Your Directors are pleased to present the Second Annual Report on
business and operations with the audited financial statement for the year ended 31st
March, 2018:
Demerger
A major development in 2016-17 was the decision to demerge business of
Talwalkars Better Value Fitness Limited. The total business was restructured in two parts
Gym Business and Lifestyle Business. The Gym business consists of world class gymming
experience backed by professional trainers. Fitness centres in four di3erent formats which
are Talwalkars Gym, Talwalkars Premium Gym, HiFi and Power World Gyms. Whereas the
Lifestyle Business provides value added services like Nuform (Timee3cient weight
loss program), Reduce (Easy Diet based program), Transform (Holistic fitness program),
Mickey Mehta 360 degrees wellness centres, Zumba Merchandise and Zumba (Aerobics and Latin
dance inspired fitness program), Zorba (Yoga), Spa, Massage and Aerobics along with club
business venture.
The National Company Law Tribunal, Mumbai Bench (NCLT) as per its order
dated 9th March, 2017 directed convening a meeting of shareholders for the purpose of
considering and if thought fit, approving the Scheme of Arrangement between Talwalkars
Better Value Fitness Limited ("Demerged Company") and Talwalkars Lifestyles
Limited ("Resulting Company") and their respective shareholders. A Court
Convened Meeting was held on 27th April, 2017 wherein the Shareholders of the Company
approved the said Scheme of Arrangement. Subsequently, NCLT approved the Scheme of
Arrangement vide its order dated 21st December, 2018. The Scheme became e3ective from 20th
February, 2018.
Accordingly, the Demerged Company named as Talwalkars Better Value
Fitness Limited ("TBVFL") transferred the entire Gym Business to Talwalkars
Lifestyles Limited ("TLL"), the resulting company and the cost of acquisition of
TLL shares was 71.04%.
In consideration of the Scheme, TLL has issued and allotted equity
shares to the shareholders of TBVFL in the share entitlement ratio of 1:1 i.e. one (1)
equity share of Rs 10/- (Rupees Ten only) each in TLL for every one (1) equity share of
Rs10/- (Rupees Ten only) each in TBVFL, held by each shareholder as on record date of 28th
March, 2018.
Subsequently application for listing of the equity shares allotted
pursuant to the Scheme of Arrangement was made to The National Stock Exchange of India
Limited ("NSE") and BSE Limited ("BSE Ltd").
TLL received in principle approval from NSE on 19th April, 2018, BSE on
4th May, 2018 and letter confirming relaxation from Rule 19(2)(b) of the Securities
Contracts (Regulation) Rules, 1957 from Securities and Exchange Board of India
("SEBI") on 20th June, 2018. The Final listing and trading approval for the
equity shares of TLL were received from NSE and BSE on 27th June, 2018.
The Equity shares of TLL were listed and admitted to dealings on NSE
and BSE with e3ect from 29th June, 2018.
Financial Highlights
Pursuant to the Scheme of Arrangement, the entire gym business was
transferred to the Company with e3ect from 20th February, 2018. The below table summarizes
the Financial Results of the Gym Business.
The Company has adopted Indian Accounting Standards (Ind
AS') pursuant to notification issued by the Ministry of Corporate A3airs dated 16th
February, 2015 and as prescribed under Section 133 of the Companies Act, 2013
("Act") read with the relevant rules made thereunder from 1st April, 2016 being
the date of transition as per Ind AS101.
Financial statement for the year ended and as at 31st March, 2017 has
been restated to conform to Ind AS. The highlights of your Company's standalone
financial performance for the year ended 31st March, 2018 are summarised below:
|
|
Rs in millions |
Summarized Financial Results |
March 31, 2018 |
March 31, 2017 |
Revenue from operations |
2307.38 |
2077.78 |
Other Income |
122.95 |
19.37 |
Total Income |
2430.33 |
2097.15 |
Profit before interest, depreciation and taxation |
1473.58 |
1230.22 |
Financial Expenses |
154.02 |
106.47 |
Depreciation |
291.11 |
289.83 |
Exceptional Items |
0.81 |
-3.92 |
Pro3t before tax |
1029.26 |
830.00 |
Provision for taxation |
282.15 |
295.43 |
Deferred Tax |
60.35 |
9.72 |
Pro3t after tax but before minority interest |
686.76 |
524.85 |
Share of minority interest |
- |
- |
Pro3t after tax |
686.76 |
524.85 |
Excess provision of Income Tax written back |
- |
- |
Balance brought forward |
2006.45 |
1671.89 |
Total available for appropriation |
2693.21 |
2196.74 |
Final Dividend and Dividend Distribution Tax |
53.63 |
53.63 |
General Reserve |
- |
30.85 |
Debenture Redemption Reserve |
198.10 |
105.81 |
Balance carried forward |
2441.48 |
2006.45 |
Our Business
Your Company continues its leadership position as largest Fitness Chain
with 251 fitness centres on consolidated basis across 84 cities and towns. At Talwalkars,
we possess multiple gym models that includes core gymming and personalised training
Review of Operations
Riding on brand goodwill and management competence, our Income from
Operations (Net) on a standalone basis grew at a 2-year CAGR (FY17 - FY18) of 11.05%
achieving Rs2307.38 millions during Financial Year 17-18. Similarly, our EBITDA and
Profits after
Tax on a standalone basis for the year ended 31st March, 2018, were
Rs 1,351.44 millions and Rs 686.76 millions respectively, growing at a
2-year CAGR (FY 17 - FY 18) of 11.25% and 30.85% respectively.
