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Directors Report of Talwalkars Better Value Fitness Ltd.

Mar 31, 2018

Dear Shareholder’s

The Directors are pleased to present 15th Annual Report on business and operations with the audited financial statement for the year ended 31st March, 2018:

Demerger

The National Company Law Tribunal (NCLT), Mumbai Bench by its order dated 9th March, 2017 directed the Company to convene a meeting of Shareholders. Accordingly a Court Convened Meeting of Shareholders was held on 27th April, 2017 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. As per the Scrutiniser’s Report dated 27th April, 2017, the Shareholders of the Company approved the said Scheme of Arrangement. The Scheme of Arrangement was sanctioned by the Hon’ble National Company Law Tribunal, Mumbai Bench on 21st December, 2017. The certified true copy of order of Hon’ble National Company Law Tribunal was filed with the Registrar of Companies on 20th February, 2018 and accordingly, the scheme has become effective from 20th February, 2018.

Accordingly, the Resulting Company named as on the date of this report as Talwalkars Lifestyles Limited (TLL), is the Company to which the entire Gym business is transferred and the cost of acquisition of its share is 71.04%. The existing Company i.e. Talwalkars Better Value Fitness Limited (TBVFL) has retained all other business other than the Gym business and its cost is 28.96%.

In consideration of the demerger scheme, Talwalkars Lifestyles Limited has issued and allotted equity shares to the shareholders of Talwalkars Better Value Fitness Limited 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 Rs. 10/- (Rupees Ten only) each in TBVFL, held by each shareholder as on record date of 28th March, 2018.

Financial Highlights

The Company has adopted Indian Accounting Standards (‘IndAS’) pursuant to notification issued by the Ministry of Corporate Affairs dated 16th February, 2015 and as prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules made thereunder from 1st April, 2016 being the date of transition as per IndAS.

Financial statement for the year ended and as at 31st March, 2017 has been restated to confirm to IndAS. 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

572.83

493.49

Other Income

31.98

30.53

Total Income

604.81

524.02

Profit before interest, depreciation and taxation

421.45

343.46

Financial Expenses

103.22

78.49

Depreciation

178.72

126.17

Exceptional Items

-

-

Profit before tax

139.51

138.80

Provision for taxation

26.17

21.50

Deferred Tax

11.13

26.18

Profit after tax but before minority interest

102.21

91.12

Share of minority interest

-

-

Profit after tax

102.21

91.12

Excess provision of Income Tax written back

-

-

Balance brought forward

617.34

526.22

Total available for appropriation

719.55

617.34

Proposed Dividend

-

-

Corporate Dividend Tax

-

-

Debenture Redemption Reserve

-

-

General Reserve

-

-

Balance carried forward

719.55

617.34

Our Business

Vide the Scheme of Arrangement between Talwalkars Better Value Fitness Limited (“Demerged Company”) and Talwalkars Lifestyles Limited (“Resulting Company”) and their respective shareholders, the management of Demerged Company has demerged the Gym Business by transferring the same to Talwalkars Lifestyles Limited. Post sanction of the Scheme of Arrangement by NCLT, the business of your Company is to render different types of healthcare and beauty services including diet, nutrition-based weight-loss programs like Reduce, Nuform, yoga, physiotherapy, Zumba, Zorba, and other allied lifestyle and wellness activities etc.

Review of Operations

Riding the brand goodwill and management competence, our Income from Operations (Net) on a standalone basis grew at a 2 year CAGR (Financial Years 2016-17 and 2017-18) of 16.08% achieving Rs. 572.83 millions during financial year. Similarly, our EBITDA and Profits after Tax on a standalone basis for the year ended 31st March, 2018, were Rs. 389.47 millions and Rs. 102.20 millions respectively, growing at a 2 year CAGR (Financial Years 2016-17 and 2017-18) of 24.47% and 12.18% 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 0.53% and 12.18% respectively. The volume of the business also displayed an increase of 16.08% over last year.

No material changes affecting the financial position of the Company have occurred between the end of the financial year 2017-18 and the date of this Report, 7th May, 2018.

Share capital

During the year, the Company issued 13,00,000 Equity shares of Rs. 10/- each at a premium of Rs. 308.33/- on a preferential basis in terms of Chapter VII of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. The funds have been used to finance the short term and long term working capital requirement of the business on one hand and to support the future growth plans of the Company, on the other.

Dividend

Your Directors are pleased to recommend for the consideration of shareholders, a dividend @5% (Re.0.50/- per equity share of Rs. 10/-) for the year ended on 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.

Reserves

The Directors have decided to retain the entire amount of Rs. 719.55 millions in the Profit and Loss Account.

Deposits

During the year under review, Company has not accepted any fixed deposits from the public falling within the purview of Section 73 of the Companies Act, 2013 (herein after referred to as “the Act”) and rules framed there under.

Subsidiaries

The Company has two subsidiaries as on 31st March, 2018. There has been no material change in the nature of the business of the subsidiaries. There are no Associate Companies or Joint Venture Companies within the meaning of Section 2(6) of the Act.

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 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: http://www.talwalkars.net/admin/investor/Po licyforMaterialSubsidiary12716164544408-7249c.pdf

Management Discussion and Analysis

A detailed Management Discussion and Analysis forms part of this Annual Report.

Corporate Social Responsibility (CSR)

The CSR policy of your Company is aimed at exhibiting care and concern for the Society. The Company broadly undertakes the activities related to health awareness, education, medical checkups, promotion of Art and culture etc. The Board plans to increase CSR expenses.

The initiatives undertaken by the Company on CSR activities during the year are set out in Annexure - II of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy on CSR as approved by the Board has been uploaded on the Company’s website. CSR Policy may be accessed at http://www.talwalkars.net/admin/investor/ CSRPolicy12716164414123-0a542.pdf

Secretarial Standards

The Company complies with all the applicable Secretarial Standards.

Directors and Key Managerial Personnel

In accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Vinayak Gawande (DIN: 00324591) and Mr. Girish Talwalkar (DIN: 00341675), Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. Resolutions for their re-appointment will be placed for your approval at the ensuing Annual General Meeting.

During the year Mr. Girish Talwalkar (DIN: 00341675), Executive Chairman of the Company was re-designated as Non-Executive Chairman with effect from 29th March, 2018.

Mr. Dinesh Afzulpurkar (DIN:05313394), Independent Director of the Company of the Company resigned from the Board with effect from 29th March, 2018 due to preoccupation. Your Directors placed on record its heartfelt gratitude for his valuable contribution towards the success of the Company.

Mr. Prashant Talwalkar, Managing Director and Chief Executive Officer, Mr. Madhukar Talwalkar, Mr. Girish Talwalkar, Mr. Anant Gawande, Mr. Vinayak Gawande, Mr. Harsha Bhatkal, Wholetime Directors, Mr. Girish Nayak, Chief Financial Officer and Ms. Avanti Sankav, Company Secretary and Compliance Officer of the Company are the Key Managerial Personnel of the Company in terms of Section 2 (51) read with Section 203 (1) of the Companies Act, 2013.

During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.

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 SEBI Listing Regulations Requirements of the Stock Exchanges.

Ten 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 carried out an annual evaluation of its own performance as well as that of its Committees and individual Directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI Listing Regulations. The performance of the Board was evaluated after seeking inputs from all the Directors on the basis of criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning etc. The Guidance Note issued by the Securities and Exchange Board of India on Board Evaluation was duly considered while conducting the evaluation.

