mahalaxmi Chambers, 22, Bhulabhai Desai Road, Mumbai - 400 026.

• Approval u/s. 81(1A) of the Companies Act, 1956.

• Investment in Equity Shares of the Company by FIIs.

2009-2010 14th November, 2009

1.00 p.m. 801-813, Mahalaxmi Chambers, 22, Bhulabhai Desai Road, Mumbai - 400 026.

• Issue of Bonus Shares.

• Increase in Borrowing Limits of the Company.

• Creation of Charge.

• Re-appointment of Executive Chairman for further period of 5 years aged above Seventy Years.

• Commission to Non-Executive Directors.



C. 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 31st March, 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 8th February, 2005, was the joint venture Company. DEPL was converted from the JVC to 50.1% Subsidiary Company vide approval of the Board of Directors granted in the Meeting held on 28th October, 2010.

As at 31st March, 2011, we hold 50,100 equity shares of Rs. 100/- (Rupees One Hundred only) each i.e. 50.1% of paid-up capital of DEPL.

Equinox Wellness Private Limited (EWPL).2.

Equinox Wellness Private Limited, incorporated on 8th June, 2004, is step-down subsidiary of your Company. As at 31st March, 2011, we hold 50.1% of paid-up capital of Denovo Enterprises Private Limited which, in turn, holds 4,00,000 equity shares of Rs. 10/- (Rupees Ten only) each i.e., 66.67% of the 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 the 66.67% of the paid-up capital). EWPL was converted to subsidiary company vide approval of the Board of Directors granted in the Meeting held on 28th October, 2010

Aspire Fitness Private Limited (AFPL).3.

Aspire Fitness Private Limited, incorporated on 5th December, 2009, was the joint venture company. AFPL was converted from JVC to the 50.001% Subsidiary Company vide approval of the Board of Directors granted in the Meeting held on 28th October, 2010.

As at 31st March, 2011, we hold 50,001 equity shares of Rs. 100/- (Rupees One Hundred only) each i.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 were placed periodically before the Audit Committee and the Board. All transactions with the related parties or others were on an arm’s length basis.


B. Disclosure of Accounting Treatment:

All Accounting Standards mandatorily required have been followed in preparation of fi nancial statements and 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 Assessment and Minimization procedures and periodical reviews to ensure that risk is controlled by the Executive Management through the means of a properly defi ned 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 31st March, 2011 are as stated below:

Particulars Fund requirement as stated in Prospectus

Deployment of Funds as on 31st March, 2011

(Rs. In Lacs)

Setting up of additional health clubs 5,022.00 3,950.00

Repayment of unsecured loans 2,059.20 2,059.20

Meeting Issue related expenses 662.80 662.80

Total 7,744.00 6,672.00

The Company utilised Rs. 66,72,00,000/- till 31st March, 2011 out of the total proceeds from the Public Issue of Rs. 77,44,00,000/-.

E. Details of Unclaimed Shares Allotted in the (IPO) Initial Public Offering

The 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 of which Unclaimed Shares are transferred to a Special Account opened by the Company viz. Unclaimed Shares Demat Suspense Account.

Details of the Shares in the Unclaimed Shares Demat Suspense Account is as follows:



The voting rights on the said unclaimed shares shall remain frozen till the rightful owners of such shares claims the shares. The respective shareholders may approach the Company Secretary or M/s. Link Intime 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 15th September, 2010 and shares have been subsequently transferred to the said account on 21st September, 2010 and 23rd September, 2010 respectively.

F. Means of Communication:

Quarterly and Audited Financial Results are published in the following Newspapers:i)

The Economic Times

The Free Press Journal

Maharashtra Times

NavShakti

The Company’s website at www.talwalkars.net is regularly updated with the fi nancial results.ii)

The Management Discussion and Analysis Report, in Compliance with the requirements of Clause 49 iii) of the Listing Agreement is annexed to the Annual Report and forms part of this Annual Report.

G. General Shareholders Information:

i. Annual General Meeting

Date and Time

Venue Garware Club House, 1st Main Building, Wankhede Stadium, D Road, Churchgate, Mumbai – 400020

ii.Financial Calendar 2011-12 (Tentative) Results

Reporting

Unaudited Results for the quarter ending 30th June, 2011

On or before 15th August, 2011.

Unaudited Results for the quarter ending 30th September, 2011

On or before 15th November, 2011

Unaudited Results for the quarter ending 31st December, 2011

On or before 15th February, 2012

Unaudited Results for the quarter and year ending 31st March, 2012

On or before 15th May, 2012

Audited Results for the year ending 31st March, 2012

On or before 15th July, 2012

AGM for the approval of the Audited ac-counts for the year ended 31st March, 2012

On or before 30th September, 2012

Friday, 12th August, 2011 at 12.00 p.m.


Financial Year 1st April to 31st March

iii. Book Closure Date 6th August, 2011 to 12th August, 2011(both days inclusive)

iv. Dividend payment date On or after 12th August, 2011

H. Listing:

Equity

Equity Shares of the Company are Listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) with effect from 10th May, 2010.

STOCK CODES

BSE: 533200

NSE: TALWALKARS

ISIN Number for NSDL and CDSL for Dematerialised Shares: INE502K01016

Debt Securities

300 Non-Convertible Debt Securities (NCDs) of Rs. 10,00,000/- each aggregating to Rs. 30,00,00,000/- issued and allotted on 25th January, 2011 on Private Placement basis are listed with the Bombay Stock Exchange Limited (BSE) in the List of securities of “F - Group - Debt Instruments” effective from 24th February, 2011

STOCK CODES

BSE: Scrip Code: 947096 Scrip ID: TBVFL250111

ISIN Number for NSDL and CDSL for Dematerialised Shares: INE502K07013

The Company has paid the listing fees in full for the year 2011-12 to the aforesaid Stock Exchanges within the stipulated time.

I. Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion date and likely impact on equity:

The Company has not issued any GRDs, ADRs, Warrants or any other convertible instruments.



J. 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 10th May, 2010, hence the fi gures for said period are not applicable.

K. Share Price in Relation to BSE Sensex:

180.00

220.00

260.00

300.00

340.00

380.00

May

-10

Jun-

10

Jul-1

0

Aug-1

0

Sep-1

0

Oct-10

Nov-1

0

Dec-1

0

Jan-

11

Feb-1

1

Mar

-11

16000.0017000.00

18000.0019000.0020000.00

21000.0022000.00

TALWALKARS BSE HIGH BSE Sensex

Share Price in Relation to BSE Sensex for the month of April -2010 is not provided as the Company got listed on 10th May, 2010.


L. Share Transfer System:

The share transfers/ transmissions are approved by the Shareholders/ Investors Grievance, Share Allotment and Share Transfer Committee. There are no share transfer requests pending as on 31st March, 2011.

The Company’s Shares are required to be compulsorily traded in the Stock Exchanges in the dematerialized form. Shares in the physical mode which are lodged for transfer are processed and returned within the stipulated time.

The Board of Directors of the Company has delegated the power to approve the share transfers to Registrar and Share Transfer Agents M/s. Link Intime India Private Limited having its offi ce at C-13, Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (West), Mumbai – 400 078.

M. Distribution of Shareholding as on 31st March, 2011.

No. of equity shares held No. of Shareholders No. of Shares held % of Share holding

Upto 500 5,490 4,28,989 1.78

501 to 1,000 155 1,24,804 0.52

1,001 to 2,000 63 1,02,776 0.43

2,001 to 3,000 19 48,897 0.20

3,001 to 4,000 20 72,931 0.30

4,001 to 5,000 15 72,411 0.30

5,001 to 10,000 37 2,73,316 1.13

More than 10,000 90 2,29,91,548 95.34

Total 5,889 2,41,15,672 100

N. Shareholding Pattern as on 31st March, 2011.

Category No. of Share held % of Share holding

Promoters & 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 2,41,15,672 100



O. Dematerialisation of Shares:

As on 31st March, 2011, 99.46% of the total paid up capital representing 2,39,85,814 shares, was held in dematerialized form and the balance 0.54% representing 1,29,858 shares was held in physical form.

P. Address for correspondence:

Registered Offi ce 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 6314

The Company has an exclusive e-mail id viz. [email protected] to enable investors to register their complaints, 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: [email protected]


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 are 2. provided under the heading “Remuneration/ Compensation Committee”.

Management.

For and on behalf of the Board

Talwalkars Better Value Fitness Limited.

Prashant Talwalkar Anant Gawande

Managing Director & CEO Whole-time Director & CFO

Date: 14th June, 2011

Place: Mumbai

3. The qualifi cation in the Auditors Report for the year 2010-11 has been adequately replied by the



Certifi cates under Report on Corporate Governance

Declaration on Compliance of the Company’s Code of Conduct.

To,

The Shareholders

Talwalkars Better Value Fitness Limited

Mumbai.

The Company has framed a specifi c Code of Conduct for the members of the Board of Directors and the Senior Management Personnel of the Company pursuant to Clause 49 of the Listing Agreement with 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 affi rmed due observance of the said Code of Conduct in so far as it is applicable to them and there is no non compliance thereof during the year ended 31st March, 2011.

For and on behalf of the Board


Prashant Talwalkar

Managing Director & CEO


Place: Mumbai


Chief Executive Offi cer (CEO) and Chief Financial Offi cer (CFO) Certifi cation

To

The Board of Directors


Dear Sirs,

Sub: CEO/CFO Certifi cate

(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 Profi t & Loss Account for the year ended as on that date along with all it’s schedules, notes to the accounts and also the Cash Flow statement for the year ended 31st March, 2011 and based on our knowledge and information, confi rm that:

i) these statements do not contain any materially untrue statement or omit any material fact or contain any statement that may be misleading,

ii) these statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

Based on our knowledge and information, there are no transactions entered into by the b. Company during the year which are fraudulent, illegal or in violation of the Company’s code of conduct.

We along with Company ’s other certifying officers, accept responsibility for c. establishing and maintaining internal controls and that we have:

A

B

C



i) evaluated the effectiveness of internal control system of the company, and

ii) disclosed to the Auditors and the Audit Committee, defi ciencies, in the design or operations of internal controls, if any, of which we are aware and steps taken or proposed to be taken for rectifying these defi ciencies.

We, along with Company’s other certifying offi cers, have indicated to the Auditors and the Audit D. Committee:

Signifi cant changes in the internal control during the year,

Signifi cant changes in the accounting policies during the year and that the same have (ii) been disclosed in the notes to the fi nancial statements, and

Instances of signifi cant fraud of which they have become aware and the involvement (iii) therein, if any, of the management or an employee having a signifi cant role in the Company’s internal control system over fi nancial reporting.

Yours sincerely,

Prashant Talwalkar Anant Gawande

Managing Director & CEO Whole-time Director & CFO


Place: Mumbai

(i)


CERTIFICATE ON CORPORATE GOVERNANCE

To, The Members of Talwalkars Better Value Fitness Limited

We have examined the compliance of conditions of Corporate Governance by Talwalkars Better Value Fitness Limited, for the year ended on 31st March 2011, as stipulated in Clause 49 of the Listing Agreement of the said Company with stock exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been limited to a review of the procedures and implementation thereof adopted by the Company for ensuring compliance with the conditions of the Corporate Governance as stipulated in the said Clause. It is neither an audit nor an expression of opinion on the fi nancial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 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 the effi ciency or effectiveness with which the management has conducted the affairs of the Company.

For Geeta Canabar & AssociatesPracticing Company Secretary ACS 22908 CP 8330

Geeta CanabarProprietor

Place: Mumbai



With an impressive base of over 1,00,000 members and 5,00,000 square feet of floor space across 100 outlets in more than 50 cities, it’s little wonder that Talwalkars is among the top 20 health club brands globally.

