TALWALKARS BETTER VALUE FITNESS LTD (TBVF)

TALWALKARS BETTER VALUE FITNESS LTD Quarterly Update(Q1 FY 2012-13)

9th Aug 2012

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The views expressed here may contain information derived from publicly available sources

that have not been independently verified. No representation or warranty is made as to the

accuracy, completeness or reliability of this information.

Any forward looking information in this presentation has been prepared on the basis of a

number of assumptions which may prove to be incorrect. This presentation should not be

relied upon as a recommendation or forecast by Talwalkars Better Value Fitness Limited.

This presentation may contain 'forward-looking statements‘ - that is, statements related to

future, not past, events. In this context, forward-looking statements often address our

expected future business and financial performance, and often contain words such as

'expects,’ 'anticipates,' 'intends,' 'plans,' 'believes,' 'seeks,' or 'will.' Forward - looking

statements by their nature address matters that are, to different degrees, uncertain.

For us, uncertainties arise from the behavior of financial markets and change in

consumption patterns; from future integration of acquired businesses; and from numerous

other matters of national, regional and global scale, including those of an environmental,

climatic, natural, political, economic, business, competitive or regulatory nature. These

uncertainties may cause our actual future results to be materially different than those

expressed in our forward-looking statements.

We do not undertake to update our forward-looking statements.

Cautionary Statement and Disclaimer

1. Talwalkars (TBVFL) – About us

2. Business Strategy

3. New Initiatives

4. Marketing Initiatives

5. Result Update – Q1 FY13

6. Current Quarter Highlights

7. Outlook

Discussion Summary

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About us – overview

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

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

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

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

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

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

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

• Consistent financial performance; achieved CAGR(FY’06-12) of 52.36% in Income from Operations, 55.46% in EBITDA & 80.04% in PAT

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

About us – pan-India brand, and presence

• Most of the Organized Chains have presence limited to Tier I cities .

• Talwalkars has demonstrated the scalability of health clubs by establishing presence in smaller towns of India like Ajmer , Ichalkaranji, Ranchi, Jamshedpur, etc.

• Talwalkars will further continue to bring quality fitness at affordable prices across the country.

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

Only organized

Player in listed space

Member base of over 1,26,000

130 health clubs spread

in 69 cities and towns of India

One of the largest gym chain in India and Asia

TBVFL

TALWALKARS MODEL

VALIDATION

Thane

Mumbai Sangli

Pune Belgaum

Nagpur

Ahmedabad

Bengaluru

Guntur

Hyderabad

Ichalkaranji

Delhi/NCR

Amritsar

Secunderabad

Aurangabad

Hubli

Mysore

Mangalore

Cochin

Calicut

Ludhiana

Udaipur

Jaipur Jodhpur

Chennai

Coimbatore

Bhopal

Indore Kolkata

Jabalpur

Varanasi

Vishakhapatnam

Bhubaneswar

Kakinada

Madurai

Bhimavaram

Nellore

Thiruvananthapuram

Rajkot

Gwalior

Ghaziabad

Jamnagar

Raipur

Kota

Trichy

Ujjain

Bilaspur

Guwahati

Bareilly

Agra Lucknow

Meerut

Faridabad

Jalandhar

Allahabad

Dehradhun

Bhavnagar

Panchkula

Jamshedpur

Ambala

Ranchi

Gandhinagar

Ajmer

Vijayawada

Solapu

r

Noid

a

Singhgad

Bhila

i

Rajahmundry

Aligarh

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Format No. of Health clubs

Talwalkars – Own 92

Talwalkars –JV 11

Trademark Licensed 10

Talwalkars –Franchise 7

HiFi 10

Total 130

About us – health club details

About us – acceptance across India

Total no. of Health Clubs Tier Distribution

Zonal Distribution

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• Penetration across target customers spread over tier I,II,III cities through different formats and price points.

• Opened several health clubs in the mini-metros and mid-India towns like Ajmer, Gandhinagar, Indore, Jamshedpur, and many more, and the response has been ahead of our expectation.