In a separate meeting of Independent Directors, performance of non-Independent Directors and the Board as a whole was evaluated, taking into account the views of Executive Directors and Non-Executive Directors. The same was discussed in the Board Meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its Committees and individual Directors was also discussed. Performance evaluation of independent Directors was done by the entire Board, excluding the independent Director being evaluated.

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.

Your Directors highly value the suggestions of the Audit Committee and have never turned down any of it.

Related Party Transactions

In line with the requirements of the Companies Act, 2013 and SEBI Listing Regulations, your Company has formulated a Policy on Related Party Transactions which is also available on the Company’s website at http://www.talwalkars.net/admin/investor/ PolicyonRelatedPartyTransactions12716165958474-995fe.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.

All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions on a quarterly basis for transactions which are of repetitive nature and / or entered in the ordinary course of Business and are at Arm’s Length basis. These transactions were entered as per the Company’s Policy on Related Party transactions. No related party transaction was in conflict with the interests of the Company.

No Significant Material Related Party Transactions were entered during the year by your Company. 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.

Risk Management

Your Company has constituted Risk Management Committee to identify and mitigate various risks faced by the Company from time to time. The details of the Risk Management Committee and its terms of reference are set out in the Corporate Governance Report.

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.

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 Rs. 1.02 crores per year or Rs. 8.5 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, Chief Executive Officer, Chief Financial Officer and Company Secretary during the financial year 2017-18:

Sr. No.

Name of Director/KMP

Designation

Ratio of remuneration of each Director to median remuneration of Employees

Percentage increase in remuneration

1

Girish Talwalkar

Non-Executive Chairman

--

--

2

Madhukar Talwalkar

Whole-time Director

6.07

--

3

Prashant Talwalkar

Managing Director & CEO

--

--

4

Vinayak Gawande

Whole-time Director

--

--

5

Anant Gawande

Whole-time Director

--

--

6

Harsha Bhatkal

Whole-time Director

--

--

7

Manohar Bhide

Independent Director

0.13

--

8

Raman Maroo

Independent Director

0.09

--

9

Mohan Jayakar

Independent Director

0.03

--

10

Avinash Phadke

Independent Director

0.07

--

11

Abhijeet Patil

Independent Director

0.28

--

12

Dinesh Afzulpurkar#

Independent Director

--

--

13

Mrunalini Deshmukh

Independent Director

0.06

--

14

Avanti Sankav

Company Secretary

Not Applicable

15.32

15

Girish Nayak

Chief Financial Officer

Not Applicable

32.41

# Mr. Dinesh Afzulpurkar has resigned as Independent Director w.e.f. 29th March, 2018

(ii) The percentage increase in the median remuneration of employees in the financial year: 15.08%.

(iii) Permanent employees on the roll as on 31st March, 2018: 9

(iv) During the Financial year 2017-18, there was an average 19.05 % increasein the salaries of employees other than the managerial personnel in the last financial year. Managerial Remuneration rose by 23.86 % in line with the volume of the Company’s business and profits earned by it and their responsibilities.

(v) We hereby affirm that the remuneration paid is as per the remuneration policy of the Company.

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 affairs 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 sufficient 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 effectively;

(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 effectively;

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 effective during financial year 2017-18.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Conservation of Energy and Technology absorption are not applicable to the Company.

Auditors

Statutory Auditor

M. K. Dandeker & Co., Chartered Accountants (Firm Registration Number: 000679S) were appointed as Statutory Auditors of your Company at the Annual General Meeting held on 8th September, 2016, for a term of five consecutive years. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Auditors is required to be ratified by Members at every Annual General Meeting.

Auditors report and Secretarial Audit Report

The Auditors Report and Secretarial Audit Report do not contain any qualification, reservation or adverse remarks. Secretarial Audit Report is attached to this report.

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 the one mentioned above, no significant and material orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and the Company’s operations in future.

Extract of the Annual Return

The extract of annual return in Form MGT-9 as required under Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as an Annexure -IV to this Annual Report.

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.

Acknowledgement

Your Directors take this opportunity to place on record its appreciation of sincere efforts put in by the employees of the Company in making the Company excel in its services.

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 in the growth of company.

For and on behalf of the Board

Talwalkars Better Value Fitness Limited

Prashant Talwalkar Anant Gawande

Managing Director & CEO Whole-time Director

DIN: 00341715 DIN: 00324734

Date:7th May, 2018

Place: Mumbai


Mar 31, 2015

Dear Members,

The Directors are pleased to present 12th Annual Report on business and operations with the audited financial statement for the year ended 31st March, 2015:

BUSINESS AND FINANCIAL HIGHLIGHTS

Financial Highlights

The highlights of your Company's stand-alone financial performance for the year ended 31st March, 2015 are summarised below:

Rs. in millions

31.03.2015 31.03.2014

Total Income 2248.71 1808.73

Profit before interest, 1134.90 814.55 depreciation and taxation

Financial Expenses 109.14 95.60

Depreciation 366.77 222.66

Exceptional Items - (0.28)

Profit before tax 658.99 496.01

Provision for taxation 211.68 119.37

Deferred Tax 17.47 42.63

Profit after tax but before 429.84 334.01 minority interest

Share of minority interest - -

Profit after tax 429.84 334.01

Excess provision of Income - - Tax written back

Balance brought forward 852.10 618.82

Total available for appropriation 1281.94 952.83

Proposed Dividend 39.27 39.27

Corporate Dividend Tax 7.85 6.67

Debenture Redemption reserve 48.03 38.09

General Reserve 21.49 16.70

Depreciation adjusted 8.02 -

Arrears of depreciation 41.40 -

Balance carried forward 1115.88 852.10

Our Business

Your Company continues its leadership position as largest Fitness Chain with 150 health clubs across 79 cities and towns. For over 80 years, Talwalkars has dominated and led the gymming business in India, committing itself in making India, Healthy and Fit. It's USP is the pan-India health fitness chain providing world-class gymming experience, facilitated by the professional trainers. The Company has a state-of-the Art training Institute in Thane that focuses on creating industry- ready professionals to man its pan-India outlets.

Your Company works out for reversing the ever growing reality of lifestyle-induced illnesses and ensuring overall wellness of the members.

Review of Operations

Your Company provides the diverse fitness services apart from the standard gymming and fitness solutions like Zumba® programme, Spa, Massage, Aerobics, Yoga, Nuform, Reduce and Transform which is a unique combination of Nuform and Reduce through two formats "Talwalkars" (large size formats mostly located in Metros) and "HiFi" (low cost format located in non-metro locations.)

During the year, along with the financial performance on stand-alone basis, on a consolidated basis also, your Company's profit before tax as well as profit after tax and minority interest recorded a healthy growth of 26.48% and 25.93% respectively. The volume of the business also displayed an increase of 20.58% over last year.

No material changes affecting the financial position of the Company have occurred between the end of the financial year 2014-15 and the date of this Report, 7th May, 2015.

Dividend

Your Directors are pleased to recommend for the consideration of members, a dividend @15% ( Rs.1.50/- per equity share of Rs.10/-) for the year ended on 31st March, 2015. 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.

Reserves

The Directors proposes to transfer Rs. 21.49 million (5% of the net profit) to the General Reserve out of the amount available for appropriations and an amount of Rs.1115.88 million is proposed to be retained in the Profit and Loss Account.