Leadership and

widespread

presence leads

to undisputed

market

dominance

• Auditors’ Report ....................................................................................... 67

• Balance Sheet ......................................................................................... 70

• Profi t and Loss Account .......................................................................... 71

• Cash Flow Statement .............................................................................. 72

• Schedules ................................................................................................. 74

• Notes to Accounts ................................................................................... 79

• Balance Sheet Abstract and General Business Profi le ........................ 91

• Auditors’ Report on Consolidated Financial Statements ................... 92

• Consolidated Balance Sheet ................................................................. 94

• Consolidated Profi t and Loss Account ................................................. 95

• Consolidated Cash Flow Statement ..................................................... 96

• Schedules to Consolidated Financial Statements ............................... 98

• Notes to Consolidated Financial Statements .................................... 103

Financial Information


TO THE MEMBERS OF TALWALKARS BETTER VALUE FITNESS LIMITED

1. We have audited the attached Balance Sheet of TALWALKARS BETTER VALUE FITNESS LIMITED as at 31st March, 2011, the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a Statement on the matters specifi ed 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 belief

were 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 Profi t and Loss Account and the Cash Flow Statement dealt with by this Report

are in agreement with the books of account; (d) In our opinion the Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt

with by this report are in compliance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(e) On the basis of written representations received from the directors as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualifi ed as on 31st March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, together with the other notes appearing thereon, give the information required by the Companies 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; and

ii) in the case of the Profi t and Loss Account, of the profi t of the Company for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.

For Saraf Gurkar & AssociatesChartered Accountants

Firm Registration No. 126518W

S. L. SarafDated: 14th June, 2011 PartnerPlace : Mumbai Membership No. 030866

Auditors’ Report

ANNEXURE TO THE AUDITOR’S REPORT OF EVEN DATE ON THE ACCOUNTS OF TALWALKARS BETTER VALUE FITNESS LIMITED FOR THE YEAR ENDED 31ST MARCH, 2011

(Referred to in Paragraph (3) of the above Report)1. Fixed Assets: (a) The Company is in the process of re-compiling its fi xed asset register with a view towards refl ecting full

particulars including quantitative details and situation of its fi xed assets. (b) As explained to us, physical verifi cation of fi xed assets has been carried out by the Management at

most of the branches in accordance with a program of verifi cation which, in our opinion, provides for physical verifi cation of all the fi xed assets at reasonable intervals. No material discrepancies were noticed on such physical verifi cation as informed by the management. In view of the fact that the fi xed asset register is in the process of re-compilation, the management has informed us that discrepancies, if any, arising between the assets verifi ed and the books and records would be dealt with in the year in which such re-compilation of the register is completed.

(c) The fi xed assets disposed off during the year, in our opinion, do not constitute substantial part of the fi xed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

2. The Company is a service Company primarily rendering services in respect of health and fi tness centres. Accordingly it does not hold any inventory. Thus, the provisions of Clause 4(ii) are not applicable to the company for the year under review.

3. Loans: (a) The Company has granted loans to its subsidiary Company listed in the register maintained under

Section 301 of the Companies Act, 1956. The maximum amount involved during the year in respect of the said loans was ` 75 Lacs and at the year end the balance outstanding of the said loans taken was ` 16.17 Lacs. Other than the above, the Company has not granted any loans, secured or unsecured to companies, parties or fi rms covered in the register maintained u/s. 301 of the Act.

(b) In our opinion, prima facie, the interest and other terms and conditions of the aforesaid loan granted are not prejudicial to the interest of the Company.

(c) In case of the loan granted to the subsidiary Company listed in the register maintained u/s. 301, the borrower has been regular in the payment of interest as stipulated. The terms of arrangement do not stipulate any repayment schedule and the loan is repayable on demand. Accordingly paragraph 4(iii)(c) of the Order is not applicable to the Company in respect of repayment of the principal amount.

(d) There are no overdue amounts of more than rupees one lacs in respect of the loan granted to the subsidiary Company.

(e) The Company has taken unsecured loans from 9 companies listed in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year in respect of the said loans was ` 2663.72 Lacs and at the year end the balance outstanding of the said loans taken was ` 530.83 Lacs. Other than above, the Company has not taken any loans, secured or unsecured to companies, parties or fi rms covered in the register maintain under Section 301 of the Act.

(f) In our opinion, prima facie, the interest and other terms and conditions of the aforesaid loan taken from the Companies listed in the register maintained under Section 301 are not prejudicial to the interest of the Company.

(g) As per the information and explanations furnished to us, for loans taken as above, repayment terms of principal amount has not been stipulated/fi xed as yet and the loans are repayable on demand. The Company has been regular in the payment of interest. Accordingly paragraph 4(iii)(g) of the Order is not applicable to the Company in respect of repayment of the principal amount.

4. In our opinion and based on the information and explanations given to us, the internal control procedures need to be strengthened to be commensurate with the size of the Company and the nature of its business with regard to purchases of fi xed assets and sale of services. The activities of the Company do not involve purchase of inventory and the sale of goods. We have not observed any major weakness in the internal control system during the course of the audit.

5. Transactions: (a) In our opinion and according to the information and explanations given to us, the transactions that

need to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) Based on the information and explanations given to us, in our opinion these transactions have been made at reasonable prices having regard to the prevailing market prices at the relevant time of transactions.

6. The Company has not accepted any deposits from public within the meaning of Sections 58A and 58AA of the Companies Act, 1956 and the rules made under Companies (Acceptance of Deposits) Rules,

Annexure to the Auditors’ Report


1975. Therefore, the provisions of Clause (vi) of paragraph 4 of the aforesaid Order, in our opinion are not applicable to the Company for the year under review.

7. In our opinion, the scope and coverage of internal audit system need to be increased to make it commensurate with the size and nature of business of the company.

8. According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under clause (d) of sub-clause (1) of Section 209 of the Companies Act, 1956 in respect of services carried out by the Company.

9. Statutory Dues: (a) According to the records of the Company, Provident Fund, Employees State Insurance, Income tax, Sales

tax, Customs Duty, Service Tax, Excise Duty, Cess and other statutory dues to the extent applicable to the Company, have been generally regularly deposited during the year with the appropriate authorities.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of Income tax, Customs Duty, Service Tax, Excise Duty, Cess and other statutory dues outstanding as at 31st March 2011, for a period more than six months from the date they become payable.

According to the information and explanations given to us, the following dues of Income-tax have not been deposited by the Company on account of disputes.Name of the Statute

Nature of the disputed dues

Amount of Tax (` in lacs)

Period to which the amount relates

Forum where dispute is pending

Income Tax Act, 1961

Income Tax 19.00 AY 2006-2007 Commissioner of Income Tax-Appeals

10. The Company does not have any accumulated losses at the end of the fi nancial year and has not incurred cash losses in the fi nancial year and in the immediately preceding fi nancial year. Accordingly, paragraph 4(x) of the Order is not applicable.

11. Based on the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to fi nancial institution and banks.

12. In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi/ mutual benefi t fund/ society. Therefore, the provisions of Clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

14. The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for the loans taken by others from banks or fi nancial institutions are not prima facie prejudicial to the interests of the Company.

16. According to the information and explanations given to us, term loans raised by the Company have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us, and on the overall examination of the Balance sheet of the Company, we report that the Company has not used funds raised on short term basis for long- term investment.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies/ fi rms covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

19. In our opinion and according to the information and explanations given to us, the Company has created security or charge in respect of the secured debentures issued during the year.

20. The Management has disclosed the end use of money raised by public issue at Note 21 of Schedule H (B). We have verifi ed the same to the extent of utilisation by the Company.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year under review.


Firm Registration No. 126518W S. L. SarafDated: 14th June, 2011 PartnerPlace : Mumbai Membership No. 030866

Annexure to the Auditors’ Report

(` in Lacs)Schedule As at As at

31st March, 2011 31st March, 2010 SOURCES OF FUNDS: Shareholders’ Funds:Share Capital A1 2,411.57 1,806.57 Reserves and Surplus A2 10,066.43 2,398.89

12,478.00 4,205.46 Deferred Tax Liability 1,048.42 482.09 Loan Funds:Secured Loans B 10,211.59 6,285.56 Unsecured Loans 926.47 3,434.52

11,138.06 9,720.08 TOTAL 24,664.48 14,407.63

APPLICATIONS OF FUNDS:Fixed Assets: CGross Block 18,904.01 13,219.23 Less: Accumulated Depreciation/Amortisation 2,416.12 1,608.16 Net Block 16,487.89 11,611.07 Capital Work-in-progress 2,742.54 1,301.87

19,230.43 12,912.94 Investments D 969.14 494.02 Current Assets, Loans and Advances:Sundry Debtors E1 1,443.74 328.73 Cash and Bank Balances E2 2,795.13 1,248.71 Loans and Advances E3 2,224.07 1,087.21

6,462.94 2,664.65 Less: Current Liabilities and ProvisionsCurrent Liabilities F1 881.68 1,182.30 Provisions F2 1,116.35 562.15

1,998.03 1,744.45 Net Current Assets 4,464.91 920.20 Miscellaneous Expenditure(To the extent not written off or adjusted) G – 80.47

TOTAL 24,664.48 14,407.63 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS H

Schedules referred to above form an integral part of the Financial Statements

As per our report of even date

For Saraf Gurkar & AssociatesChartered AccountantsFirm Registration No. 126518WS. L. SarafPartnerMembership No. 030866

Place: MumbaiDate: 14th June, 2011

For and on behalf of the BoardMadhukar Talwalkar Executive ChairmanPrashant Talwalkar Managing Director & CEOVinayak Gawande Whole-time DirectorGirish Talwalkar Whole-time DirectorHarsha Bhatkal Whole-time DirectorAnant Gawande Whole-time Director & CFORaman Maroo DirectorManohar Bhide DirectorAbhijeet Patil DirectorMohan Jayakar Director Avinash Phadke DirectorAvanti Sankav Company Secretary & Compliance Offi cer

Balance Sheet as on 31st March, 2011


(` in Lacs)Schedule Year ended Year ended

31st March, 2011 31st March, 2010 INCOME:Income from Operations I1 8,652.04 6,611.55 Other Income I2 189.42 38.29

8,841.46 6,649.84 EXPENDITURE:Personnel Cost J1 1,775.72 1,568.32 Administrative and other expenses J2 2,169.96 1,731.12 Selling and Marketing Cost J3 271.95 146.69 Service Tax Collected and Paid 786.31 605.82

5,003.94 4,051.95 PROFIT BEFORE INTEREST, DEPRECIATION, 3,837.52 2,597.89 EXTRA ORDINARY ITEMS and TAXES Finance Cost J4 735.95 808.76 PROFIT BEFORE DEPRECIATION, EXTRA 3,101.57 1,789.13 ORDINARY ITEMS and TAXESNon-Cash Charges K 833.36 608.90 PROFIT BEFORE EXTRA ORDINARY ITEMS and TAXES 2,268.21 1,180.23 Profi t/(loss) on Sale of Asset (36.44) (21.32)PROFIT BEFORE TAX 2,231.77 1,158.91 Taxation (Net) L 447.20 212.31 Deferred Tax 261.88 152.90 PROFIT AFTER TAX 1,522.69 793.70 Balance Brought Forward 1,822.44 1,522.86 Profi t available for appropriations 3,345.13 2,316.56 APPROPRIATIONS:Effect on Change in AS 11 – 23.86 Effect of previous year’s Deferred Tax Liability – 329.19 Proposed Dividend on Equity Shares 241.16 120.58 Tax on Dividend 40.03 20.49 Debenture Redemption Reserve 22.60 – BALANCE CARRIED TO BALANCE SHEET 3,041.34 1,822.44 Earnings Per Share (`) :Weighted Average 6.46 4.43 Diluted 6.46 4.42 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS HSchedules referred to above form an integral part of the Financial Statements





Profit and Loss Account for the year ended 31st March, 2011

(` in Lacs) Year ended Year ended

31st March, 2011 31st March, 2010 A. CASH FLOW FROM OPERATING ACTIVITIES:

Net profi t before Taxes 2,231.77 1,158.91 Non-cash expenses 833.36 609.50 Finance cost (Net) 735.95 808.76 Income from Investment activity (108.42) –(Profi t)/Loss on sale of assets 36.44 21.32

1,497.33 1,439.58 Operating Profi t before Working capital changes 3,729.10 2,598.49 (Increase)/Decrease in Current Assets (409.19) (125.65)(Increase)/Decrease in Trade and other receivables (1,115.02) (269.07)Increase/(Decrease) in Trade and other payables (303.51) 34.03

(1,827.72) (360.69)Cash generated from operations 1,901.38 2,237.80 Direct taxes paid (519.02) (106.75)Net cash from operating activities 1,382.36 2,131.05