31%

45%

25%

Tier I Tier II Tier III

92

11

7

10

10

Own Subsidiaries Talwalkars-Franchise Trade mark licensed HiFi

5%

39%

30%

25%

East West North South

About us – health club growth, membership growth

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23 30 42

54 63

94

128

7 12

12 9

31

34

2

0

15

30

45

60

75

90

105

120

135

FY07 FY08 FY09 FY10 FY11 FY12 Q1 FY13

Additions Beginning of the year

130 No. of Health clubs

CAGR – 33%

As on result date

As on result date

19 21

29 38

55 59

83

125 126

0

20

40

60

80

100

120

140

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Q1FY13

Members(in '000)

CAGR 29%

About us – strengths

Consistency

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

Quality

• World Class Equipments from reputed international manufacturer, viz., Precor, Matrix, Hoist etc.

• In House Training ensures quality of the Trainers and improves the Resource pool for rapid expansion.

Trained manpower

• Talwalkars has its own 25000 sq ft residential training academy in Thane , Mumbai which gives training to existing and newly recruited trainers.

• The course duration typically ranges from 30-35 days. • In-house project management team • Critical to scaling up business.

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Diverse service offerings

• TBVFL has broadened its scope from being a gym player to a fitness player. NuForm Gym studios is one of the initiatives with a focus on Weight Loss and Slimming Activity. Other recent initiatives include ZUMBA® fitness program .

• Besides the standard facilities in the Health club, TBVFL has introduced several Value added offerings such as Spa , Aerobics , Personal Training etc.

About us – key differentiators

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Market Leadership: TBVFL is one of the largest fitness chain in India with a pan- India presence. Brand Talwalkars is present at 130 locations spread across 69 cities and towns in 18 states, serving over 1,26,000 members. The recently launched HiFi format will hasten our penetration in to the smaller markets of the country. Brand Equity: The brand has a strong recall. This factor along with personalized services and competitive pricing helps in customer retention and breaking the competitive clutter of the industry, dominated by unorganized sector. Promoters’ Experience and Expertise: Company has benefited from the diverse expertise of its Promoters. While the Talwalkars Group has several decades of experience in the health and fitness industry, the Gawande Group has vast experience in several areas of business management including finance marketing and legal.

Diverse service offering: TBVFL has broadened its scope from Fitness to Fitness, Wellness and Slimming segment. NuForm Gym studios is one of the Initiatives with a focus on Weight Loss and Slimming Activity. Also apart from the standard facilities in the health club, TBVFL has introduced ZUMBA® fitness program and other several Value added offerings such as Spa, Aerobics, Personal Training etc.

Quality and Consistent health club experience: The company assures a uniform health club experience for its patrons, across all its locations in the country, including world-class equipments and consistent quality of the trainers. The in-house academy provides tremendous competitive advantage in an industry, with shortage of quality fitness trainers.

Business Strategy – high ROI, scale & low cap-ex

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TBVFL

100% Ownership

51% Subsidiary

Franchisee

+

Tier 1 and Tier 2 cities

EXPANSION STRATEGY DRIVEN TO MAXIMIZE ROIC

TYPE OWNERSHIP CAP-EX ROIC IMPLICATION

Talwalkars 100% Full Neutral

Talwalkars - Subsidiary 51% Half Higher

HiFi Nil Nil Highest

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

2. The franchise agreement entered ensures quality supervision of gym equipment , trainers , ambience etc. by TBVFL.

BUSINESS STRATEGY- Subsidiary- Salient features

Lower Cap-ex, Higher Returns

Buyback Option

• Low Capex due to 51% holdings in subsidiary health club

• Talwalkars receives a Royalty of 6% of Revenues for 1st 3 yrs which is 8% thereafter

• Faster BEP, Higher ROIC

• Option to buyback subsidiary health club at any point of time @ 3.5x EV/EBITDA multiple

Subsidiary Model

• Operate through Brand “TALWALKARS”

• Full Service health club spread over ~5000 sq ft.

• Target Customers – Tier 1,2 Cities

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Business Strategy – subsidiary model

Hi-Fi FRANCHISEE – from India to Bharat

Lower cap-ex, Affordable

• There are several Tier II/III cities and towns and select suburbs in large cities where a full service Talwalkars health club would not be commercially viable.