During the year along with the financial performance, your
Company's profit before tax as well as profit after tax and minority interest
recorded a healthy growth of 21.21% and 19.94% respectively. The volume of the business
also displayed an increase of 9.69% over last year.
No material changes a3ecting the financial position of the Company have
occurred between the end of the financial year 2017-18 and the date of this Report.
Dividend
Based on the Company's performance, your Directors are pleased to
recommend for approval of the members a dividend @ 10% (Re. 1/- per equity share of
Rs10/-) for the year ended 31st March, 2018. The dividend has been recommended in
accordance with your Company's policy of balancing dividend pay-out with the
requirement of funds for its growth plans.
Transfer to Reserves
The Directors have decided to retain the entire amount of Rs 2441.48
millions in the retained earnings.
Subsidiaries and Associate Company
The Company has 3 Subsidiaries as on 31st March, 2018. There are 6
Associate companies / Joint Ventures The Subsidiaries, Associate companies and Joint
Ventures have been classified based on criteria specified under Ind As. There has been no
material change in the nature of the business of the subsidiaries.
Pursuant to the provisions of Section 129(3) of the Act, a statement
containing the salient features of financial statements of the Company's
Subsidiaries/Associate Companies/Joint Ventures in Form AOC-1 is attached to this Report
as Annexure - I. Further, pursuant to the provisions of Section 136 of the Act, the
financial statement of the Company, consolidated financial statement and the financial
statements of subsidiaries, are available on the website of the Company. The Company has
formulated a policy for determining material subsidiaries. The Policy may be accessed at
the link: https://talwalkarslifestyles.com/wp-content/uploads/2018/08/
Policy-on-Determinig-Material-Subsidiaries.pdf
Directors' Responsibility Statement
In accordance with the provisions of Section 134(5) of the Act, your
Directors confirm that:
(a) In the preparation of the annual accounts, the applicable
accounting standards have been followed and there are no material departures;
(b) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and prudent so as
to give a true and fair view of the state of a3airs of the Company at the end of the
financial year and of the profit of the Company for that period;
(c) The Directors have taken proper and su3cient care for the
maintenance of adequate accounting records in accordance with the provisions of this Act
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities;
(d) The Directors have prepared the annual accounts on a going concern
basis;
(e) The Directors laid down internal financial controls to be followed
by the Company and that such internal financial controls are adequate and were operating
e3ectively;
(f ) The Directors have devised proper systems to ensure compliance
with the provisions of all applicable laws and that such systems were adequate and
operating e3ectively;
Based on the framework of internal financial controls and compliance
systems established by the Company, work performed by the internal, statutory and
secretarial auditors, including audit of internal financial controls over financial
reporting by the statutory auditors, the Board is of the opinion that the Company's
internal financial controls were adequate and e3ective during financial year 2017-18.
Directors and Key Managerial Personnel
Your Company has four Directors including Non-Executive Chairman,
Executive Director and two Independent Directors including a Woman Director in accordance
with Corporate Governance norms of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (herein after referred to as "SEBI Listing
Regulations") and the provisions of the Act.
Mr. Prashant Talwalkar relinquished the o3ce of Executive Director and
was re-designated as Non Executive Chairman of your Company. Further, in accordance with
the provisions of the Act and the Articles of Association of the Company, Mr. Prashant
Talwalkar, Director of the Company retires by rotation at the ensuing Annual General
Meeting and being eligible, o3ers himself for reappointment.