Deposits

During the year under review, Company has not accepted any fixed deposits from the public falling within the purview of Section 73 of the Companies Act, 2013 and rules framed there under.

Subsidiaries

Your Company's subsidiary model encompasses the full services fitness centres under the Talwalkars brand with each fitness outlet spread across around 4,000 - 5,000 sq. ft. largely targeting customers in Tier I and Tier II cities. This prudently structured model ensures lower capex outflows and cash flow accretive incomes through royalty receipt. This model also keeps open the buyout of the subsidiary fitness centre at any point of time through optimal valuations.

Pursuant to the first proviso to Section 129(3) of the Companies Act, 2013 and Rule 5 and 8(1) of the Companies (Accounts) Rules, 2014, the salient features of the financial statement, performance and financial position of subsidiaries are given in Form AOC - 1 as Annexure - I to this Report. Your Company has the following subsidiaries:

(1) Denovo Enterprises Private Limited with gym spread in Northern and Western India.

(2) Equinox Wellness Private Limited with gym spread in Eastern India.

(3) Aspire Fitness Private Limited with gym spread in Western India.

(4) Jyotsna Fitness Private Limited with gym spread in Western India.

(5) Talwalkars Club Private Limited: This wholly-owned Subsidiary is incorporated in March, 2014 to own, lease and manage recreational/ lifestyle clubs by providing all kinds of sports, games, recreational and hospitality facilities.

The Company has framed a policy for determining material subsidiaries, which has been uploaded on the Company's website (web link: http://talwalkars.net/pdf/Policy%20for%20 Material%20Subsidiary.pdf).

HiFi

Talwalkars is present across the horizontal as well as the vertical value chain by not only operating the full service "Talwalkars" brand but also by operating the cost effective HiFi brand (short for Healthy India Fit India) of fitness centres which are largely located in Tier II and III towns and appeal to this segment. All gyms under this format are franchised.

Management Discussion and Analysis

A detailed Management Discussion and Analysis forms part of this Annual Report.

Corporate Social Responsibility

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, during the year, the Company should have spent Rs.7.55 millions on CSR activities. The actual spend was Rs.2.51 millions. The Company broadly undertakes the activities related to health awareness, education, medical check-ups, promotion of Art and culture etc. The Board plans to increase CSR expenses especially in the area of health awareness. Details of CSR activities are given in Annexure - II to this Report. The policy on CSR as approved by the Board has been uploaded on the Company's website www.talwalkars.net.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act 2013, 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 affairs 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 sufficient 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; and

(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 effectively.

(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 effectively.

DIRECTORS, BOARD COMMITTEE, KMP AND REMUNERATION

Directors

Your Company has thirteen Directors including six Independent Directors and a woman Director in accordance with Corporate Governance norms of the Listing Agreement with the Stock Exchanges and the provisions of the Companies Act, 2013.

Independent Directors of your Company have given declaration confirming their independence and fair conduct in performance as prescribed in both Companies Act and Clause 49 of the Listing Agreement with the Stock Exchanges.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Madhukar Talwalkar and Mr. Vinayak Gawande, Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. Resolutions for the re-appointment will be placed for your approval at the ensuing Annual General Meeting.

Ten Board meetings were held during the Financial Year 2014- 15 with requisite quorum present for each of them, the details of which are given in the Corporate Governance Report.

Changes in Directorships

Pursuant to resignation of Mr. Madhukar Talwalkar from the post of Executive Chairman w.e.f. 17th November, 2014, Mr. Girish Talwalkar, Whole-time Director has been appointed as the Chairman of your Company. Mr. Madhukar Talwalkar has continued to be part of the promoter group of the Board of Directors of the Company.

In terms of Section 149 and 161 of the Companies Act, 2013, read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and Clause 49 of the Listing Agreement, Mrs. Mrunalini Deshmukh has been appointed as an Additional Director of Company w.e.f. 24th March, 2015. In terms of Section 161, she holds office only upto the ensuing Annual General Meeting. The Company has received requisite notice under Section 160 of the Companies Act, 2013 in writing from a member along with the requisite deposit proposing her candidature for the office of Director of the Company. Resolution seeking approval of the Members for her appointment as Director of the Company, has been incorporated in the Notice of the ensuing Annual General Meeting along with brief details about her.

Board Evaluation

In compliance with the provisions of Section 134(3)(p) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges, The Board carried out an annual evaluation of its own performance and individual directors. It also evaluated the performance of its Committees. The evaluation inter alia covered different aspects viz. composition of the Board and its Committees, qualifications, performance, inter-personal skills, submissions done by the Director in varied disciplines related to the Company's business etc.

Company's Policy on Directors' Appointment and Remuneration

Your Company believes that an effective Board is a prerequisite for growth of an organization. Also, though Remuneration or Emoluments is theoretically defined as the salary or pay for the work done, your Company looks at it as a reward for the efforts and initiatives. The Company has a well defined Remuneration Policy for the Directors and Employees. The Nomination and Remuneration Committee of the Company, has carefully balanced the qualification, positive attributes and independence of a Director with the remuneration/ compensation given with a due regard to the motivation and encouragement to the Directors and employees to put their best foot forward. The Committee has also formulated the evaluation criteria for performance evaluation of independent directors and the Board adopted a report on the same and also devised a policy on Board diversity.

Audit Committee

Audit Committee of your Company comprises of Mr. Abhijeet Patil (Independent Director and Chairman of the Committee), Dr. Avinash Phadke (Independent Director and Member of the Committee) and Mr. Anant Gawande (Whole-time Director & CFO and Member of the Committee). Your Directors highly value the suggestions of the Audit Committee and have never turned down any of it. The functions performed by the Audit Committee and the particulars of meetings held and attendance thereat are given in the Corporate Governance Report.

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. All Related Party Transactions were placed before the Audit Committee for its review and approval. These transactions were entered as per the Company's Policy on Related Party transactions. Your Company has not entered into materially significant related party transactions with any of its related parties. The policy on Related Party Transactions as approved by the Board has been uploaded on the Company's website www. talwalkars.net (web link : http://talwalkars.net/pdf/Policy%20 on%20Related%20Party%20Transactions.pdf).

Risk Management

Your Company has constituted Risk Management Committee to identify and mitigate various risks faced by the Company from time to time. The details of the Risk Management Committee and its terms of reference are set out in the Corporate Governance Report.

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.