B. CASH FLOW FROM INVESTING ACTIVITES:Investment in Joint Venture (106.09) (84.27)Payment towards purchase of Fixed Assets, CWIP (7,054.11) (3,200.80)Proceeds from sale of fi xed assets 1.00 1.72 Dividend received 99.89 –Purchase of Short Term Investments (12,406.00) –Proceeds from sale of Short Term Investments 12,059.74 –Net cash (used in)/from Investing activities (7,405.57) (3,283.35)

Cash Flow for the year ended 31st March, 2011


(` in Lacs) Year ended Year ended

31st March, 2011 31st March, 2010 C. CASH FLOW FROM FINANCING ACTIVITIES:

Share issue Proceeds (net of refund including security premium) 7,693.75 1,850.00 Issue proceeds from Non-Convertible Debentures 3,000.00 – IPO related expenses (582.24) (80.47)Borrowings done 2,166.16 8,565.65 Repayment of Long-term and other borrowings (3,556.52) (7,198.84)Finance cost paid (992.84) (808.76)Dividend Paid (120.58) (1.97)Dividend Tax Paid (20.49) (0.33)Net cash used in Financing Activities 7,587.24 2,325.28 NET INCREASE IN CASH AND CASH EQUIVALENTS (A + B + C) 1,564.03 1,172.98 CASH AND CASH EQUIVALENTS AT THE BEGINING OF THE PERIOD 1,174.56 1.58 Cash and Bank Balance including Fixed Deposits 2,795.13 1,248.71 Balance in Cash Credit facility (56.54) (74.15)

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 2,738.59 1,174.56





Cash Flow for the year ended 31st March, 2011

(` in Lacs) As at As at

31st March, 2011 31st March, 2010 SCHEDULE

“A1” SHARE CAPITALAUTHORISED:30,000,000 Equity Shares of ` 10/- each[Previous year 30,000,000 Equity Shares of ` 10/- each]

3,000.00 3,000.00

3,000.00 3,000.00ISSUED, SUBSCRIBED & PAID-UP:24,115,672 Equity shares of ` 10 each Fully Paid-up 2,411.57 1,806.57(Previous year 18,065,672 Equity shares of ` 10 each Fully Paid-up)(a) of the above, 550,000 shares were allotted as Fully

paid-up pursuant to the Agreement for takeover of business and issued in consideration received other than in cash. [Previous year 550,000 Equity Shares of `10 each]

(b) of the above, 70,260 Equity Shares were allotted against redemption of Preference Shares [Previous year 70,260 Equity Shares of ` 10 each]

(c) of the above, 15,807,463 Equity Shares have been issued by way of bonus by capitalising Reserves (Previous year - 15,807,463 Equity Shares)

2,411.57 1,806.57“A2” RESERVES and SURPLUS

(a) Securities PremiumBalance in Securities Premium 576.45Add: Securities Premium received on Issue of shares 7,139.00 7,715.45Less: Adjustment Share issue expenses* 662.71Less: Adjustment Debenture issue expenses* 50.25 712.96 7,002.49 576.45(b) Balance in Profi t and Loss Account 3,041.34 1,822.44(c) Debenture Redemption ReserveAs per last Balance Sheet – –Add: Transferred from Profi t and Loss Account 22.60 –

10,066.43 2,398.89* Adjustment as per the provisions of Section 78 of the

Companies Act, 1956“B” SECURED LOANS

From Bank (a) Term Loans (including interest accrued and due) 5,833.57 4,972.77(b) Cash Credit Facility 56.55 74.15(c) Acceptances 1,321.47 1,238.64(For details of Security offered refer to Note ‘B2’ of Schedule H of Notes to Accounts)(d) Redeemable Secured Non-Convertible Debentures 3,000.00 –

10,211.59 6,285.56

Schedules forming part of the Balance Sheet


SCHEDULE “C”FIXED ASSETS

(` in Lacs)Description Gross Block Depreciation Net Block

As on 1st April,

2010

Additions during the

Year

Deduc-tions

As on 31st March,

2011

As on 1st April,

2010

For the Year

Deduc-tions

As on 31st March,

2011

As on 31st March,

2011

As on 31st March,

2010Intangible Assets Goodwill 566.03 – – 566.03 78.54 28.63 – 107.17 458.86 487.49 Tangible AssetsImmovable Property 561.76 – – 561.76 55.27 9.16 – 64.43 497.33 506.49 Computers 134.66 50.67 185.33 50.43 24.46 – 74.89 110.44 84.23 Air-Conditioners 852.42 429.80 14.28 1,267.94 92.42 45.36 4.73 133.05 1,134.89 760.00 Furniture and Fittings 5,245.68 1,972.71 33.71 7,184.68 711.00 368.31 14.71 1,064.60 6,120.08 4,534.68 Electrical fi ttings 1,138.14 556.03 7.05 1,687.12 109.76 73.80 2.65 180.91 1,506.21 1,028.38 Gym Equipment 4,424.57 2,546.46 9.94 6,961.09 481.77 264.44 3.31 742.90 6,218.19 3,942.80 Offi ce Equipment 295.97 194.09 - 490.06 28.97 19.20 – 48.17 441.89 267.00

13,219.23 5,749.76 64.98 18,904.01 1,608.16 833.36 25.40 2,416.12 16,487.89 11,611.07 Previous Year 11,088.62 2,164.11 33.50 13,219.23 1,009.72 608.90 10.46 1,608.16 11,611.07 10,078.90

(` in Lacs)As at As at

31st March, 2011 31st March, 2010SCHEDULES “D” INVESTMENTS

A] Long-term Non-Trade Unquoted (at cost):Investment In Joint Ventures:Splendor Fitness Private Limited 500.00 100.00 (formerly known as Talwalkars Pantaloon Fitness Pvt. Ltd.) [140,000 (Previous year 100,000) Equity Shares of ` 100/- each fully paid ]Investment in Subsidaries:Denovo Enterprises Private Limited 50.10 50.00 [50,101 (Previous year 50,000) Equity Shares of ` 100/- each fully paid ]Aspire Fitness Private Limited 50.00 0.50 [50,001 (Previous year 500) Equity Shares of ` 100/- each fully paid ]

B] Share Application Money in Joint Ventures (pending allotment)Splendor Fitness Private Limited – 293.31 (formerly known as Talwalkars Pantaloon Fitness Pvt. Ltd.) Aspire Fitness Pvt. Ltd. – 50.21

C] Current, short-term, trade(valued at cost or market value whichever is lower)Axis Liquid Fund 362.00 – UTI Treasury Advantage Fund 7.04 –

969.14 494.02


(` in Lacs) As at As at

31st March, 2011 31st March, 2010 SCHEDULE

“E1” SUNDRY DEBTORS[ Unsecured and Considered Good ](a) More than Six months 64.19 – (b) Others 1,379.55 328.73

1,443.74 328.73 “E2” CASH AND BANK BALANCES

(a) Cash in hand (as certifi ed) 151.08 450.51 (b) Balances with Scheduled Bank - in current a/c 779.35 286.08 - in Fixed Deposit Accounts (including interest accrued ) 1,864.70 512.12

2,795.13 1,248.71 “E3” LOANS AND ADVANCES

[Unsecured and considered good](a) Advances recoverable in Cash or Kind for value to be

received 37.06 14.08 (b) Deposits 1,031.94 748.36 (c) Input Credit Service Tax Carried forward 116.08 46.52 (d) Income Tax and FBT paid 650.21 226.99 (e) Prepaid expenses 34.38 24.15 (f) Unavailed Service Tax Cenvat Credit 49.95 27.11 (g) Minimum Alternate Tax credit entitlement 304.45 –

2,224.07 1,087.21 “F1” CURRENT LIABILITIES

(a) Liabilities for expenses 414.03 354.98 (b) Duties and Taxes payable 212.54 574.96 (c ) Liabilities for Capital goods 254.51 251.32 (d) Membership fees refundable 0.60 1.04

881.68 1,182.30 “F2” PROVISIONS

(a) Provision for Income Tax 752.24 400.85 (b) Provision for Fringe Benefi t Tax 19.63 19.63 (c) Proposed Dividend on Equity Shares 241.16 120.58 (d) Provision for Tax on Dividend 40.03 20.49 (e) Provision for Contribution to Group Gratuity Scheme 0.91 0.60 (f) Provision for Interest on Non-Convertible Debenture 62.38 –

1,116.35 562.15 “G” MISCELLANEOUS EXPENDITURE

(to the extent not written off or adjusted)Share Issue ExpensesOpening 80.47 – Expenses Incurred during the year 582.24 80.47

662.71 80.47 Less: Adjusted against Securities premium 662.71 –

– 80.47



(` in Lacs)Year ended Year ended

31st March, 2011 31st March, 2010SCHEDULE

“I1” INCOME FROM OPERATIONSGross Fees including Service Tax 7,779.17 6,356.26 Franchisee Fees including Service tax 641.18 129.80 Input Credit Service Tax 231.69 125.49

8,652.04 6,611.55 “I2” OTHER INCOME

Income from Juice Centre and Food and Supplements 4.10 6.37 Sundry Credit balances no longer payable 8.51 13.41 Profi t/(loss) on Sale of Asset/ Investments 8.53 – Dividend From Mutual Funds 99.89 – Interest on Bank Term Deposits 54.74 12.49 Miscellaneous Income 13.65 6.02

189.42 38.29 “J1” PERSONNEL COST

Payments to Outsourcing Agencies 1,680.03 1,513.47 Director’s Remuneration, Sitting fees 60.81 42.42 Salaries 33.48 11.83 Contribution to group gratuity scheme 1.40 0.60

1,775.72 1,568.32 “J2” ADMINISTRATIVE AND OTHER EXPENSES

Statutory Audit Fees 12.50 6.07 Internal Audit Fees 19.60 13.69 AGM Meeting Expenses 1.58 – Consumables, Food and Supplements 72.36 55.55

Electricity and Fuel expenses 584.20 461.38 Insurance Charges 10.15 3.59 Juice Centre & Spa Expenses 5.51 7.56 Pooja and Special Function Expenses 9.17 7.95 Printing and Stationery 23.78 36.99 Professional Fees 35.35 90.04 Rates and Taxes 31.35 20.11 Interest on late payment of Service Tax 28.04 23.28 Rent 1,071.71 780.36 Repairs and Maintenance - Building and Gym Equipment 67.88 53.53 - Others 65.22 54.25 ROC Expenses 0.61 10.34 Telephone Expenses 44.56 37.35 Travelling and Conveyance Expenses 20.76 26.48 Water Charges 29.50 26.67 Miscellaneous Expenses 36.13 15.93

2,169.96 1,731.12

Schedules forming part of the Profit and Loss Account

(` in Lacs)Year ended Year ended

31st March, 2011 31st March, 2010SCHEDULE

“J3” SELLING AND MARKETING COSTAdvertising Expenses 232.48 119.90 Business Promotion expenses 39.47 26.79

271.95 146.69 “J4” FINANCE COST

Interest on Secured Loan 388.11 376.56 Interest on Unsecured Loan 185.83 354.26 Interest on Letter of credit 43.58 33.86 Bank Charges 16.20 11.22 Credit Card Charges 39.64 32.86 Interest on Non-Convertible Debentures 62.59 –

735.95 808.76 “K” NON-CASH CHARGES

Depreciation 833.36 608.90 833.36 608.90

“L” TAXATION (NET)Provision for Current Tax 442.44 212.29 Prior period Tax Adjustments 4.76 0.02

447.20 212.31

Schedules forming part of the Profit and Loss Account


SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2011.

SCHEDULE “H”:

A) STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES: (a) Basis of preparation of fi nancial statements: • The fi nancial statements are prepared in accordance with Indian Generally Accepted Accounting

Principles (“GAAP”) under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards as specifi ed in the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956.

(b) Use of Estimates: • The preparation of fi nancial statements in conformity with generally accepted accounting

principles requires that management makes estimates and assumptions that affect the reported amounts of income and expenses of the year. The reported balance of assets and liabilities and the disclosure relating to contingent liabilities as at the date of the fi nancial statements. These estimates are based upon management’s best knowledge of current events and actions. The difference between the actual results and estimates are recognized in the period in which the results are known/materialised.