• To tap this huge opportunity, the HiFi brand is being launched in cities like Porbander, Faridabad etc.

Faster roll out, Attractive pricing

Target tier II-III cities and towns

Affordable Accelerated

Expansion

Brand Extension

Reaching Wider

Customer Base

• With a small sized format, HiFi health club can be rolled out in 8-10 weeks against 14- 16 weeks for a typical Talwalkars health club and it would be priced at 60% of its price points.

• A HiFi health club would typically be a no frills format health club of ~2500-2800sqft, smaller than the ~5000sqft full service Talwalkars health club and low on cap-ex.

• It is an affordable format rolled out on a Franchise or JV model in the Tier II & III cities and towns.

BUSINESS STRATEGY - Salient features

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Business Strategy – HiFi model

CAPEX FOR TALWALKARS NIL

ROYALTY TO TBVFL ON REVENUE

Royalty for 1st 3 years (% of Revenue) 6%

ROYALTY THEREAFTER 8%

One time Income to TBVF

One Time Upfront Royalty (`mn) 1

One Time Equipment Supply Charges (` mn)

1

NuForm Gym Studio – Weight loss with just 20mins/week

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Targeting to select

audience

Focus on Slimming

and Weight Loss

Time Saving, Convenient

Fitness Solution

Better Realizations- 2-3x normal

Gym Membership

Standalone High Street Studios –

Low Capex. High ROI

• Talwalkars NuForm model – Uses various technological tools for focussed weight loss through EMS, Diet counselling along with food products .The EMS session is just 20 minutes work out once a week.

• Target Customer Segment - Nuform is aimed to cater to potential customer that has avoided gyms due to shortage of time, health and aging issues. Mainly Targeted as Tier- 1 cities with focus on Upwardly mobile and Affluence class.

• Benefits - Total fitness, Weight loss and fat removal, Enhanced muscle formulation and stimulation, Muscular strength and endurance.

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

Miha Bodytec came up with the concept of losing weight through the Electro Muscle Stimulation (EMS) technology.

Miha machines has been successfully used by thousand of users at more than 1,500 centres across Germany and the Rest of Europe.

The same, proven German technology is now being introduced as NuForm by Talwalkars in India.

NuForm gym studio

Capex (`Mn) 15

Operating Expenses (`Mn) 7.5

Revenue per member (` p.a) 42000

Member Capacity per Studio 500

No. of studios opened 6

ZUMBA® fitness program

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• ZUMBA® Fitness started with selling DVDs, then the infomercial – which introduced the ZUMBA® Fitness-Party to the public on a wide-scale basis – then came the demand for ZUMBA® fitness program and ZUMBA® instructors.

• Talwalkars has introduced ZUMBA® fitness program in Talwalkars health clubs. Currently, ZUMBA® fitness program is offered across 11 location and the company plans to introduce ZUMBA® program across all gyms in a phased manner. Apart from the health clubs Talwalkars also plans to start ZUMBA® fitness program in schools, colleges etc.

• Rationale for Talwalkars – The launch of ZUMBA® Fitness is a move towards widening its customer base while using the team and infrastructure it already has in place, thereby seeking to consolidate its position as the leader in the fitness industry in India.

Started in 2001, the ZUMBA® fitness program has grown to become the world's largest and most successful – dance-fitness program

DID YOU KNOW ? ZUMBA® fitness program is practised by over more than 12 million people of all shapes, sizes and ages taking weekly ZUMBA® classes in over 110,000 locations

across more than 125 countries.

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Marketing – national market initiative

Summer Scheme

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

NATIONAL MARKETING INITIATIVE Marketing – regional initiatives

DECCAN CHARGERS – Vizag Branch

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Marketing – social media properties (new websites)

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

Marketing – digital marketing initiative

Webinars & presence across social media

Talwalkars fitness blog

A Webinar is an on-line seminar more of

having a live seminar experience.

The speaker in the webinar is a Consultant

who has vast experience and knowledge

speak on the various subjects.