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

particular 2014-15 2013-14

Total foreign _ 0.64 exchange earnings

Total foreign 5.08 66.69 exchange outgo

Vigil Mechanism/ Whistle blower policy

Your Company promotes ethical behavior in its business activities and is progressive in designing a mechanism of reporting the grievances, illegal or unethical behavior or any other genuine concern by any employee of the Company. The Company takes utmost care to maintain the confidentiality of those, reporting the concerns/problems/violations and such people are not subjected to any discriminatory practice. Whistleblower policy on the same is uploaded on Company's website www.talwalkars.net

Particulars of Employees

Pursuant to Section 197 of the Companies Act, 2013 (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 2014-15, in excess of Rs.60 lakhs per year or Rs.5 lakhs per month or in excess of the remuneration drawn by the Managing Director or Whole-time Director or Manager or 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 Executive Director to the median remuneration of the Employees of the Company for the financial year 2014-15, the percentage increase in remuneration of Chief Executive Officer, Chief Financial Officer and other Executive Director and Company Secretary during the financial year 2014-15:

Sr. Name of Executive Designation Ratio of remuneration No Director of each director to medianremuneration of Employees

1 Girish Talwalkar Executive 3.49 : 1 Chairman

2 Madhukar Talwalkar Whole-time 4.65 : 1 Director

3 Vinayak Gawande Whole-time 4.65 : 1 Director

4 Prashant Talwalkar Managing 4.65 : 1 Director & CEO

5 Anant Gawande Whole-time 4.65 : 1 Director & CFO

6 Harsha Bhatkal Whole-time 4.65 : 1 Director

7 Avanti Sankav Company Not Applicable Secretary

Sr. Name of Executive Percentage increase in No Director remureation

1 Girish Talwalkar (25.00)

2 Madhukar Talwalkar -

3 Vinayak Gawande -

4 Prashant Talwalkar -

5 Anant Gawande -

6 Harsha Bhatkal -

7 Avanti Sankav 10.96

(ii) The percentage increase in the median remuneration of Employees for the financial year ended 31st March, 2015 was 6.93%.

(iii) Permanent employees on the roll as on 31st March, 2015:17.

(iv) The explanation on the relationship between average increase in remuneration and Company performance: PAT for the year ended 31st March, 2015 increased by 28.69% and the median remuneration by 6.93%

(v) The comparison of the remuneration of the Key Managerial Personnel against the performance of the Company: PAT for the year ended 31st March, 2015 increased by 28.69% and the remuneration of the Key Managerial Personnel by 10.96%.

(vi) Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase or decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer:

Sr. Particulars As at 31st March, As at 31st March, No. 2015 2014

1. Market BSE Rs.9728.82 BSE Rs.4213.81 Capitalisation millions millions

NSE Rs.9787.72 NSE Rs.4221.67 millions millions

2. Price Earnings BSE 22.63 BSE 12.61 Ratio NSE 22.77 NSE 12.64

The Company came with an Initial Public Offer in April, 2010 at the price of Rs.128/- per equity share at premium of Rs.118/- of face value Rs.10/- each. As on 31st March, 2015, the closing price of the Company's share was Rs.371.60 on BSE Limited (increase of 290% over the share price at its last public offer) and Rs.373.85 on The National Stock Exchange of India Limited (increase of 290% over the share price at its last public offer).

(vii) During the financial year 2014-15, there was an average 8.51% increase in the salaries of employees other than the managerial personnel. Remuneration of the key managerial personnel rose by 10.96% in line with the volume of the Company's business and profits earned by it and their responsibilities.

(viii) The key parameters for any variable component of remuneration availed by the directors: No variable component of remuneration is availed by the Directors.

(ix) During the year ended, 31st March, 2015, the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the financial year was 0.82:1.

(x) We hereby affirm that the remuneration paid is as per the remuneration policy of the Company.

AUDITORS

Statutory Auditor

At the 11th Annual General Meeting (AGM), the Members appointed M. K. Dandeker & Co., Chartered Accountants (Firm Registration Number: 000679S), as the Statutory Auditors of the Company, for a period of two years till the conclusion of the 13th AGM, subject to the ratification by Members at the 12th AGM. Pursuant to the provisions of Sections 139(1) and 141 of the Companies Act, 2013 (Act), the Company has received a certificate from M.K. Dandeker & Co., certifying that if they are appointed as Auditors, their appointment would be as per the conditions prescribed by the said Sections. Pursuant to the provisions of Section 139 of the Act read with Rule 6 of the Companies (Audit and Auditors) Rules, 2014, you are requested to ratify the appointment of M.K. Dandeker & Co, as Statutory Auditors of the Company, from the conclusion of the 12th AGM till the conclusion of the 13th AGM or any adjournment thereof. The Auditors' Report does not contain any qualification, reservation or adverse remark.

Secretarial Auditor

Geeta Canabar & Associates, Practicing Company Secretary, have been appointed as the Secretarial Auditor of the Company. The Secretarial Audit Report for the financial year ended 31st March, 2015 is given in Annexure - III to this report. There is no qualification, reservation or adverse remark in the said Report.

Extract of the Annual Return

The extract of the Annual Return as provided under Section 92 (3) of the Companies Act, 2013 in Form MGT-9 is presented here under in Annexure - IV.

Corporate Governance

The Report on Corporate Governance as required under the Listing Agreement forms part of and is annexed to this Report. A certificate from Practicing Company Secretary on compliance with Corporate Governance requirements along with a certificate from the CEO and CFO as required under Clause 49 of the Listing Agreement are annexed with this Report.

Acknowledgement

Your Directors take this opportunity to place on record its appreciation of sincere efforts 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 difference.

For and on behalf of the Board Talwalkars Better Value Fitness Limited

Prashant Talwalkar Anant Gawande Managing Director & CEO Whole-time Director & CFO DIN: 00341715 DIN: 00324734 Date: 7th May, 2015 Place: Mumbai


Mar 31, 2014

Dear Members,

The Company has twelve Directors including six Independent Directors conforming with Corporate Governance norms as specified in Clause 49 of the Listing Agreement with the Stock Exchanges.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Harsha Bhatkal and Mr. Anant Gawande, Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Resolutions for the re-appointment will be placed for your approval at the ensuing Annual General Meeting.

The Board of the Company, presently comprises six Independent Directors viz. Mr. Manohar Bhide, Mr. Raman Maroo, Mr. Mohan Jayakar, Dr. Avinash Phadke, Mr. Abhijeet Patil and Mr. Dinesh Afzulpurkar. Pursuant to Section 149 (10) of the Companies Act, 2013 and amended Clause 49 of the Listing Agreement, these Independent Directors have to be appointed to hold office upto five consecutive years for a term commencing from the ensuing Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchange.

Further, the terms of employment of Mr. Prashant Talwalkar, Managing Director & CEO of the Company shall expire on 17th June, 2014 and that of Mr. Madhukar Talwalkar, Executive Chairman, Mr. Vinayak Gawande, Whole-time Director, Mr. Girish Talwalkar, Whole-time Director, Mr. Anant Gawande, Whole-time Director & CFO and Mr. Harsha Bhatkal, Whole- time Director of the Company on 30th September, 2014.

The members approval is sought for their re-appointment for a further period of 5 years.

Brief profiles of the Directors are set out in the Notice.

Declaration by the Independent Directors Independent Directors of your Company have given declaration under Clause 49 I (A) (iii) of the Listing Agreement confirming their independence and fair conduct in performance.

Disclosure under Section 274(1)(g)

None of the Directors of the Company are disqualified from being appointed as directors as specified u/s. 274(1)(g) of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000.

Particulars of Employees

None of the employees of the Company were in receipt of the remuneration during the financial year 2013-14 in excess of H60 lakhs per year or H5 lakhs per month as required to be disclosed 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.

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

1. Part A & B pertaining to the Conservation of Energy and Technology Absorption are not applicable to the Company.

AUDITORS

M. K. Dandeker & Company, Chartered Accountants (Regn No. 000679S), Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re- appointment. The Company has received a letter from the retiring auditor to the effect that their appointment as Statutory Auditor for year 2014-2015, if made, will be in accordance with the provision of Sections 139, 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014.

Auditors'' Report

The report of Auditors and notes forming part of the Accounts are attached along with the Annual Report. There is no qualification in the Audit Report and Notes are self-explanatory.