(c) Fixed assets: • Fixed assets are stated at original cost, net of tax/duty credits availed if any, less accumulated

depreciation/amortisation. Costs include all expenses incurred to bring the assets to its present location and condition. Assets acquired by way of slump sale are recorded at book value in the books of the transferor as on the date of transfer. Revenue expenses incurred in connection with project implementation in so far as such expenses relate to the period prior to the commencement of commercial activity are treated as part of the fi xed assets and capitalised.

• Capital work-in-progress comprises outstanding advances paid to acquire fi xed assets, and the cost of fi xed assets that are not yet ready for their intended use at the balance sheet date.

• Intangible assets are recorded at the consideration paid for acquisition and are carried at cost less accumulated amortisation.

(d) Depreciation/Amortisation: • Depreciation on all fi xed assets is provided pro-rata from/upto the date of acquisition/disposal

using the straight line method at the rates prescribed by Schedule XIV of the Companies Act, 1956.

• In case of Goodwill, the amount is amortised @4.75% p.a. using the straight-line method.

(e) Provisions, Contingent Liabilities and Contingent Assets: • Provisions involving substantial degree of estimation in measurement are recognised if there is

a present obligation as a result of past events and it is probable that there will be an outfl ow of resources.

• Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the fi nancial statements.

(f) Revenue Recognition:

• Income from Fees and subscriptions, recorded net of discounts and rebates have been recognised as income for the year irrespective of the period, for which these are received. However, the Fees receivable from existing members as at the end of the year has been recognised as income for the year.

• The costs relating to rendering of these services being unascertainable are charged off to revenue in the year in which they become legally payable.

• Input credit availed on Service Tax through revenue expenses paid are accounted for separately as income, thus accounting the expenses at their gross values inclusive of service tax. Expenses on

Notes to Accounts

which service tax is paid in subsequent year are booked net of the Un-availed Service Tax at end of the year.

• Income by way of Franchise Fees (including up-front fees) received pursuant to franchise agreements entered are recognised as income of the period in accordance with terms of the agreement, and as per data submitted by the franchisees.

• Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

• Any other income i.e. from juice bar sales, consumables, etc are recognised on receipt basis since the realizations there-from are immediate and no credit is allowed to the customers/members.

(g) Impairment of Assets:

• The management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired.

• An impairment loss is charged to the Profi t and Loss Account in the year in which the asset is identifi ed as impaired.

• At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss.

• The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

(h) Employee benefi ts:

• All employee benefi ts payable wholly within twelve months of rendering the service are classifi ed as a short-term employee benefi ts. Benefi ts such as salaries, wages, contractual labour charges and short-term compensated absences, etc. is recognised in the period in which the employee/contractual labour renders the related service.

• The gratuity liability is provided and charged off as revenue expenditure based on actuarial valuation. The Company has subscribed to the group gratuity scheme policy of LIC of India.

• Any other payments under the relevant labour statutes, wherever applicable are reimbursed to the Outsourced Agency as and when applicable.

(i) Borrowing Cost:

• Borrowing cost incurred for qualifying assets is capitalized up to the date the asset is ready for intended use, based on borrowings incurred specifi cally for fi nancing the asset. In determining the amount of borrowing cost eligible for capitalisation during a period, any income earned on the temporary investment on those borrowings is deducted from the borrowing cost incurred.

• Other Borrowing costs are charged off to Revenue Account in the year in which they are incurred.

(j) Foreign Currency Transactions:

• Exchange differences are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing rate.

• Exchange differences that arise on settlement of monetary items or on reporting at each balance sheet date of the Company’s monetary items at the closing rate are:

i. Upto 31st March, 2008, recognised as income or expense in the period in which they arise and

ii. Thereafter adjusted in the cost of fi xed assets specifi cally fi nanced by the borrowings to which the exchange differences relate.

Notes to Accounts


(k) Earnings per share:

• Basic and diluted earnings per share is computed by dividing the net profi t attributable to equity shareholders for the year, by weighted average number of equity shares outstanding during the year.

(l) Taxes on Income:

• Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

• Deferred Taxation is recognised for all timing differences between accounting income and taxable income and is quantifi ed using enacted/substantial enacted tax rates as at balance sheet date. Deferred Tax asset are recognised subject to the management’s judgement that the realization is virtually/reasonably certain.

• Tax credit is recognised in respect of Minimum Alternate Tax (MAT) paid in terms of Section 115JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within the statutory time frame and the same is reviewed at each balance sheet date.

(m) Investments:

• Long-term Investments are stated at cost, less provision for other than temporary diminution in value. Current investments comprising investments in Mutual Funds are stated at the lower of cost and fair value determined on an individual investment basis.

(n) Cash Flow Statement :

• The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard (AS) 3 on Cash Flow Statements and presents the cash fl ows by operating, investing and fi nancing activities of the Company.

• Cash and Cash equivalents presented in the Cash Flow Statement consist of Cash on hand, balances in Current, Fixed Deposit and Cash Credit Accounts with Bank.

(o) Transfer to Debenture Redemption Reserve is made pro-rata over the life of Debentures in terms of the requirement of provisions of Companies Act, 1956.

(p) Segment Reporting:

• There is only one reportable business segment as envisaged by Accounting Standard (AS) 17 'Segment Reporting'. Accordingly, no separate disclosure for the segment reporting is required to be made in the fi nancial statement of the Company.

• Secondary segmentation based on geography has not been presented as the Company operates primarily in India and the Company perceives that there is no signifi cant difference in its risk and returns in operating from different geographic areas within India.

B) NOTES TO THE ACCOUNTS:

1. Contingent Liabilities :

Contingent liabilities not provided for in respect of (` in lacs)2010-11 2009-10

Income Tax demands (net of amount paid in protest) AY 2006-07 19.00 19.00Bank Guarantee given on behalf of Joint Ventures / Subsidaries 472.50 1,245.50Claim from a landlord, case pending before the Judiciary

- Hyderabad

- Koramangala

306.50

72.11

Not ascertainable

Claim by Advertising agency # 6.39 5.97

# 8800 GBP @` 72.59 (as on 31.03.2011)

Notes to Accounts

2. Security against Secured Loans Availed: [Refer Schedule 'B' to accounts]

• All loans, which include sub-limit of Inland and Foreign Letter of credit and cash credit facility are sanctioned by Union Bank of India are secured primarily against the fi rst hypothecation/ mortgage charge on the entire movable and immovable Fixed Assets and Current Assets of the Company including Gymnasium Equipments, Furniture and Fixtures and any other equipment installed in the Gymnasiums, equitable mortgage of immovable premises of the Company, corporate guarantee and collateral security by way of equitable mortgage of premises situated at Tardeo and Mahalaxmi, Mumbai of third parties and the personal guarantee of three Directors of the Company.

(Amount repayable in the next 12 months ` 1,293.00 lacs, Previous year ` 849.58 lacs)

• The abovementioned Foreign/Inland Letters of Credit availed by the Company have been shown under “Acceptances” under the head “SECURED LOANS”.

3. Disclosure pursuant to Accounting Standard (AS) 11:

In line with the amendment to Accounting Standard (AS) 11 as per the Notifi cation No. G.S.R. 225 (E) dated 31st March, 2009, the foreign exchange gains has been adjusted to the cost of the fi xed assets as on 31st March, 2011.


The Details of Joint Venture Agreements entered by the Company are as follows:

Name of the Company Ownership InterestDenovo Enterprises Private Limited 50.10%Equinox Wellness Private Limited 33.33% *Aspire Fitness Private Limited 50.001%

* effective ownership due to 66.67% holding of Denovo Enterprises Private Limited in Equinox Wellness Private Limited.

5. Disclosure pursuant to Accounting Standard (AS) 15 (Revised):

The Company’s liability towards Gratuity as per provision of Accounting Standard (AS) 15 (Revised) on the basis of actuarial valuation has been covered by a LIC Group Gratuity Scheme. The Company does not allow carry forward of compensated absences to employees. Accordingly, no provision has been made for compensated absences.

A. During the year additional provisions were created in respect of Gratuity, Ex-Gratia and Other Terminal Benefi ts as detailed below:-

During the year: (Amount in `)

Particulars Gratuity Leave Salary

Ex-Gratia Other Terminal benefi ts

Total

Opening Balance 60,124 N.A NIL NIL 60,124Less: Paid/Adjusting during the year

NIL N.A NIL NIL NIL

Add: Provision made during the year

1,87,966 N.A NIL NIL 1,87,966

Closing Balance 2,48,090 N.A NIL NIL 2,48,090

Notes to Accounts


During the Previous year:

Particulars Gratuity Leave Salary Ex-Gratia Other Terminal benefi ts

Total

Opening Balance NIL N.A NIL NIL NILLess: Paid/Adjusting During the year

NIL N.A NIL NIL NIL

Add: Provision made during the year

60,124 N.A NIL NIL 60,124

Closing Balance 60,124 N.A NIL NIL 60,124

B. The employees long-term benefi ts like Gratuity, Ex-Gratia and other terminal benefi ts are valued on actuarial basis and recognised in the Profi t and Loss account. The assumption in the actuarial Valuation of the gratuity provision is as under:

i) Nature of Gratuity - Gratuity is payable to all eligible employees at the rate of 15 days of last drawn salary for each completed year of service subject to the maximum of ` 10 Lacs for all employees who were on the roll as on 31.03.2011.

ii) The retirement age is taken as 60 years. iii) Progression of future salary is taken into account while calculating the liability. iv) Valuation Method: Projected unit credit method. v) Basis of Valuation:

1 Mortality Rate LIC (1994-96) 2 Withdrawal Rate 1% to 3% depending on age3 Discount rate 8% p.a.4 Salary Escalation 5%

6. Earnings per share:

The Following table sets forth the computation of basic and diluted earnings per share:

(` in Lacs)

2011 2010Net profi t after tax 1,522.69 793.70Weighted average number of equity shares 2,35,68,686 1,79,15,612Nominal value of shares [`] 10 10Earnings per share – Basic [`] 6.46 4.43Earnings per share – Diluted [`] 6.46 4.42

7. Details of Investments purchased and sold during the year:

Nature of Transaction For the year ended31st March, 2011

For the year ended31st March, 2010

Quantity (‘000) Value (` lacs) Quantity (‘000) Value (` lacs)

Purchases 36,717 12,506 NIL NILSales 36,683 12,160 NIL NIL


• There is only one reportable business segment as envisaged by AS-17 'Segment Reporting'. Accordingly, no separate disclosure for the segment reporting is required to be made in the fi nancial statement of the Company.

Notes to Accounts

• Secondary segmentation based on geography has not been presented as the company operates primarily in India and the Company perceives that there is no signifi cant difference in its risk and returns in operating from different geographic areas within India.