The webinar acts as a new lead generation

tool for various health clubs. Also, the webinar

can act as a catalyst for up-selling to the

existing members the various services offered

within the gym.

Marketing – digital marketing initiative

Talwalkars fitness blog

How a 20 minutes workout once a week can keep you fit!

Videos – Social Media Platforms

Marketing – digital marketing initiative

Google Ads

myTalwalkars on Twitter

UNDERSTANDING SEASONALITY Understanding Financial - seasonality

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Given the nature of our Business, there exists a strong seasonality and hence our numbers should be compared on a YoY basis, and not sequentially to derive the true picture

Q1

Q2

Q3

Q4

Apr - Jun

Jul - Sep

Oct - Dec

Jan - Mar

19%

35%

18%

28%

REVENUE %

School vacation, Monsoons

Talwalkars Annual Discount Scheme, A big Draw

Festivals: Diwali, Ganesh Chaturti, Pongal, Navratri, Dussera, Christmas

New Year, New resolutions sees uptake in membership

CHARACTERISTICS

9%

PAT %

40%

10%

41%

UNDERSTANDING SEASONALITY Standalone results – profit & loss (Q1 FY 12-13)

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Unaudited

Particulars (` mn) Apr-Jun

2012 Jan-Mar

2012 Apr-Jun

2011 YoY%

Income from Operations 252 307 202 25%

Other Operating Income 2 4 5 -55%

Total 254 311 206 23%

Expenditure

Personnel Cost 57 44 49 16%

Admin & Other Exp 86 81 72 20%

Service Tax Collected & Paid 26 28 18 44%

Total 170 152 139 22%

EBITDA 85 159 67 26%

Depreciation 31 26 26 18%

EBIT 54 133 41 31%

Interest 23 23 19 20%

PBT 31 113 22 41%

Tax 5 39 4 16%

PAT & before extraordinary Items 26 74 17 47%

PAT 26 74 17 47%

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

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Unaudited

Particulars (` mn) Apr-Jun

2012 Jan-Mar

2012 Apr-Jun

2011 YoY%

Income from Operations 285 412 232 23% Other Operating Income 2 5 5 -55%

Total 287 417 236 21% Expenditure Personnel Cost 65 56 55 18% Admin & Other Exp 98 117 81 21% Service Tax Collected & Paid 30 30 21 42%

Total 193 203 157 23% EBITDA 94 214 79 19% Depreciation 33 29 28 17% EBIT 61 185 51 20% Interest 25 28 22 14% PBT 36 160 29 24% Tax 5 45 6 -11% PAT & before extraordinary Items 31 115 23 33% PAT before Minority Interest 31 115 23 33% Minority Interest 3 20 3 -12% Net Profit After Minority Interest 28 95 20 40%

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

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Notes

1 The above results were reviewed by the Audit Committee and approved by the Board of Directors at their meeting held on 9th August, 2012.

2 The Statutory Auditors have carried out a limited review of the results for the quarter ended 30th June, 2012.

3 The above financial results are in accordance with the accounting policies followed by the Company in preparation of its statutory accounts.

4 Consolidated financial results have been prepared in accordance with Accounting Standard 21 - "Consolidated Financial Statements" and Accounting Standard 23 - "Accounting for Investment in Associates in Consolidated Financial Statements".

5 There are no qualifications raised by the Auditors in the Limited Review Report.

6 There are no separate reportable segments as per Accounting Standards (AS–17) – Segment Reporting.

7 The company has 130 Healthclub and Gyms across 69 cities and towns in India. The company has started Zumba ® classes in 11 centres across 8 towns in India.

Status of Investors complaints for the quarter ended 30th June, 2012:

Pending at the beginning of the quarter Received during

quarter

Disposed Off

during the quarter

Remaining unresolved at the end of the

quarter

8 Nil Nil Nil Nil

9 The Consolidated results includes the financial results of the subsidiaries Aspire Fitness Private Limited, Denovo Enterprises Private Limited, Equinox Wellness Private Limited and Jyotsna Fitness Private Limited

10 Information of Standalone Accounts as per Clause 41 of Listing Agreement.

Particulars Quarter ended Year ended

30.06.2012 31.03.2012 30.06.2011 31.03.2012

Unaudited Unaudited Unaudited Audited

Turnover 2,277.63 2,835.64 1,880.18 10,088.02

Profit before Tax 305.95 1,131.16 217.13 2,810.96

Profit after Tax 255.76 737.70 173.71 1,919.67

11 The Company has opted to publish only the Consolidated financial results. The standalone results of the Company will be available for Investors at www.talwalkars.net, www.nseindia.com and www.bseindia.com.