OTHER DISCLOSURES

Listing of Equity

Talwalkars equity scrip is listed on the NSE (National Stock Exchange of India Limited) and BSE (BSE Limited), the scrip code being TALWALKARS in NSE and 533200 in BSE. The entire paid-up equity capital of H26,18,08,880/- is listed on both the exchanges as on date.

Corporate Governance

We at Talwalkars, perceive Corporate Governance as an endeavor for transparency and a wholehearted approach towards establishing Professional Management, aimed at continuous enhancement of Shareholder''s value. 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.

The Report on Corporate Governance as required under the

Listing Agreement forms a part of and is annexed to this Report. A certificate from Practicing Company Secretary on compliance with Corporate Governance requirements along with a certificate from the CEO and CFO as required under Clause 49 of the Listing Agreement are annexed with this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, your Directors hereby state and confirm that:

(a) In preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to 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 affairs of the Company at the end of the financial year ended on 31st March, 2014 and of the profit of the Company for that year;

(c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records for the year ended 31st March, 2014 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;

(d) The Directors have prepared the Annual Accounts on a going concern basis.

Acknowledgement

Your Directors take this opportunity to place on record its appreciation of sincere efforts 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.

For and on behalf of the Board Talwalkars Better Value Fitness Limited

Prashant Talwalkar Anant Gawande Managing Director&CEO Wholetime Director & CFO DIN:00341715 DIN:00324734

Date:8th May,2014 Place:Mumbai


Mar 31, 2013

The Directors are pleased to present 10th Annual Report on business and operations with the audited financial statements for the year ended 31st March, 2013:

Financial Results

The highlights of your Company''s financial performance for the year ended 31st March, 2013 are summarised below:

Rs.in Millions

Summarised Financial Results Standalone Consolidated 31.03.2013 31.03.2012 31.03.2013 31.03.2012

Total Income 1471.57 1107.67 1700.89 1321.02

Profit before interest, depreciation and taxation 637.68 464.70 738.75 558.54

Financial Expenses 94.79 77.86 107.91 91.28

Depreciation 132.27 109.43 146.47 117.73

Exceptional ltems 3.68 3.68

Profit before tax 410.62 281.10 484.37 353.21

Provision for taxation 84.62 59.31 107.99 72.53

Deferred Tax 49.32 29.82 50.23 31.50

Profit after tax but before minority interest 276.68 191.97 326.15 249.18

Share of minority Interest 25.65 28.57

Profit after tax 276.68 191.97 300.50 220.61

Excess Provision of Income Tax written back 0.09

Balance brought forward 440.77 304.13 476.25 310.97

Total available for appropriation 717.45 496.10 776.84 531.58

Proposed Dividend 39.27 30.15 39.27 30.15

Corporate Dividend Tax 6.37 4.89 6.37 4.89

Debenture Redemption reserve 34.37 20.29 34.37 20.29

General Reserve 18.63 18.63

Balance carried forward 618.81 440.77 678.20 476.25

Review of Performance:

In a country with gym penetration standing below 0.5%, your Company has a strong belief in the philosophy “Spreading Fitness. That’s our Karma.” Apart from the core business of gymming, your Company has embarked on new initiatives like Nuform, Zumba® programme, Reduce diet programme, Talwalkars David Lloyd Leisure consulting, which all act in complementto the coreactivity of gymming and would increase same store revenues as well as overall revenues. Talwalkars is leading from the front in this space of these fitness solutions and services. Your Company now has 144 health clubs across 75 cities on consolidated basis.

During the year, on a consolidated basis your Company''s profit before tax as well as profit after tax recorded a healthy growth of 37% and 36% respectively. The volume of the business also displayed an increase of 29% over last year.

Dividend

Your Company believes Promoting fitness enhances the health of our members while adding to the wealth of our shareholders. It has been consistent in sharing its profits with the shareholders. Your Directors are pleased to recommend for consideration of members, dividend @ 1 5% (Rs.1.50/- per equity share of Rs.10/-) for the year ended on 31st March, 2013. 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.

Our Offers

In continuation of its mission to make healthier and fitter India, your Company, apart from its initiatives, presented various offers and schemes during the year like:

- Summer Scheme: Breaking News: Summer extended by one whole month this year!

- NuForm: The Nu way to Total Fitness. Just 20 Minutes. Once a week.

- Zumba Fitness.

- Reduce: The easy weight loss solution.

- July 1999: Say hello to fitness for just Rs.1999.

- August Scheme 2012: Because August comes just once a year.

- Britannia Losers Challenge 2012: United, we Fall. How much collective weight can you dropRs.

- New Year 2013: 2013 will change you. That''s a promise.

Our Business

The Company has grown multifold with 144 health clubs with a member base of over 1,33,000. Talwalkars business model comprises of 100%-owned health clubs, 51%-subsidiary health clubs, trademark licensed gyms and the franchised gym concept.

Our Subsidiaries

Your Company''s decision to partner a local master franchise and set up health clubs through a 51%-subsidiary approach on a franchise basis has been proved successful by the Company''s subsidiaries, namely Denovo Enterprises Private Limited, Equinox Wellness Private Limited, Aspire Fitness Private Limited and Jyotsna Fitness Private Limited. Our subsidiaries- endeavours towards imparting good quality fitness services and thereby maintain the same benchmark as that of the Talwalkars Health clubs. On overall basis, the subsidiaries have shown phenomenal growth by contributing significantly to the profits of the Company.

(1) Denovo Enterprises Private Limited

Denovo Enterprises Private Limited, a subsidiary of your Company, is sharing 40% of the total gym count under the subsidiaries head. Denovo''s health clubs are operational in Northern and Western India.

(2) Equinox Wellness Private Limited

Equinox Wellness Private Limited is a step-down subsidiary of your Company (direct subsidiary of Denovo Enterprises Private Limited). Equinox has its health clubs operational in Eastern India.

(3) Aspire Fitness Private Limited

Aspire Fitness Private Limited, a subsidiary of your Company is sharing 40% of the total gym count under the subsidiaries head. Aspire''s health clubs are operational in Western India.

(4) Jyotsna Fitness Private Limited

Jyotsna Fitness Private Limited though relatively new entrant in the list of our subsidiaries, it is following the same quality footsteps as that of Talwalkars. Jyotsna Fitness''s health clubs are operational in Western India.

Franchisees

The Company developed a brand for low cost gyms known as -HiFi'' (short for Healthy India Fit India). All gyms under this format are franchised. Presently, the Company has twenty two franchised gyms. The Company is actively focusing on this division and is confident of increasing the number of franchisees in the coming years.

Section 212

The Ministry of Corporate Affairs, Government of India, vide its General Circular No. 2/2011 dated 8th February, 2011, has granted General Exemption to attach various documents in respect of the subsidiary companies, as set out in Sub-section (8) of Section 212 of the Companies Act, 1956.

Accordingly, the 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 office of the Company and its concerned subsidiary, on request made in writing to that respect.

Company’s QIP

The Company has successfully completed its QIP (Qualified Institutional Placement) issue during the year and allotted 20,65,216 additional Equity shares of Rs.10/- each at a price of Rs.205.18/, The paid-up capital of the Company, thereby, has been increased to Rs.26,18,08,880/- from Rs.24,11,56,720/-.