9. Details of Deferred Tax Asset/ (Liability) are as under: (` In Lacs)

Nature of timing difference Deferred Tax Asset / (Liability)

as on 1st April, 2010

(Charge) / credit to the Profi t and

Loss Account

Deferred Tax Asset / (Liability) as on

31st March, 2011Deferred Tax Liabilities Depreciation (786.54) (279.75)

(1048.42)Re-statement of fi gures at current tax rates – 17.88Deferred Tax Assets Net Amount and consequent increase/decrease in Net Profi t and Reserves (786.54) (261.88) (1048.42)

10. Related Party Disclosures:

Disclosure as required by the Accounting Standard 18, “Related Party Disclosure” is given below:

List of Related Parties:

Key Management Personnel ● Mr. Madhukar Talwalkar (Executive Chairman) ● Mr. Prashant Talwalkar (Managing Director & Chief Executive Offi cer) ● Mr. Girish Talwalkar (Whole-time Director) ● Mr. Vinayak Gawande (Whole-time Director) ● Mr. Harsha Bhatkal (Whole-time Director) ● Mr. Anant Gawande (Whole-time Director & Chief Financial Offi cer)

Relatives of Key Management Personnel

● Mrs. Yamini Anant Gawande ● Mr. Sudhakar Talwalkar

Subsidaries/Associates

● Denovo Enterprises Private Limited ● Equinox Wellness Private Limited ● Aspire Fitness Private Limited

Enterprises over which Key Management Personnel and their relatives exercise signifi cant infl uence:

● Anfi n Investments Private Limited ● Better Value Leasing & Finance Ltd. ● Better Value Brands Private Limited ● Better Value Properties Private Limited ● Brainworks Learning Systems Private Limited ● Gawande Consultants Private Limited ● Life Fitness India Private Limited ● Popular Prakashan Private Limited

Notes to Accounts


● Popular Institute of Arts Private Limited ● Radhika Hotels Private Limited ● Pinnacle Fitness Private Limited ● Talwalkars Fitness Club ● Talwalkars Health & Leisure ● Talwalkars Health Club ● Talwalkars Health Complex ● Talwalkars Health Commune ● Talwalkars Nutrition Centre ● Talwalkars ● Anant Gawande (HUF) ● Vinayak Gawande (HUF) ● Nitin Gawande (HUF) ● R2 Infrastructure Private Limited ● R2 Spa Systems ● Indian Cookery.com Private Limited ● India Cookery Private Limited ● Splendor Fitness Private Limited

a) Transactions with Related Parties:

(` in lacs)

Nature of transactions Subsidaries Associates Key Managerial

Personnel

Others Total

Incomes 100.14 21.81 – – 121.95Expenses – 62.42 19.19 – 81.61Interest on Unsecured Loans – 121.30 – – 121.30Purchase of Equipments – 66.08 – – 66.08Director's Remuneration – – 252.00 – 252.00Transfer of Members Fees 0.13 1.26 – – 1.39Investments incl. Share Appln Money 51.24 – – 106.69 157.93Loans repaid/ (taken) Net 15.00 1,371.69 – – 1,386.70Loans and Advances (given)/ repaid Net – 4.30 – – 4.30

Balance as at 31st March, 2011:

Nature of transactions Subsidaries Associates Key Managerial

Personnel

Others Total

Investments incl. Share Application Money 101.28 – – 500.00 601.28Sundry Debtors 13.85 5.24 – – 19.09Deposits – 6.13 13.05 – 19.19Loans and Advances (0.76) 9.17 – – 8.41Unsecured Loans – 13.89 – – 13.89

Notes to Accounts

Transactions with Related Parties pursuant to Accounting Standard-18Key management personnel and their Relatives: Name of the party Nature of transaction 31st March,

201131st March,

2010Mr. Madhukar Talwalkar Director's Remuneration 42.00 36.82Mr. Prashant Talwalkar Director's Remuneration 42.00 26.52 Rent for Premises 19.19 19.19 Deposit outstanding as on 13.05 13.05Mr. Girish Talwalkar Director's Remuneration 42.00 26.52 Loans and Advances given/(taken) Net – 0.11 Loan outstanding as on – –Mr. Vinayak Gawande Director's Remuneration 42.00 17.68 Loans and Advances repaid/(taken) Net – 73.12 Interest on Unsecured Loans – 7.15 Loan outstanding as on – –Mr. Harsha Bhatkal Director's Remuneration 42.00 17.68Mr. Anant Gawande Director's Remuneration 42.00 17.68

Transactions with Related Parties pursuant to Accounting Standard-18Others: Name of the party Nature of transaction 31st March,

201131st March,

2010Mrs. Yamini Gawande Loans and Advances repaid/(taken) Net – 25.01

Interest on Unsecured Loans – 1.66 Loan outstanding as on – –Mr. Sudhakar Talwalkar Professional fees paid – 3.00

Joint Ventures/ Associates/Subsidaries :Name of the party Nature of transaction 31st March,

201131st March,

2010Splendor Fitness Pvt. Ltd. (formerly known as Talwalkars Pantaloon Fitness Pvt. Ltd.)

Share Application Money given 106.69 33.56Investment in Equity Shares as on 500.00 100.00Share Application Money as on NIL 293.31

Denovo Enterprises Pvt. Ltd. Franchise fee Income 37.57 28.75Investment during the year 0.101 –

Transfer of Members Fees 0.13 0.13 Loans and Advances given/(taken) Net – 0.38 Investment in Equity Shares as on 50.10 50.00 Loan outstanding as on (0.76) 0.62

Notes to Accounts


Joint Ventures/ Associates/Subsidaries (Contd.) :Name of the party Nature of transaction 31st March,

201131st March,

2010

Aspire Fitness Private Limited Investment in Equity Shares in the year 49.501 0.50Share Application Money given 49.501 50.21Loans & Advances given/ (taken) Net 13.83 –Loan outstanding as on 13.83 –Franchisee Income 50.00 –Interest income on Unsecure Loan 3.38 –

Investment in Equity Shares as on 50.001 0.50 Share Application Money as on – 50.21Equinox Wellness Pvt. Ltd. Franchise fee Income 9.19 9.23 Franchise fee receivable as on 13.85 4.66

Associate Companies/Firms:Name of the party Nature of transaction 31st March,

201131st March,

2010Better Value Leasing & Finance Ltd Loans and Advances given/(taken) Net (390.18) (15.43)

Offi ce expenses 0.48 1.17 Interest on Unsecured Loans 63.56 161.53 Loan outstanding as on (265.27) (1123.58)Gawande Consultants Pvt. Ltd. Loans and Advances given/(taken) Net 242.77 (64.45) Electricity expenses 1.74 3.60 Interest on Unsecured Loans 22.10 39.46 Loan outstanding as on (115.34) (358.11)Popular Prakashan Pvt. Ltd. Loans and Advances given/(taken) Net (506.02) (76.28) Interest on Unsecured Loans 12.64 70.22 Loan outstanding as on (29.79) (535.82)Radhika Hotels Pvt. Ltd. Loans and Advances given/(taken) Net 95.60 (95.14) Interest on Unsecured Loans 5.82 8.48 Loan outstanding as on (30.49) (126.09)Popular Institute of Art Pvt Ltd Loans and Advances repaid/(taken) Net 72.14 20.52 Interest on Unsecured Loans – 11.33 Loan outstanding as on – (72.14)Anfi n Investments Pvt. Ltd. Loans and Advances given/(taken) Net 173.89 (180.52) Interest on Unsecured Loans 11.48 8.80 Loan outstanding as on (69.63) (243.52)Better Value Brands Pvt. Ltd Loans and Advances given/(taken) Net 14.26 (1.60) Interest on Unsecured Loans 0.29 2.01 Loan outstanding as on – (14.26)Better Value Properties Pvt. Ltd. Loans and Advances given/(taken) Net 2.96 18.18 Interest on Unsecured Loans 1.03 (1.93) Loan outstanding as on (6.14) (9.10) Deposit outstanding as on 37.08 37.08 Rent for Premises 60.19 57.33

Notes to Accounts

Associate Companies/Firms (Contd.) :Name of the party Nature of transaction 31st March,

201131st March,

2010Life Fitness India Pvt. Ltd. Loan outstanding as on (0.12) (0.12)Pinnacle Fitness Private Limited Loans and Advances given/(repaid) Net – (0.38) Transfer of Members Fees (0.71) (0.86) Loan outstanding as on (2.20) (1.49)

Franchise fee Income 21.81 23.45 Franchise fee receivable as on 4.05 4.25Talwalkars Fitness Club Loans and Advances given/(repaid) Net 0.65 2.82 Transfer of Members Fees (0.11) (0.60) Loan outstanding as on 5.12 4.58Talwalkars Health & Leisure Loans and Advances given/(repaid) Net 1.29 (3.02) Transfer of Members Fees (0.44) (0.35) Loan outstanding as on 1.73 0.88Talwalkars Health Club Loans and Advances given/(repaid) Net (0.44) (0.66) Transfer of Members Fees – (0.30) Loan outstanding as on (0.31) (0.13)Talwalkars Health Complex Loans and Advances given/(repaid) Net (0.65) (1.42) Transfer of Members Fees – (0.20) Loan outstanding as on 2.50 1.85Talwalkars Health Commune Members Fees receivable – 0.83 Membership fee receivable as on 0.83 0.83Talwalkars Loans and Advances given/(repaid) Net 0.12 0.20 Loan outstanding as on 0.33 0.20Talwalkars Nutrition Centre Loans and Advances given/(repaid) Net 1.16 (0.72) Transfer of Members Fees – (0.11) Loan outstanding as on 1.50 0.34Club Business Systems Members Fees receivable – 0.36 Membership fee receivable as on 0.36 0.36Vinayak Gawande (HUF) Loans and Advances given/(taken) Net – 25.02 Interest on Unsecured Loans – 2.39 Loan outstanding as on – –Anant Gawande (HUF) Loans and Advances given/(taken) Net – 25.02 Interest on Unsecured Loans – 0.17 Loan outstanding as on – –Nitin Gawande (HUF) Loans and Advances given/(taken) Net – 25.02 Interest on Unsecured Loans – 1.30 Loan outstanding as on – –

b) Corporate Guarantees given: i) Denovo Enterprises Private Limited The Company has given a Corporate Guarantee amounting to ̀ 235 lacs to the said Joint Venture

Company (Previous year ` 125 lacs)

Notes to Accounts


ii) Equinox Wellness Private Limited

The Company has given a Corporate Guarantee amounting to ` 37.50 lacs to the said Joint Venture Company (Previous year ` 37.50 lacs)

iii) Aspire Fitness Private Limited

The Company has given a Corporate Guarantee amounting to ` 200.00 lacs to the said Joint Venture Company (Previous year ` NIL)

11. Events occurring after Balance Sheet date:

• The Company launched a low cost gym concept – Healthy India Fit India (HiFi) in April 2011. Unlike a typical full service Talwalkar Health Gym Format, the Hi-Fi Gyms is a “no-frills” gym providing quality and affordable health and fi tness solution catering to the Tier III and Tier IV cities/towns. The Company depending on location and space availability may set up Hi-Fi Gyms in Tier I and Tier II cities. A Hi-Fi Gym would typically be smaller in size, with an average area of 2,500 to 2,800 sq ft. A Hi-Fi gym will have all the key facilities of the existing gyms including imported fi tness equipments, air-conditioning, generator back up, excellent ambience and high quality personal trainers.

12. Auditors’ Remuneration (inclusive of service tax): (` in lacs)

2010-11 2009-10 - Audit Fees (Incl. Tax Audit Fee) 13.79 6.07- Other Services 1.99 4.69- Out of Pocket expenses 0.09 Nil

13. Estimated amounts of contracts remaining to be executed on capital accounts and not provided for 586.05 134.89

14. Directors’ Remuneration: includes paid to Six Directors of the Company, amounting to ` 252.00 lacs. (Previous year ` 142.90 lacs)

15. Additional information as prescribed under Part II of Schedule VI of the Companies Act, 1956 in respect of production /inventories are not applicable since the Company does not undertake any trading or manufacturing activity.

(` in lacs)Year ended

2010-11Year ended

2009-1016. Value of Imports on CIF Basis -

Gymnasium EquipmentsFurniture and Fixtures

1,055.97 55.65

838.72NIL

17. Earnings in Foreign Currency NIL NIL

18. Expenditure in Foreign Currency

Travelling Expenses 1.58 NIL

19. Non-Convertible Debentures:

The Company has issued 11.5% Redeemable Secured Non-Convertible Debentures, Face Value ` 10 lacs each aggregating to ` 30 Crores through private placement. The principal amount of the Non-Convertible Debentures, interest due and any other monies payable by the Company in respect of the Non-Convertible Debentures will be secured by fi rst pari passu charge on the specifi ed assets of the Company as identifi ed in the Debenture Trust Deed such that a fi xed asset cover of 1.25 times is maintained at all times during the tenor of the Non-Convertible Debentures.

Notes to Accounts

20. Based on the intimations regarding their status under Micro, Small and Medium Enterprises Development Act, 2006 there are no amounts due and payable to suppliers covered under the above category.

21. The Company made an Initial Public Offer of 60,50,000 equity shares of ̀ 10 each for cash at a premium of ̀ 118 per equity share, aggregating to ̀ 7,744 lacs of which ̀ 6,672 lacs have been spent towards the object of the issue (` 3,950 lacs were utilised for setting up additional health clubs, ` 2,059.20 towards repayment of unsecured loans and ` 662.80 lacs towards issue expenses) and the balance has been invested in debt schemes of mutual fund.

22. The operations of the Belgaum and Koramangala Branches have been temporarily suspended due to some disputes. The Company has already fi led legal cases against the same and on the basis of advice of its legal counsel, is confi dent of favourable outcome and early recommencement of operations of the branches.