Mr. Dinesh Afzulpurkar and Ms. Farzana Tavadia were appointed as
Additional Directors in the Non-Executive, Independent Category with e3ect from 29th
March, 2018 subject to confirmation by members at the ensuing Annual General Meeting.
Resolutions for appointment / re-appointment of Directors will be
placed for your approval at the ensuing Annual General Meeting.
Mr. Harsha Bhatkal resigned from the Board of Directors with e3ect from
30th March, 2018 due to pre occupation. The Board places on record its appreciation for
his invaluable contribution and guidance provided by him.
Independent Directors of your Company have given declaration confirming
their independence and fair conduct in performance as provided in Section 149 of the Act
and the Listing Requirements of the Stock Exchanges.
During the year, the Non-Executive Directors of the Company had no
pecuniary relationship or transactions with the Company.
The Board appointed Ms. Gayatri Valan Prasad as the Company Secretary
and Compliance O3cer with e3ect from 15th December, 2017.
Mr. Girish Talwalkar, Executive Director and Ms. Gayatri Valan Prasad
Company Secretary and Compliance O3cer of the company are the Key Manegerial Personnel of
Company in terms of Section 2(51) read with section 203(1)of the companies Act, 2013.
Number of Meetings of the Board
Nine Board meetings were held during the Financial Year 2017-18 with
requisite quorum present for each of them, the details of which are given in the Corporate
Governance Report.
Board Evaluation
The Board of Directors has devised a policy for annual evaluation of
the performance of the Board, its Committees and of individual directors (including
Independent Directors) pursuant to the provisions of the Act and the Corporate Governance
requirement as prescribed by SEBI Listing Regulations. The performance of the Board are
evaluated after seeking inputs from all the Directors on the basis of criteria such as the
Board composition and structure, e3ectiveness of Board processes, information and
functioning etc. as provided by the Guidance Note on Board Evaluation issued by the
Securities and Exchange Board of India on 5th January, 2017.
The Board and the Nomination & Remuneration Committee review the
performance of individual Directors on the basis of criteria such as the contribution of
the individual Director to the Board and Committee meetings like preparedness on the
issues to be discussed, meaningful and constructive contribution and inputs in meetings,
etc. The performance of the Committees are evaluated by the Board after seeking inputs
from the Committee Members on the basis of criteria such as the composition of Committees,
e3ectiveness of Committee Meetings etc.
Company's Policy on Directors' Appointment and Remuneration
The Company's policy on Directors' appointment and
remuneration and other matters provided in Section 178(3) of the Act has been disclosed in
the Corporate Governance Report, which forms part of this report.
Audit Committee
The details pertaining to composition, functions performed and meetings
of Audit Committee are included in the Corporate Governance Report, which forms part of
this report.
Statutory Auditor
Pursuant to the provisions of Section 139 of the Act read with
Companies (Audit and Auditors) Rules, 2014, as amended from time to time, M/s Lakdawala
& Associates, Chartered Accountants (Firm Registration No. 105518W), were appointed as
statutory auditors from the conclusion of the first Annual General Meeting (AGM) held on
September 30, 2017 till the conclusion of the sixth AGM of the Company, subject to the
ratification of their appointment at every AGM, if required under law. Accordingly,
necessary resolution for ratification of appointment of auditors is included in the Notice
for ensuing AGM.
Auditor's Report and Secretarial Audit Report
The Auditor's Report and Secretarial Audit Report do not contain
any qualifications, reservations, or adverse remarks. Secretarial Audit Report is attached
to this report.
Risk Management
Your Company has Risk Management Policy to mitigate the risks. The
Company manages and monitors the principal risks and uncertainties that can impact its
ability to achieve its strategic objectives.
Particulars of loans, guarantees and Investments
The particulars of loans, guarantees and investments have been
disclosed in the financial statement forming part of this Annual Report and the same were
given for the principal business activities.
Related Party Transactions
During the year under review, all related party transactions entered
into by the Company were in the ordinary course of business and on an arm's length
basis. No related party transaction was in conflict with the interests of the Company.
Your Company has not entered into materially significant related party transactions with
any of its related parties. Accordingly, the disclosure of Related Party Transactions as
required under Section 134(3)(h) of the Companies Act, 2013, in Form AOC-2 is not
applicable.
In line with the requirements of the Companies Act, 2013 and SEBI
Listing Regulations, the Board has formulated a Policy on Related Party Transactions which
has been uploaded on the Company's website at
https://talwalkarslifestyles.com/wp-content/
uploads/2018/07/Policy-on-Related-Party-Transactions.pdf
The Policy intends to ensure that proper reporting, approval and
disclosure processes are in place for all transactions between the Company and Related
Parties.