Listing of Equity

Talwalkars equity scrip is listed on the NSE (National Stock Exchange of India Limited) and BSE (BSE Limited), the scrip code being TALWALKARS in NSE and 533200 in BSE. The entire paid-up equity capital of Rs.26,18,08,880/- is listed on both the exchanges as on date.

Fixed Deposits

During the year under review, Company has not accepted any

fixed deposits from the public falling within the purview of Section 58A and 58AA of the Companies Act, 1956 and rules framed there under.

Directors

Your Company has twelve Directors including six Independent Directors in consonance with Corporate Governance norms as specified in Clause 49 of the Listing Agreement with the Stock Exchanges.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Madhukar Talwalkar, Mr. Vinayak Gawande and Mr. Girish Talwalkar, Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Resolutions for the re-appointment will be placed for your approval at the forthcoming Annual General Meeting.

Directors’ Responsibility Statement

As required under Section 217(2AA) of the Companies Act, 1956, your Directors hereby state and confirm that:

(a) In preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to 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 affairs of the Company at the end of the financial year ended on 31st March, 2013 and of the profit of the Company for that year;

(c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records for the year ended 31st March, 2013 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;

(d) The Directors have prepared the Annual Accounts on a going concern basis.

Disclosure under Section 274(1)(g)

None of the Directors of the Company are disqualified from being appointed as directors as specified u/s 274(1) (g) of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000.

Particulars of Employees

None of the employees of the Company were in receipt of the remuneration during the financial year 2012-13 in excess of Rs.60 lakhs per year or 15 lakhs per month as required to be disclosed 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.

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

1. Part A & B pertaining to the Conservation of Energy and Technology Absorption are not applicable to the Company.

2. Foreign Exchange earnings and outgo:

Rs. In Millions Particulars 2012-13 2011-12

Total foreign exchange earnings 0.73 Nil

Total foreign exchange outgo 73.45 69.10

Corporate Governance

All the requirements of Corporate Governance are adhered to both in letter and spirit at the Company. The Audit Committee and Shareholders/ Investors Grievance, Share Allotment and Share Transfer Committee of the Board meet at regular interval 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 the 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.

The Report on Corporate Governance as required under the Listing Agreement forms part of and is annexed to this Report. A certificate from Practicing Company Secretary on compliance with Corporate Governance requirements along with a

certificate from the CEO and CFO as required under Clause 49 of the Listing Agreement are annexed with this Report.

Auditors

M. K. Dandeker & Company, Chartered Accountants (Regn No. 000679S), Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for reappointment. The Company has received a letter from the retiring auditor to the effect that their appointment as Statutory Auditor, if made, will be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

Auditors’ Report

The report of Auditors and notes forming part of the Accounts are attached along with the Annual Report. There is no qualification in the Audit Report and Notes are self-explanatory.

Acknowledgement

Your Directors take this opportunity to place on record its appreciation of sincere efforts 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 difference.

For and on behalf of the Board

Talwalkars Better Value Fitness Limited.

Prashant Talwalkar Anant Gawande Managing Director & CEO Whole-time Director & CFO

Date: 8th May, 2013

Place: Mumbai


Mar 31, 2012

To,The Members of Talwalkars Better Value Fitness Limited

The Directors are pleased to present 9th Annual Report on business and operations with the audited financial statements for the year ended 31st March, 2012:

Financial Results:

The financial highlights of your Company's performance for the year ended 31st March, 2012 are summarised below:

Rs in Millions

Summarised Financial Results Standalone Consolidated 31.03.2012 31.03.2011 31.03.2012 31.03.2011

Total Income 1,107.67 884.15 1,321.02 1,043.44

Profit before interest, depreciation and taxation 464.70 383.76 558.54 421.37

Financial Expenses 77.86 73.60 91.28 85.94

Depreciation 109.43 83.34 117.73 89.64

Exceptional Items 3.68 (3.64) 3.68 (3.64)

Profit before tax 281.09 223.18 353.21 242.15

Provision for taxation 59.31 44.72 72.53 45.92

Deferred Tax 29.82 26.19 31.50 27.80

Profit after tax but before minority interest 191.97 152.27 249.18 168.43

Share of minority interest - - 28.57 8.12

Profit after tax 191.97 152.27 220.61 160.31

Balance brought forward 304.13 182.24 310.97 181.04

Total available for appropriation 496.10 334.51 531.59 341.35

Proposed Dividend 30.15 24.12 30.15 24.12

Corporate Dividend Tax 4.89 4.00 4.89 4.00

Debenture Redemption reserve 20.29 2.26 20.29 2.26

Balance carried forward 440.77 304.13 476.26 310.97

Review of Performance:

Your Directors are delighted at the rapid progress of the Company. The Company has demonstrated a consistent and robust growth in its business and profitability. High quality service and gym equipments at the health clubs, constant innovation and development of several health products like NuForm, expansion of sub-brand "HiFi" as well as introduction of world renowned Zumba® Fitness Party are the key points to boost members confidence in the Company. This together makes your Company a Brand Leader in India. Your Company now has 128 health clubs across 68 cities on consolidated basis.

During the year, on consolidated basis your Company's profit before tax as well as profit after tax recorded the rise of 46% and 38% respectively, representing a healthy growth over last years financial performance. Volume of the business also displayed 26.45% increase over last year.

Dividend

Your Company has been consistent in sharing its profits with the shareholders. Your Directors are pleased to recommend for consideration of members, dividend @ 12.5% (Rs 1.25 per equity share of Rs 10/-) for the year ended on 31st March 2012. The total outflow towards dividend payment including tax on distributable profits would amount to Rs 35.03 million. 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.

Our Offers

Apart from bringing the Health Clubs at your door step, during the year, your Company had presented various offers and schemes for the purpose of promoting the health and fitness in the Country.

Various Schemes offered during the year:

- Enjoy the Woman's week offer at Talwalkars.

- Celebrate Valentines Day with your loved ones at Talwalkars.

- New Year Scheme with gift of fitness.

- Tone Master at Talwalkars - the next step to body toning.

- Talwalkars Care - Free Fitness Health Camp on World Diabetes Day.

- Talwalkars Loser's Challenge, Getting Slim is now an adventure.

- Create your Discount at Talwalkars (August Scheme).

- July 999 offer.

- Summer Scheme.

Our Business

Your Company has always adopted various business models in the process of its growth and its increasing footprint is the result of a combination of Company operated health clubs, trademark licensed health clubs, franchised health clubs and Subsidiary operated health clubs.

Your Company has "Quality Service" as its biggest focus point. Therefore, it ensures that all the Companies which also ensure the same focus are part of the "Talwalkars".

Certain highlights like the latest equipments, well trained & courteous staff and welcoming ambience are ensured from both subsidiaries and associate companies to maintain the same standard of service as provided by your Company.

Our Subsidiaries

Your Company has four subsidiaries as on 31st March, 2012, namely Denovo Enterprises Private Limited, Equinox Wellness Private Limited, Aspire Fitness Private Limited and Jyotsna Fitness Private Limited which are active in the same business of running health clubs and gyms.

(1) Denovo Enterprises Private Limited (Denovo)

Denovo Enterprises Private Limited, a subsidiary of your Company, is sharing 54% of the total gym count under the Subsidiaries head. Denovo's health clubs are operational in Northern and Western India.

Denovo was the Joint Venture Company (JVC). Considering its continuous striving for imparting good quality service, Denovo was converted from the JVC to Subsidiary Company. It has maintained the same benchmark as that of Talwalkars health clubs.