23. Previous year’s fi gures have been regrouped/re-arranged wherever necessary to confi rm to the current year’s classifi cation.





Notes to Accounts


1. COMPANY’S REGISTRATION DETAILS:Registration No. 140134 State Code 11 Balance Sheet Date 31st March, 2011

(` in Lacs)2. CAPITAL RAISED DURING THE YEAR:

Public Issue 605.00Right Issue NilBonus Issue NilPrivate Placement Nil

3. DETAILS OF MOBILISATION AND DEPLOYMENT OF FUNDS:Total Liabilities 24,664 Total Assets 24,664 SOURCES OF FUNDS:Paid-up Capital 2,412 Reserves and Surplus 10,066 Secured Loans 10,212 Unsecured Loans 926 Defered tax liability 1,048 APPLICATION OF FUNDS:Net Fixed Assets 19,230 Investments 969 Net Current Assets 4,465 Miscellaneous Expenditure Nil Accumulated Losses Nil

4 PERFORMANCE OF COMPANY:Turnover 8,841 Total Expenditure 6,610 Profi t before Tax 2,232 Profi t after Tax 1,523 Earnings per share Weighted Average (`) 6.46

Diluted (`) 6.46 Statutory Dividend rate % 10.00%

5 GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/ SERVICES OF COMPANY (AS PER MONETARY TERMS):Item Code No. N.A.Service Description GYMNASIUMS



Balance Sheet Abstract and Company’s General Business Profile

TO THE BOARD OF DIRECTORS OF TALWALKARS BETTER VALUE FITNESS LIMITED

We have audited the attached Consolidated Balance Sheet of Talwalkars Better Value Fitness Limited (the Company) and its s ubsidiaries (collectively referred to as “the Group”) as at 31st March, 2011, and the Consolidated Profi t and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management and have been prepared by the Management on the basis of separate fi nancial statements and other fi nancial information regarding components. Our responsibility is to express an opinion on these Consolidated fi nancial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and the signifi cant estimates made by the Management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. We did not audit the fi nancial statements of Aspire Fitness Private Ltd. and Equinox Wellness Private Limited, subsidiaries, whose fi nancial statements refl ect total assets of ` 911.10 Lacs as at 31st March, 2011, total revenue of ` 498.22 Lacs and cash fl ows amounting to ` 66.42 Lacs for the year ended. These fi nancial statements and other fi nancial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of other auditors.

2. We have relied on the unaudited fi nancial statements of Denovo Enterprises Private Limited, a subsidiary whose consolidated fi nancial statements refl ect total assets of `1,417.45 Lacs as at 31st March, 2011, total revenue of ` 1,035.30 Lacs, cash fl ows amounting to ` 6.47 Lacs for the year then ended. These unaudited fi nancial statements as approved by the Board of Directors of the said company have been furnished to us by the Management and our report in so far as it relates to the amounts included in respect of the said Subsidiary Company is based solely on such approved unaudited fi nancial statements. The said subsidiary has not made any provision for deferred Tax in accordance with Accounting Standard (AS) 22, the consequential impact thereof on the profi t of the Subsidiary for the year ended 31st March, 2011 and on the Reserves as on 31st March, 2011 cannot be ascertained.

3. We report that the Consolidated Financial Statements have been prepared by the Company’s management in accordance with the requirements of Accounting Standard 21 (Consolidated Financial Statements), as notifi ed under the Companies (Accounting Standards) Rules, 2006;

4. Based on our audit and on consideration of reports of other auditors on separate fi nancial statements of the Company and on other fi nancial information of the components, subject to our comments in paragraph 2 above and to the best of our information and according to the explanations given to us, in our opinion, the Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India:

Auditors’ Report on Consolidated Financial Statements


(i) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2011;

(ii) in the case of the Consolidated Profi t and Loss Account, of the profi t of the Group for the year ended on that date; and

(iii) in the case of the Consolidated Cash Flow Statement, of the cash fl ows of the Group for the year ended on that date.


Firm Registration No. 126518W

S. L. SarafDated: 14th June, 2011 PartnerPlace : Mumbai Membership No. 030866

Auditors’ Report on Consolidated Financial Statements

(` in Lacs)Schedule As at

31st March, 2011 I. SOURCES OF FUNDS:1. Shareholders’ Funds Share Capital 1 2,411.57 Reserves and Surplus 2 10,146.84 Capital Reserve on Consolidation 19.34

12,577.75 2. Minority Interest 216.99 3. Loan Funds Secured Loans 3 10,743.45 Unsecured Loans 4 1,371.03

12,114.48

4. Deferred Tax Liabilities (net) 1,091.84 TOTAL 26,001.06

II. APPLICATION OF FUNDS:1. Fixed Assets 5 (a) Gross Block 20,482.17 (b) Less: Accumulated Depreciation/Amortisation 2,628.60 (c) Net Block 17,853.57 Capital Work-in-progress 2,742.52

20,596.09 2. Investments 6 869.04 3. Current Assets, Loans and Advances (a) Sundry Debtors 7 2,026.99 (b) Cash and Bank Balances 8 2,915.22 (c) Loans and Advances 9 2,427.81

7,370.02 Less: Current Liabilities and Provisions 10 (a) Current Liabilities 1,727.92 (b) Provisions 1,134.33

2,862.25 Net Current Assets 4,507.77 4. Miscellaneous Expenditure (to the extent not written off or adjusted) Preliminary Expenses 28.16

TOTAL 26,001.06 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS 19Schedules referred to above form an integral part of the Financial StatementsAs per our report of even date




Consolidated Balance Sheet as at 31st March, 2011


(` in Lacs)Schedule Year ended

31st March, 2011 INCOMEIncome from Operations 11 10,226.89 Other Income 12 207.48

10,434.37 Personnel Cost 13 2,024.40 Administrative and other expenses 14 2,903.15 Selling and Marketing Cost 15 350.73 Service Tax Collected and Paid 942.41

6,220.69 PROFIT BEFORE INTEREST, DEPRECIATION, EXTRAORDINARY ITEMS AND TAXES 4,213.68 Finance Cost 16 859.34 PROFIT BEFORE DEPRECIATION , EXTRAORDINARY ITEMS AND TAXES 3,354.34 Non-Cash Charges 17 896.42 PROFIT BEFORE EXTRAORDINARY ITEMS AND TAXES 2,457.92 Profi t/(loss) on Sale of Asset (36.44)PROFIT BEFORE TAX 2,421.48 Taxation (Net) 18 459.19 Deferred Tax 277.98 PROFIT AFTER TAX BUT BEFORE MINORITY INTEREST 1,684.31 Share of Minority Interest 81.21 PROFIT AFTER TAXATION 1,603.10 Profi t Brought Forward from Previous Year 1,810.43 Profi t available for appropriations 3,413.53 APPROPRIATIONS:Debenture Redemption Reserve 22.60 Proposed Dividend on Equity Shares 241.15 Tax on Dividend 40.03 Balance carried to Balance Sheet 3,109.75

Earnings Per Share (`) :Basic 6.80 Diluted 6.80 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS 19Schedules referred to above form an integral part of the Financial StatementsAs per our report of even date




Consolidated Income Statement for the year ended 31st March, 2011

(` in Lacs)Year ended

31st March, 2011 A. CASH FLOW FROM OPERATING ACTIVITIES:

Net profi t before Taxes 2,421.48 Non-cash expenses 909.50 Finance cost (Net) 859.34 Income from Investment activity (108.42)(Profi t)/Loss on sale of assets 36.44

1,696.86 Operating Profi t before Working capital changes 4,118.34

(Increase)/Decrease in Current Assets (493.16)(Increase)/Decrease in Trade and other receivables (1,677.25)Increase/(Decrease) in Trade and other payables 459.05

(1,711.36)Cash generated from operations 2,406.98

Direct taxes paid (522.59)Share of Minority Interest (256.98)Net cash from operating activities 1,627.41

B. CASH FLOW FROM INVESTING ACTIVITES:Investment in Joint Venture (106.09)Payment towards purchase of Fixed Assets, CWIP (7,916.80)Proceeds from sale of fi xed assets 1.00 Dividend Received 99.89 Purchase of Short Term Investments (12,406.00)Proceeds from sale of Short Term Investments 12,059.74 Share of Minority Interest 435.75 Net cash (used in)/from Investing activities (7,832.51)

Consolidated Cash Flow for the year ended 31st March, 2011


(` in Lacs)Year ended

31st March, 2011 C. CASH FLOW FROM FINANCING ACTIVITIES:

Share issue Proceeds (net of refund including security premium) 7,718.54 Issue proceeds from Non-Convertible Debentures 3,000.00 IPO related expenses (587.47)Borrowings done 3,017.64 Repayment of Long-term and other borrowings (3,883.53)Finance cost paid (1,116.25)Dividend Paid (120.58)Dividend Tax Paid (20.49)Share of Minority Interest (210.48)Net cash used in Financing Activities 7,797.38

NET INCREASE IN CASH AND CASH EQUIVALENTS (A + B + C) 1,592.28

CASH AND CASH EQUIVALENTS AT THE BEGINING OF THE PERIOD AFTER MINORITY INTEREST 1,204.13

Cash and Bank Balance including Fixed Deposits 2,915.22 Balance in Cash Credit facility (56.54)Less : Share of Minority Interest (62.27)

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD AFTER MINORITY INTEREST 2,796.41





Consolidated Cash Flow for the year ended 31st March, 2011

(` in Lacs)As at

31st March, 2011 SCHEDULE 1 SHARE CAPITAL Authorised: 30,000,000 Equity Shares of ` 10/- each 3,000.00

3,000.00 Issued, Subscribed and Paid-up Equity Shares24,115,672 Equity shares of ` 10 each Fully Paid-up 2,411.57 (a) of the above, 550,000 shares were allotted as Fully paid up pursuant to the

Agreement for takeover of business and issued in consideration received other than in cash.

(b) of the above, 70,260 Equity Shares were allotted against redemption of Preference Shares

(c) of the above, 15,807,463 Equity Shares have been issued by way of bonus by capitalising Reserves

2,411.57

SCHEDULE 2 RESERVES AND SURPLUS (a) Securities Premium Balance in Securities Premium 588.45 Add: Securities Premium received on Issue of shares 7,139.00

7,727.45 Less: Adjustments of Share issue/Debenture issue expenses 712.96

7,014.49 (b) Debenture Redemption Reserve 22.60 (c) Balance in Profi t and Loss Account 3,109.75

10,146.84

SCHEDULE 3 SECURED LOANS (a) Secured Loans (Term loan and acceptances) 7,686.91 (b) Cash Credit Facility 56.54 (c) Redeemable Secured Non-Convertible Debentures 3,000.00

10,743.45

SCHEDULE 4 UNSECURED LOANS 1,371.03

1,371.03

Schedules forming part of the Consolidated Balance Sheet as at 31st March, 2011


SCHEDULE 5 FIXED ASSETS

(` in Lacs)

Particulars Gross Block Depreciation Net Block

As at 1st April,

2010

Additionduring the

year

Deletionduring the

year

As at31st March,

2011

As at 1st April,

2010

For the year Adjustment for the year

As at 31st March,

2011

As at 31st March,

2011

Goodwill 566.03 – – 566.03 78.54 28.63 – 107.17 458.86

Immovable Property 715.35 29.37 – 744.72 76.76 15.32 – 92.08 652.64

Furniture and Fixtures 5,410.22 2,228.22 33.76 7,604.68 775.47 391.00 14.71 1,151.76 6,452.92

Gym and Offi ce Equipments 5,089.04 3,189.53 9.94 8,268.63 566.84 310.70 3.31 874.23 7,394.40

Computer and Software 143.45 71.21 – 214.66 57.07 27.44 – 84.51 130.15

Franchisee License Fees 3.00 – – 3.00 1.67 0.33 – 2.00 1.00

Other Equipments – 7.96 – 7.96 – 0.21 – 0.21 7.75

Air-conditioners 852.42 485.20 14.28 1,323.34 92.42 46.71 4.73 134.40 1,188.94

Electrical Installations 1,138.14 618.06 7.05 1,749.15 109.76 75.13 2.65 182.24 1,566.91

Total 13,917.65 6,629.55 65.03 20,482.17 1,758.53 895.47 25.40 2,628.60 17,853.57

(` in Lacs)As at

31st March, 2011SCHEDULE 6 INVESTMENTS A. Long term Non-Trade Unquoted (at cost) : Investment In Joint Ventures: Fully paid Equity Shares In Joint Ventures Splender Fitness Pvt. Ltd. 500.00 (Formerly known as Talwalkars Pantaloon Fitness Pvt. Ltd.)