Corporate Social Responsibility (CSR)
The Board has designed a CSR Policy. Your Company aims at exhibiting
care and concern for the Society. The Company broadly aims to undertake the activities
related to health awareness, education, medical check-ups, promotion of Art and culture
etc.
Weblink of Company's CSR Policy: https://talwalkarslifestyles.com/
wp-content/uploads/2018/08/CSR-Policy.pdf
Extract of the Annual Return
The extract of the Annual Return as provided under Section 92 (3) of
the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration)
Rules, 2014 in Form No. MGT-9 is presented here under in Annexure III to this
Annual Report.
Particulars of Employees
Pursuant to Section 197 of the Act, read with Rule 5 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, none of the employees
of the Company was in receipt of the remuneration during the financial year 2017-18, which
in aggregate was in excess of Rs1.02 crores per year or Rs8.5 lakhs per month or in excess
of the remuneration drawn by the Managing Director or Whole-time Director or Manager and
holds by himself or along with his spouse and dependent children two percent or more of
the equity shares of the Company.
The statement of particulars of appointment and remuneration of
managerial personnel pursuant to Rule 5 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 is as under:
(i) Ratio of the remuneration of each Director to the median
remuneration of the Employees of the Company for the financial year 2017-18 and the
percentage increase in remuneration of each Director and Company Secretary during the
financial year 2017-18:
Name of Director/KMP |
Designation |
Ratio of remuneration of each Director to median remuneration
of Employees |
Percentage increase in remuneration |
1 Prashant Talwalkar |
Non Executive Chairman |
Not Applicable |
- |
2 Girish Talwalkar |
Executive Director |
Not Applicable |
- |
3 Harsha Bhatkal* |
Executive Director |
Not Applicable |
- |
4 Dinesh Afzulpurkar |
Independent Director |
Not Applicable |
- |
5 Farzana Tavadia |
Independent Director |
Not Applicable |
- |
6 Gayatri Valan Prasad |
Company Secretary |
Not Applicable |
Not Applicable |
*Resigned with e3ect from 30th March, 2018
(ii) The percentage increase in the median remuneration of employees in
the financial year: Not Applicable
(iii) Permanent employees on the roll as on 31st March, 2018 : 2
(iv) During the financial year 2017-18, average increase in the
salaries of employees other than the managerial personnel in the last financial year was
not applicable and increase in Managerial Remuneration was also not applicable.
(v) We hereby a3rm that the remuneration paid is as per the
remuneration policy of the Company.
Corporate Governance
As per SEBI Listing Regulations, Corporate Governance Report with a
certificate of Practicing Company Secretary is attached, which forms part of this report.
Management Discussion and Analysis
A detailed Management Discussion and Analysis forms part of this Annual
Report.
Secretarial Standards
The Company complies with all the applicable Secretarial Standards.
Deposits
The Company has not accepted any deposits from public falling within
the preview of Section 73 of Companies Act, 2013, and rules framed thereunder.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings And Outgo
Conservation of Energy and Technology absorption are not applicable to
the Company.
Foreign Exchange earnings and Outgo
|
|
Rs In millions |
Particulars |
2017-18 |
2016-17 |
Total foreign exchange earnings |
-- |
-- |
Total foreign exchange outgo |
1.8 |
-- |
Details of the statutory orders impacting the Company
Hon'ble National Company Law Tribunal, Mumbai Bench Passed an order on
21st December, 2017 approving the scheme of Arrangement between Talwalkars Better Value
Fitness Limited ("Demerged Company ") and Talwalkars Lifestyles Limited
("Resulting Company") and their respective shareholders.
Other than one mentioned above no significant and material orders were
passed by the Regulator or Courts or Tribunals Impacting the going concern status and the
Company's operations in future.
Acknowledgement
Your Directors take this opportunity to place on record its
appreciation of sincere e3orts put in by the employees of the Company in making the
Company excel in the realm of health and fitness.
Your Directors sincerely thank all the investors, members, bankers,
financial institutions, business associates, regulatory and government authorities for
their continued support, assistance and valuable co-operation to set a brand
Talwalkars' with di3erence.
For and on behalf of the Board
Talwalkars Lifestyles Limited
Girish Talwalkar
Executive Director DIN: 00341675
Prashant Talwalkar
Chairman DIN: 00341715
Date: 12th July, 2018 Place: Mumbai