12 The current period figures in this statement have been reported in the amended format as per the SEBI circular dated 16th April 2012, accordingly previous period / year figures have also been regrouped / reclassified to confirm with the current period presentation.

UNDERSTANDING SEASONALITY Highlights – Financial (Consolidated)

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• The financials vary quarter on quarter because of strong seasonal variations as explained. The current quarter being a subdued quarter is not comparable with the previous quarter results.

• The Income from operations has increased by 23% and stood at ` 287 mn while PAT after minority interest has increased by 40% over Q1 of previous year. The Profit after minority interest for the current quarter is ` 28 mn. The company was also able to generate additional revenue by offering additional facilities such as Nu-form.

• PAT as percentage of turnover has increased by 100 basis points over same quarter of previous year. Historically Q2 is a better quarter and generally 30-35% of annual PAT is generated in this quarter. We have received robust response in the first 8 days of the August scheme and have achieved the initial target.

• In spite of high inflation and increase in service tax rates the company was able to maintain its EBITDA at 33% as compared to same quarter previous year aided by new initiatives.

• The increase in Personnel cost and Administration and other expenses is mainly on account of increase in number of gyms.

BUSINESS STRATEGY- Subsidiary- Salient features

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Highlights - General

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

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

• New Initiatives introduced by TBVFL

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

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

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

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

Growth Strategy- Same Store Growth

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• The company introduced spa services in 4 of its locations, enhancing the same store sales growth. The spa services are launched as premium services thereby increasing the revenue generated per member. The company has spa services in 13 locations across India.

• There has been an increasing demand for personal training and the company with its quality trainers has been able to cater this demand and enhance revenue from members availing such services to the tune of 30-40% per member.

• The recent initiative of the company – NuForm gym studios has received satisfactory response which generates a higher realisation than the normal gym membership. The NuForm fees is ` 42000/- per annum. The company has also launched other weight loss initiative to leverage on the current customer base which have also been introduced in gym.

• The company has launched Zumba® fitness program in 11 locations. Average fee charged

for aerobics is around ` 750 per month while that for Zumba® classes is ` 2500 per month generating about 3x more of aerobics fee. The positive response for the Zumba® classes will enable the company to increase rates for Zumba® classes along with

increasing the number of centres for Zumba® classes.

• Diet food under the brand ‘Reduce’ has been introduced on trial basis in the Bangaluru based health clubs. The initial fees is about ` 20,000 per Quarter.

• TBVFL continues to dominate the health an fitness industry with 130 health clubs spread across 69 cities and towns. TBVFL has proved its credentials in running successful health club not only in larger cities but also smaller towns.

• The company sees strong demand and potential in tier II-III cities and towns of India with increased awareness. The company is focussed in penetrating in to these cities and towns to reach a wider customer base and enhance profitability.

• Increasing Focus on Optimizing Product offerings and introducing New Services to Leverage the Current Asset base and Customer portfolio.

• The company new initiatives - NuForm and Zumba® fitness program has received satisfactory response. The company believes these initiatives will help in increasing average revenue per member and also widen the customer base.

• The Company has shown a robust increase in Turnover and profitability on an annualized basis commensurate to its existing growth pattern. The Company expects to maintain the margins in the current year both at EBIDTA and PAT level.

UNDERSTANDING SEASONALITY Outlook

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THANK YOU!

Anant Gawande, Promoter and Director Talwalkars Better Value Fitness Limited anantg@talwalkars.net +91 22 66126300

Prashant Desai, Founder Seagull Value Consultants LLP

prashant@theseagull.in +919820063106

FOR FURTHER INFORMATION, CONTACT

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