[140,000 Equity Shares of `100/- each fully paid at premium aggregating 3,60,00,000] B. Current, short-term, trade (valued at cost or market value whichever is lower) Axis Liquid Fund 362.00 UTI Treasury Advantage Fund 7.04

869.04 SCHEDULE 7 SUNDRY DEBTORS(Unsecured, considered good) Debts outstanding for a period of (a) More than Six months 64.19 (b) Others 1,962.80

2,026.99


(` in Lacs)As at

31st March, 2011SCHEDULE 8 CASH AND BANK BALANCES (a) Cash in hand 159.61 (b) Balances with Scheduled Banks In Current Accounts 890.92 In Fixed Deposits 1,864.69

2,915.22

SCHEDULE 9 LOANS AND ADVANCES (Unsecured, considered good, unless otherwise stated) (a) Advances recoverable in cash or in kind or for value to be received 97.00 (b) Deposits 1,167.30 (c) Input Credit Service Tax Carried forward 116.08 (d) Income Tax and FBT paid 650.90(e) Prepaid Expenses 35.45(f) Unavailed Service Tax Cenvat Credit 56.63(g) MAT Credit 304.45

2,427.81

SCHEDULE 10 CURRENT LIABILITIES AND PROVISIONS (A) CURRENT LIABILITIES (a) Liabilities for expenses 1,246.24 (b) Duties and Taxes payable 226.57 (c) Liabilities for Capital goods 254.51 (d) Membership fees refundable 0.60

(a) 1,727.92 (B) PROVISIONS (a) Provision for Taxation 770.01 (b) Provision for Fringe Benefi t Tax 19.84 (c) Proposed Dividend on Equity Shares 241.16 (d) Provision for Tax on Dividend 40.03 (e) Provision for Contribution to Group Gratuity Scheme 0.91 (f) Provision for Interest on Non-convertible Debentures 62.38

(b) 1,134.33 (a) + (b) 2,862.25



(` in Lacs) Year ended

31st March, 2011SCHEDULE 11 INCOME FROM OPERATIONSGross Fees including Service Tax 9,354.03 Franchisee Fees including Service tax 641.18 Input Credit Service Tax 231.68

10,226.89 SCHEDULE 12 OTHER INCOMEIncome from Juice Centre and Food & Supplements 4.10 Profi t/(loss) on Sale of Asset/Investments 8.53 Sundry Credit balances no longer payable 8.52 Dividend From Mutual Funds 99.89 Miscellaneous Income 31.48 Interest on Bank Term Deposits 54.96

207.48 SCHEDULE 13 PERSONNEL COST Salaries, wages and Bonus 259.09 Contract fees for Labour/ Security/ Housekeeping 1,688.75 Director’s Remuneration, Sitting fees 67.53 Staff Welfare and Other Amenities 7.63 Contribution towards Group Gratuity Scheme 1.40

2,024.40 SCHEDULE 14 ADMINISTRATIVE AND OTHER EXPENSESStatutory Audit Fees 16.27 Internal Audit Fees 19.60 AGM Meeting Expenses 1.58 Consumables, Food and Supplements 79.72 Electricity and Fuel expenses 643.45 Insurance Charges 10.82 Juice Centre and Spa Expenses 6.10 Miscellaneous Expenses 53.28 Pooja and Special Function Expenses 9.17 Printing and Stationery 35.00 Professional Fees 97.80 Rates and Taxes 33.51 Interest on late payment of Service Tax 28.04 Rent 1,190.09 Repairs and Maintenance - Building, Gym Equip. & Machinery 152.73 - Others 3.65 ROC Expenses 0.61 Telephone Expenses 50.63 Travelling and Conveyance Expenses 30.39 Turnkey Project Expenses 410.86 Water Charges 29.85

2,903.15

Schedules forming part of the Consolidated Profit and Loss Account for the year ended 31st March, 2011

(` in Lacs) Year ended

31st March, 2011SCHEDULE 15 SELLING AND MARKETING COSTAdvertising Expenses 263.49 Business Promotion expenses 87.24

350.73

SCHEDULE 16 FINANCE COSTInterest on Secured Loan 457.25 Interest on Unsecured Loan 230.36 Interest on Letter of credit 43.58 Processing Fees 5.93 Bank Charges 16.28 Interest Non-Convertible Debentures 62.59 Credit Card Charges 43.35

859.34

SCHEDULE 17 NON-CASH CHARGESPreliminary Expenses w/off 0.95 Depreciation 895.47

896.42

SCHEDULE 18 TAXATION (NET)Provision for Current Tax 459.19

459.19

Schedules forming part of the Consolidated Profit and Loss Account for the year ended 31st March, 2011


SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS TO THE CONSOLIDATED STATEMENT OF BALANCE SHEET AS AT 31ST MARCH, 2011 AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011.SCHEDULE 19 :A) STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES: 1. Basis of Accounting: a) Basis of preparation:

The individual Balance Sheet as at 31st March, 2011 and Profi t and Loss Account for the year ended 31st March, 2011 of Talwalkars Better Value Fitness Limited (“the Company”) and its subsidiaries, collectively referred to as ‘Group’, have been consolidated as per principle of consolidation enunciated in Accounting Standard (AS) 21- ‘Consolidated Financial Statements’ issued by the Council of The Institute of Chartered Accountants of India. The fi nancial statements are prepared under the historical cost convention on an accrual basis of accounting in accordance with the generally accepted accounting principles in India, Accounting Standards notifi ed under Section 211 (3C) of the Companies Act, 1956 and the relevant provisions thereof.

b) Use of estimates:

The preparation of fi nancial statements required management to make judgements, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the fi nancial statements and the reported amount of revenues and expenditure for the years represented. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised and future years are affected.

c) Principles of Consolidation:

The consolidated fi nancial statements relate to the Company and its three partially owned subsidiaries. The fi nancial statements of the subsidiary company used in consolidation are drawn up to the same reporting date as of the Company.

The consolidated fi nancial statements have been prepared on the following basis:

1. The fi nancial statements of the Company and its partially owned subsidiaries have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealized profi ts or losses.

2. The consolidated fi nancial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner, as the Company’s separate fi nancial statements. The Company’s standalone income has been presented by way of the aggregate of gross fees including Service Tax. However, the subsidiaries have presented income by way of fees excluding Service Tax. Thus, for the purpose of consolidation, the group’s income has been computed by the former method.

Notes to Accounts

3. The subsidiaries considered in the consolidated fi nancial statement are:

Name of Company Country of Incorporation % ownership interest as at 31st March, 2011

Denovo Enterprises Private Limited India 50.10%Equinox Wellness Private Limited India 33.33% *Aspire Fitness Private Limited India 50.001%

* effective ownership due to 66.67% holding of Denovo Enterprises Private Limited in Equinox Wellness Private Limited.

2. Fixed Assets:

● Fixed assets are stated at original cost, net of tax/duty credits availed if any, less accumulated depreciation/amortisation. Costs include all expenses incurred to bring the assets to its present location and condition. Assets acquired by way of slump sale are recorded at book value in the books of the transferor as on the date of transfer. Revenue expenses incurred in connection with project implementation in so far as such expenses relate to the period prior to the commencement of commercial activity are treated as part of the fi xed assets and capitalized.

● Capital work-in-progress comprises outstanding advances paid to acquire fi xed assets, and the cost of fi xed assets that are not yet ready for their intended use at the balance sheet date.

● Intangible assets are recorded at the consideration paid for acquisition and are carried at cost less accumulated amortization.

3. Depreciation/Amortisation:

● Depreciation on all fi xed assets is provided pro-rata from/up to the date of acquisition/disposal using the straight-line method at the rates prescribed by Schedule XIV of the Companies Act, 1956.

4. Provisions, Contingent Liabilities and Contingent Assets:

● Provisions involving substantial degree of estimation in measurement are recognised if there is a present obligation as a result of past events and it is probable that there will be an outfl ow of resources.

● Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the fi nancial statements.

5. Revenue Recognition:

● Income from Fees and subscriptions, recorded net of discounts and rebates have been recognised as income for the year irrespective of the period, for which these are received. However, the Fees receivable from existing members as at the end of the year has been recognised as income for the year.

● The costs relating to rendering of these services being unascertainable are charged off to revenue in the year in which they become legally payable.

● Input credit availed on Service Tax through revenue expenses paid are accounted for separately as income, thus accounting the expenses at their gross values inclusive of service tax. Expenses on which service tax is paid in subsequent year are booked net of the Un-availed Service Tax at end of the year.

Notes to Accounts


● Income by way of Franchise Fees (including up-front fees) received pursuant to franchise agreements entered are recognised as income of the period in accordance with terms of the agreement, and as per data submitted by the franchisees.

● Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

● Any other income i.e. from juice bar sales, consumables etc. are recognised on receipt basis since the realizations there-from are immediate and no credit is allowed to the customers/members.

6. Impairment of Assets: ● The management periodically assesses using, external and internal sources, whether there is an

indication that an asset may be impaired.

● An impairment loss is charged to the Profi t and Loss Account in the year in which the asset is identifi ed as impaired.

● At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss.

● The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

7. Employees benefi ts:

● All employee benefi ts payable wholly within twelve months of rendering the service are classifi ed as a short-term employee benefi ts. Benefi ts such as salaries, wages, contractual labour charges and short-term compensated absences, etc is recognised in the period in which the employee/contractual labour renders the related service.

● The gratuity liability is provided and charged off as revenue expenditure based on actuarial valuation. The company has subscribed to the group gratuity scheme policy of LIC of India.

● Any other payments under the relevant labour statutes, wherever applicable are reimbursed to the Outsourced Agency as and when applicable.

8. Borrowing Cost:

● Borrowing cost incurred for qualifying assets is capitalised up to the date the asset is ready for intended use, based on borrowings incurred specifi cally for fi nancing the asset. In determining the amount of borrowing cost eligible for capitalisation during a period, any income earned on the temporary investment on those borrowings is deducted from the borrowing cost incurred.

● Other fi nancing/borrowing costs are charged to the Profi t and Loss Account. 9. Foreign Currency Transactions:

● Exchange differences are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each Balance Sheet date, foreign currency monetary items are reported using the closing rate.

● Exchange differences that arise on settlement of monetary items or on reporting at each Balance Sheet date of the Company’s monetary items at the closing rate are:

Notes to Accounts

● Up to 31st March, 2008, the same were recognised as income or expense in the period in which they arise and,

● Thereafter, were adjusted in the cost of fi xed assets specifi cally fi nanced by the borrowings to which the exchange differences relate.

10. Taxes on Income :

● Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

● Deferred Taxation is recognised for all timing differences between accounting income and taxable income and is quantifi ed using enacted/substantial enacted tax rates as at balance sheet date. Deferred Tax asset are recognised subject to the management’s judgment that the realization is virtually/reasonably certain.

11. Investments:

● Long-term investments are stated at cost, less any provision for diminution (other than temporary) in value. Current investments are stated at lower of cost and fair value.

12. Segment Reporting: ● In the opinion of the management, there is only one reportable business segment as envisaged

by Accounting Standard (AS) 17 'Segment Reporting'. Accordingly, no separate disclosure for the segment reporting is required to be made in the fi nancial statement of the Company.

● Secondary segmentation based on geography has not been presented as the Company operates primarily in India and the Company perceives that there is no signifi cant difference in its risk and returns in operating from different geographic areas within India.

13. Leases:

● Lease rentals/License fees in respect of assets under operating lease are charged to the Profi t and Loss account.

14. Earnings per share:

● Basic and diluted earnings per share is computed by dividing the net profi t attributable to equity shareholders for the year, by weighted average number of equity shares outstanding during the year.

15. Cash Flow Statement:

● The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard (AS) 3 on Cash Flow Statements and presents the cash fl ows by operating, investing and fi nancing activities of the Company.