(2) Equinox Wellness Private Limited (Equinox)

Equinox Wellness Private Limited is step-down subsidiary of your Company. Equinox has its health club operational in Eastern India.

Equinox, subsidiary of Denovo, became our subsidiary by virtue of the Companies Act, 1956. It is following the same quality footsteps as that of the Talwalkars.

(3) Aspire Fitness Private Limited (Aspire)

Aspire Fitness Private Limited, a subsidiary of your Company, is sharing 30% of the total gym count under the Subsidiaries head. Aspire's health clubs are operational in Western India.

Aspire was also the Joint Venture Company (JVC). It was converted from JVC to Subsidiary. Aspire has shown phenominal growth by contributing significantly to the profits of the Company.

(4) Jyotsna Fitness Private Limited (Jyotsna Fitness)

Jyotsna Fitness Private Limited has become subsidiary of your Company during this year. Jyotsna Fitness's health club is operational in Western India.

Jyotsna Fitness, our Joint Venture Company (JVC) was converted from JVC to Subsidiary Company during this year vide approval of the Board of Directors granted in the meeting held on 14th November, 2011. It has been running the health clubs itself and through its promoter directors directly and indirectly successfully, following a standard model set up by Talwalkars.

Franchisees

The Company developed a brand for low cost gyms known as "HiFi" (short for Healthy India Fit India). All gyms under this format are a franchised. Presently, the Company has 15 franchised gyms. The Company is actively focusing this division and hope to increase the number of franchisees in the coming years.

Section 212

The 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 Office of the Company and it's concerned Subsidiary, on request made in writing in that respect as per the general exemption granted by the Ministry of Corporate Affairs vide General Circular No. 2/2011 dated 8th February, 2011.

Fixed Deposits

During the year under review, Company has not accepted any fixed deposits from the public falling within the purview of Sections 58A and 58AA of the Companies Act, 1956 and rules framed thereunder.

Directors

Your Company has twelve Directors including six Independent Directors in consonance with Corporate Governance norms as specified in the Clause 49 of the Listing Agreement with the Stock Exchanges.

During the year, Mr. Glenn Saldanha, Independent Director resigned from the Directorship w.e.f. 22nd November, 2011 due to his preoccupation. Your Directors placed on record its heartfelt gratitude for his valuable contribution towards the success of the Company. Mr. Dinesh Afzulpurkar, Indian Administrative Service officer with distinguished career, has consented to join the Board as Independent Director. He has served the Government of Maharashtra as Chief Secretary. He was also the Chairman of Bombay Port Trust and Collector of Pune.

Mr. Dinesh Afzulpurkar was appointed as Additional Director w.e.f. 19th May, 2012. As per the provisions of Section 260 of the Companies Act, 1956, he holds office only upto the forthcoming Annual General Meeting. The Company has received requisite notice under Section 257 of the Companies Act, 1956 in writing from member along with the requisite deposit proposing his candidature for the office of Director of the Company. Resolution seeking approval of the Members for his appointment as Director of the Company has been incorporated in the Notice of the forthcoming Annual General Meeting along with brief details about him.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Raman Maroo, Mr. Mohan Jayakar and Mr. Abhijeet Patil, Independent Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Resolutions for the re-appointment will be placed for your approval at the forthcoming Annual General Meeting.

Directors' Responsibility Statement

As required under Section 217 (2AA) of the Companies Act, 1956, your Directors hereby state and confirm that:

(a) in preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(b) the Directors have selected such accounting policies and applied them consistently and made judgements 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 financial year ended on 31st March, 2012 and of the profit of the Company for that year;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records for the year ended 31st March, 2012 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;

(d) the Directors have prepared the Annual Accounts on a going concern basis.

Disclosure under Section 274(1)(g)

None of the Directors of the Company are disqualified from being appointed as directors as specified u/s 274(1)(g) of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000.

Information pursuant to Section 21 7 (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 for receipt of remuneration exceeding Rs 60,00,000/- per annum or Rs 5,00,000/- per month is not applicable to the Company since none of the employees is covered under that limit.

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

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

2. Foreign Exchange earnings and outgo: Rs in Million

Particulars 2011-12 2010-11

Total foreign exchange Nil Nil earnings

Total foreign exchange 69.10 111.32 outgo

Corporate Governance

Transparency is the cornerstone of your Company's philosophy and it has a strong belief on self discipline rather than imposed discipline. All requirements of Corporate Governance are adhered to both in letter and spirit. The Audit Committee and Shareholders/Investors Grievance, Share Allotment and Share Transfer Committee of the Board meet at regular interval 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 the 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 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 and is annexed to this Report. A certificate from Practicing Company Secretary on compliance with Corporate Governance requirements along with a certificate from the CEO and CFO as required under Clause 49 of the Listing Agreement are annexed with this Report.

Auditors

M. K. Dandeker & Company, Chartered Accountants, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from the retiring auditor to the effect that their appointment as Statutory Auditor, if made, will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

Auditors' Report

The report of Auditors and notes forming part of the Accounts are attached along with the Annual Report. There is no qualification in the Audit Report and Notes are self-explanatory.

Acknowledgement

Your Directors take this opportunity to place on record its appreciation of sincere efforts put in by the employees of the Company in making the Company reach its current growth level.

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 difference.

For and on behalf of the Board

Talwalkars Better Value Fitness Limited

Prashant Talwalkar Anant Gawande

Managing Director & CEO Whole-time Director & CFO

Date: 22nd May, 2012

Place: Mumbai


Mar 31, 2011

NOT APPLICABLE


Mar 31, 2010

The Directors are pleased to present 7th Annual Report on the business and operations together with the audited financial statements and Auditors Report for the financial year ended 31 st March, 2010:

Financial Results:

The financial performance of the Company for the financial year ended 31st March, 2010 is summarised below:

31-Mar-2010 31-Mar-2009

Gross Income (Income from Operations) 6,611.55 5,951.85

Other Income 38.29 22.41

Total Income 6,649.84 5,974.26

Gross Profit before Interest, Depreciation and Amortization, Extra Ordinary 2,553.81 1,706.59

Items and Taxes

Less: Interest 764.68 747.51

Depreciation and Amortization 608.90 458.29

Net Profit for the year before Taxes and Extra Ordinary Items 1,180.23 500.79

Add: Extra Ordinary Items (21.32) 280.35

Net profit for the year before Taxes 1,158.91 781.14

Less: Provision for Taxes 212.31 108.10

Deferred Tax (LiabilityVAsset 152.90 -

Profit after tax 793.70 673.04

Add: Balance Brought Forward from Previous Year 1,522.86 852.12

Surplus Available for Appropriation 2,316.56 1,525.16

Appropriations

Effect on Change in AS - 11 23.86 -

Effect of previous years Deferred Tax Liability 329.19 -

Proposed Equity Dividend 120.58 1.97

Provision for Dividend Tax 20.49 0.33

Balance Carried to Balance sheet 1,822.44 1,522.86

Total 2,316.56 1,525.16

Dividend:

The Directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of a dividend of Re. 0.50/- (Fifty Paise only) per equity share (5%) for the year ended 31st March, 2010. The amount of dividend and tax thereon aggregates to Rs. 1,41,07,065/- (Rupees One Crore Forty One Lacs Seven Thousand Sixty Five only).