● Cash and Cash equivalents presented in the cash fl ow Statement consist of cash on hand, balances in Current, Fixed Deposit and Cash Credit Accounts with Bank.

Notes to Accounts


B) NOTES TO CONSOLIDATED FINANCIAL STATEMENT: 1. Contingent Liabilities : Contingent liabilities not provided for in respect of (` in Lacs)

2010-11Income Tax demands (net of amount paid in protest) AY 2006-07 19.00Bank Guarantee given on behalf of Joint Ventures 472.50Claim from a landlord, appeal pending before the Judiciary - Hyderabad 306.50- Koramangala 72.11Claim by Advertising agency # 6.39

# 8800 GBP @ ` 72.59 (as on 31.03.2011) 2. Security against Secured Loans Availed: [Refer Schedule ‘B’ to accounts] A) Talwalkars Better Value Fitness Ltd.

● All loans, which include sub limit of Inland and Foreign Letter of credit and cash credit facility are sanctioned by Union Bank of India are secured primarily against the fi rst hypothecation/ mortgage charge on the entire movable and immovable Fixed Assets and Current Assets of the Company including Gymnasium Equipments, Furniture and Fixtures and any other equipment installed in the Gymnasiums, equitable mortgage of immovable premises of the Company, corporate guarantee and collateral security by way of equitable mortgage of premises situated at Tardeo and Mahalaxmi, Mumbai of third parties and the personal guarantee of three Directors of the Company.

● The abovementioned Foreign/Inland Letters of Credit availed by the Company have been shown under “Acceptances” under the head “SECURED LOANS”.

B) Aspire Fitness Pvt. Ltd.

All loans, which include sub limit of Inland and Foreign Letter of credit and cash credit facility are sanctioned by Axis Bank are secured primarily against the fi rst hypothecation/mortgage charge on the entire movable and immovable Fixed Assets of the Company including Gymnasium Equipments, Furniture and Fixtures and any other equipment installed in the Gymnasiums and the personal guarantee of two Directors of the Company.

C) Equinox Wellness Pvt. Ltd.

All loans are sanctioned by Axis Bank are secured primarily against the fi rst hypothecation charge on the entire movable Fixed Assets of the Company including Gymnasium Equipments, Furniture and Fixtures and any other equipment installed in the Gymnasiums.

D) Denovo Enterprises Pvt. Ltd.

All loans are sanctioned by Axis Bank are secured primarily against the fi rst hypothecation charge on the entire movable Fixed Assets of the Company including Gymnasium Equipments, Furniture and Fixtures and any other equipment installed in the Gymnasiums.


In line with the amendment to Accounting Standard (AS) 11 as per the Notifi cation No. G.S.R. 225 (E) dated 31st March, 2009, the foreign exchange gains has been adjusted to the cost of the fi xed assets as on 31st March, 2011.

Notes to Accounts

4. Related Party Disclosures: Disclosure as required by the Accounting Standard 18, “Related Party Disclosure” is given below: List of Related Parties: Key Management Personnel ● Talwalkars Better Value Fitness Ltd. (Holding Company) ■ Mr. Madhukar Talwalkar (Executive Chairman) ■ Mr. Prashant Talwalkar (Managing Director & Chief Executive Offi cer) ■ Mr. Girish Talwalkar (Whole-time Director) ■ Mr. Vinayak Gawande (Whole-time Director) ■ Mr. Harsha Bhatkal (Whole-time Director) ■ Mr. Anant Gawande (Whole-time Director & Chief Financial Offi cer) ● Denovo Enterprises Pvt. Ltd. ■ Late Mr. Vikram Maheshwary (Ex – Whole-time Director) ■ Mr. Harsh Maheshwary (Whole-time Director) ● Equinox Wellness Pvt. Ltd. ■ Mr. Abhishek Sharma (Whole-time Director) ● Aspire Fitness Pvt. Ltd. ■ Mr. Virendra Sherlekar (Whole-time Director) Relatives of Key Management Personnel ● Mrs. Yamini Anant Gawande ● Mr. Sudhakar Talwalkar ● Mr. Kedar Sherlekar Enterprises over which Key Management Personnel and their relatives exercise signifi cant infl uence: ● Anfi n Investments Private Limited ● Better Value Leasing & Finance Ltd. ● Better Value Brands Private Limited ● Better Value Properties Private Limited ● Brainworks Learning Systems Private Limited ● Gawande Consultants Private Limited ● Life Fitness India Private Limited ● Popular Prakashan Private Limited ● Popular Institute of Arts Private Limited ● Radhika Hotels Private Limited ● Pinnacle Fitness Private Limited ● Talwalkars Fitness Club ● Talwalkars Health & Leisure ● Talwalkars Health Club ● Talwalkars Health Complex ● Talwalkars Health Commune ● Talwalkars Nutrition Centre ● Talwalkars ● Anant Gawande (HUF) ● Vinayak Gawande (HUF) ● Nitin Gawande (HUF) ● R2 Infrastructure Private Limited ● R2 Spa Systems ● Indian Cookery.com Private Limited ● Indian Cookery Private Limited ● Splendor Fitness Private Limited

Notes to Accounts


Transactions with Related Parties:(` in Lacs)

Nature of transactions Associates Key Managerial Personnel

Others Total

Incomes 21.81 – – 21.81Expenses 62.42 19.19 – 81.61Interest on Unsecured Loans 121.30 3.80 6.40 134.53Purchase of Equipments 66.08 – – 66.08Director’s Remuneration – 262.29 – 262.29Transfer of Members Fees 1.26 – – 1.26Investments incl. Share Application Money – – 106.69 106.69Loans repaid/ (taken) Net 1,371.69 0.96 – 1,372.65Loans and Advances (given)/repaid Net 4.30 – – 4.30

Balance as at 31st March, 2011 :(` in Lacs)

Nature of transactions Associates Key Managerial Personnel

Others Total

Investments incl. Share Application Money – – 500.00 500.00Sundry Debtors 5.24 – – 5.24Deposits 6.13 13.05 – 19.19Loans and Advances 9.17 – – 9.17Unsecured Loans 13.89 – (15) (1.11)

Transactions with Related Parties pursuant to Accounting Standard-18 Key management personnel and their Relatives :

(` in Lacs)Name of the party Nature of transaction 31st March, 2011Mr. Madhukar Talwalkar Director’s Remuneration 42.00 Mr. Prashant Talwalkar Director’s Remuneration 42.00 Rent for Premises 19.19 Deposit for premises – Deposit outstanding as on 13.05 Mr. Girish Talwalkar Director’s Remuneration 42.00 Gym Equipment sold – Loans and Advances given/(taken) Net – Loan outstanding as on – Mr. Vinayak Gawande Director’s Remuneration 42.00 Loans and Advances repaid/(taken) Net – Interest on Unsecured Loans – Loan outstanding as on – Mr. Harsha Bhatkal Director’s Remuneration 42.00 Mr. Anant Gawande Director’s Remuneration 42.00 Mr. Abhishek Sharma Director’s Remuneration 6.72

Interest on Loan 0.66Loan outstanding as on 4.55

Late Mr. Vikram Maheshwary Director’s Remuneration 3.57

Notes to Accounts

6. Basic and Diluted Earning per Share has been computed as under : (` in Lacs)

Particulars 2010-11Profi t After Tax - Before Exceptional Item 1,603.10Weighted Average No. of Shares Outstanding 2,35,68,686Basic/Diluted EPS - Before Exceptional Item ` 6.80Profi t After Tax - After Exceptional Item 1,603.10Weighted Average No. of Shares outstanding 2,35,68,686Basic/Diluted EPS - After Exceptional Item ` 6.80Face value per share ` 10 per share

7. Details of Deferred Tax Asset/(Liability) are as under: (` in Lacs)

Nature of timing difference Deferred Tax Asset/ (Liability)

as on 1st April, 2010

(Charge) / credit to the Profi t and Loss

Account

Deferred Tax Asset/ (Liability) as on

31st March, 2011Deferred Tax LiabilitiesDepreciation (813.86) (295.85) (1109.71) Re-statement of fi gures atCurrent tax rates – 17.88 17.88Deferred Tax Assets – – –Net Amount and consequent increase/ decrease in Net Profi t and Reserves (813.86) (277.97) (1091.84)

Denovo Enterprises Pvt. Ltd. one of the subsidiaries, has not computed and provided Deferred Tax for the year ended 31st March, 2011. Hence, the consequential impact on the profi ts of the Group for the year ended 31st March, 2011 and on the reserves as on 31st March, 2011 cannot be ascertained

8. Based on the intimations regarding their status under Micro, Small and Medium Enterprises Development Act, 2006 there are no amounts due and payable to suppliers covered under the above category.

9. The operations of the Belgaum and Koramangala Branches have been temporarily suspended due to some disputes. The company has already fi led legal cases against the same and on the basis of advice of its legal counsel, is confi dent of favourable outcome and early recommencement of operations of the branches.

10. The Previous year’s fi gures have not been given as the consolidated Financial statements have been prepared for the fi rst time for the fi nancial year ended 31st March, 2011.





Notes to Accounts


STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES ANNEXED TO THE BALANCE SHEET AS AT 31ST MARCH, 2011

(` in Lacs)Name of the Subsidiary Company

The Financial

Year of the Company ended on

Holding Company’s Interest as at close of fi nancial year of

subsidiary company

Net aggregate amount of subsidiary

company’s profi t after deducting its

losses or vice-versa, so far as it concerns

members of the Holding Company which are not dealt

within the Company’s account

Net Aggregate amount of subsidiary

company’s profi t after deducting its

losses or vice-versa, dealt within the

Company’s account

Shareholding Extent of Holding %age

For the current

fi nancial year

For the previous fi nancial

year

For the current

fi nancial year

For the previous fi nancial

year

Denovo Enterprises Private Limited

31st March, 2011

50,100 Equity shares of ` 100/- each

50.1% – – 63.42 **

Equinox Wellness Private Limited

31st March, 2011

* 2,00,400 Equity shares of ` 10/-

each

33.4% – – 1.08 **

Aspire Fitness Private Limited

31st March, 2011

50,001 Equity shares of ` 100/- each

50.001% – – 15.90 **

* Holding Company holds 50.1% of the paid-up capital of Denovo Enterprises Private Limited which, in turn, holds 66.67% of the paid-up capital of Equinox Wellness Private Limited of 6,00,000 Equity shares of ` 10/- each. Accordingly, Holding Company holds 33.4% of the paid-up capital of the Equinox Wellness Private Limited. (50.1% of the 66.67% of the paid-up capital)

** The Company has published the Consolidated Financial results for the fi rst time and hence the comparative fi gures for the corresponding period in the previous year are not provided.

FINANCIAL INFORMATION RELATING TO SUBSIDIARY COMPANIES FOR THE YE AR ENDED 31ST MARCH, 2011

(` in Lacs)

Name of the Subsidiary

Capital Reserve Total Assets

Total Liabilities

Investment* Turnover** Profi t before

Tax

Provision for tax

Profi t after tax

Proposed dividendGovern-

ment Securities

Shares, Debentures,

Bonds & Others

Units of Mutual Funds

Associate

Denovo Enterprises Private Limited 100 172 1377 1145 – 40 – – 1141 126 (1) 127 –

Equinox Wellness Private Limited 60 (29) 208 177 – – – – 115 1 (2) 3 –

Aspire Fitness Private Limited 100 25 703 578 – – – – 433 63 31 32 –

* Excluding Investment in Subsidiaries

** The above turnover of the subsidiary is inclusive of Service Tax so as to be in conformity with the accounting policies of the holding company.

Note:The Ministry of Corporate Affairs, Government of India vide its General Circular No. 2/2011 No. 51/12/2007-CL-III dated 8th February, 2011 and General Circular No. 3/2011 dated 21st February, 2011 issued under Section 212(8) of the Companies Act, 1956, has granted general exemptions to the Companies from attaching the documents of the Company’s subsidiaries, required to be attached under Section 212(1) of the Companies Act, 1956. However annual accounts of the Subsidiary Companies and the related detailed information will be made available to the investors of the Company and Subsidiaries of the Company, seeking such information, at any point of time at the Registered Offi ce of the Company and the concerned Subsidiary of the Company.

full annual report tbvfl

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