Increase in Authorised Share Capital:

During the year the Authorised Share Capital of the Company was increased from Rs. 3,60,00,000/- (Rupees Three Crores Sixty Lacs only) to Rs. 30,00,00,000/- (Rupees Thirty Crores only).

Increase in Paid-up Share Capital:

The Company allotted 2,91,339 equity shares on private placement basis on 5th October, 2009, at a price of Rs. 635/- per equity share of face value of Rs. 10/- each at a premium of Rs. 625/- per equity share. The Company collected Rs. 18,50,00,265/- (Rupees Eighteen Crores Fifty Lacs Two Hundred Sixty Five only) from this allotment on private placement basis.

The Company issued seven (07) bonus equity shares for existing one (01) equity share held in the Company i.e. in the ratio of 7:1. On total 22,58,209 equity shares, the Company allotted 1,58,07,463 equity shares as bonus shares on 16th November, 2009.

Joint Venture Company:

The Company formed a 50:50 Joint Venture Company (JVC) known as Aspire Fitness Private Limited along with Life Fitness India Private Limited. The JVC is set up to operate health clubs in Pune. Mr. Madhukar Talwalkar, Mr. Girish Talwalkar and Mr. Anant Gawande, Directors of the Company are appointed as directors of the JVC.

Performance/ State of Companys Affairs:

As on 31st March, 2010, the Company was operating total fifty eight (58) health clubs, out of which forty four (44) health clubs belong to the Company and fourteen (14) health clubs belong to the Joint Venture Companies, Associate Companies and Franchisee. The Company also has one (01) training centre at Thane.

During the year under review the Company started nine (09) new health clubs at Kalyan, Paldi and Navarangpura at Ahmedabad, Jodhpur, Jabalpur, Jalandhar, Varanasi, Jubilee Hills and Kukatpally at Hyderabad.

During the period from 1 st April, 2010 to 6th July, 2010 the Company has opened total five (05) health clubs, out of which three (03) health clubs belong to the Company at Bhopal, Calicut and Coimbatore and two (02) health clubs belongs to the JVC at Baner and Viman Nagar in Pune.

Listing of Companys Equity:

The Company was converted into public company from private limited company vide Fresh Certificate of Incorporation issued by Registrar of Companies, Mumbai, dated 7th November, 2009.

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

Category No. of Applications No. of Equity No. of times

Received Shares Subscribed

Qualified Institutional Buyers 101 10,71,70,250 35.4282

Non-Institutional Investors 83 4,61,61,200 50.8663

Retail Individual Investors 36,204 1,73,58,550 8.1977

Total 36,388 17,03,90,000 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/- (Rupees Seventy Seven Crores Forty Four Lacs only). The issue constituted 25.09% of the fully diluted post issue paid up capital of the Company.

The Company has 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 got listing approval from both stock exchanges

on 6th May, 2010. The Companys equity shares were listed on both the Stock Exchanges on Monday, 10th May, 2010 at a premium to the Issue Price.

Operations:

The operations of the Company are elaborated in the annexed Management Discussion and Analysis Report.

Related Parties:

Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the Register maintained under Section 301 have been so entered.

Fixed Deposits:

During the year under review Company has not accepted any fixed 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 disqualified for being appointed as directors as specified u/s 274(1) (g) of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000.

Directors:

Mr. Madhukar Vishnu Talwalkar, Chairman of the Company was appointed as the Executive Chairman of the Company for the period of five years from 1 st October, 2009 to 30th September, 2014.

Mr. Prashant Sudhakar Talwalkar, Director of the Company was appointed as the Managing Director & Chief Executive Officer of the Company for the period of five years from 18th June, 2009 to 1 7th June, 2014.

Mr. Anant Ratnakar Gawande, Director of the Company was appointed as Whole-time Director & Chief Financial Officer of the Company for the period of five years from 1 st October, 2009 to 30th September, 2014.

Mr. Vinayak Ratnakar Gawande, Mr. Girish Madhukar Talwalkar and Mr. Harsha Ramdas Bhatkal, Directors of the Company were appointed as Whole-time Directors of the Company for the period of five years from 1 st October, 2009 to 30th September, 2014.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Madhukar Vishnu Talwalkar, Mr. Vinayak Ratnakar Gawande, Mr. Girish Madhukar Talwalkar and Mr. Harsha Ramdas Bhatkal, retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment.

During the year the Company appointed Mr. Manohar Gopal Bhide, Mr. Raman Hirji Maroo, Mr. Mohan Motiram Jayakar, Dr. Avinash Achyut Phadke, Mr. Abhijeet Rajaram Patil and Mr. Glenn Mario Saldanha as Additional Directors of the Company in the capacity of Independent Directors liable to retire by rotation. The appointment of the Independent Directors needs to be regularized in the ensuing Annual General Meeting of the Company.

Directors Responsibility Statement:

As required under Section 217 (2AA) of the Companies Act, 1 956, your Directors hereby state and confirm that:

(a) That in preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) That the Directors have selected such accounting policies and applied them consistently and made judgements 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 financial year ended on 31 st March, 2010 and of the profit of the Company for that year;

(c) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records for the year ended 31st March, 2010 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;

(d) That the Directors have prepared the Annual Accounts on a going concern basis.

Constitution of Committees of the Board of Directors:

During the year the Company constituted five (05) Committees of the Board of Directors, namely IPO Committee; Audit Committee; Remuneration/Compensation Committee; Shareholders/ Investors Grievance, Share Allotment and Share Transfer Committee and Management Committee. Details on various committees are provided in the Report on Corporate Governance.

Review of Annual Accounts by Audit Committee:

Financials of your Company for the year ended 31 st March, 2010 were reviewed by the Audit Committee before being placed before the Board.

Listing of Securities:

The Companys equity shares are listed on the National Stock Exchange of India Limited (NSE) and on the Bombay Stock Exchange Limited (BSE). The Company has paid the listing fees to both NSE & BSE for listing of its equity shares on both the Stock Exchanges.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

The particulars as required under Section 21 7(1 )(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are as under:

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

2. Foreign Exchange earnings and outgo:

Earnings - Rs. Nil.

Outgo Rs. 8,38,71,939/-

Information pursuant to Section 217 (2A) of the Companies Act, 1956:

Particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, form part of this Report.

However, having regard to the provision of Section 219 (1)(b)(iv) of the Companies Act, 1956, the Annual Report and Accounts are being sent to the members excluding the statement of particulars of employees under Section 217 (2A) of the Companies Act, 1956. Any member interested in obtaining the copy of the said statement may write to the Company Secretary at the Registered Office of the Company.

Corporate Governance:

Pursuant to Clause 49 of the listing agreement, a detailed report on Corporate Governance is given as a part of the Annual Report along with the reports on Management Discussion and Analysis. A Certificate from Practicing Company Secretary of the compliance with Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

Auditors Report:

The observations made in the Auditors Report, read together with the relevant notes thereon are self-explanatory and hence, do not call for any comments under Section 217 of the Companies Act, 1956.

Auditors:

Saraf Gurkar & Associates, Chartered Accountants, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for reappointment. The Company has received a letter from the retiring auditor to the effect that their appointment as Statutory Auditor, if made will be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

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.

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

For and on behalf of the Board

Talwalkars Better Value Fitness Limited

Prashant Talwalkar Anant Gawande

Managing Director & CEO Whole-time Director & CFO

Date: 7th July, 2010.

Place: Mumbai

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