Your Directors are pleased to present 14th Annual Report on business andoperations with the audited financial statement for the year ended 31st March2017:
BUSINESS AND FINANCIAL HIGHLIGHTS
The highlights of your Company's standalone financial performance for the year ended 31stMarch 2017 are summarised below:
Rs in millions
|Summarized Financial Results ||31.03.2017 ||31.03.2016 |
|Revenue from operations ||2571.18 ||2292.24 |
|Other Income ||5.73 ||67.20 |
|Total Income ||2576.91 ||2359.44 |
|Profit before interest depreciation and taxation ||1589.43 ||1417.18 |
|Financial Expenses ||175.60 ||155.85 |
|Depreciation ||454.88 ||435.64 |
|Exceptional Items ||(3.92) ||(0.28) |
|Profit before tax ||955.03 ||825.69 |
|Provision for taxation ||316.93 ||268.35 |
|Deferred Tax ||21.03 ||23.42 |
|Profit after tax but before minority interest ||617.07 ||533.92 |
|Share of minority interest ||- ||- |
|Profit after tax ||617.07 ||533.92 |
|Excess provision of Income Tax written back ||- ||- |
|Balance brought forward ||1503.28 ||1115.88 |
|Total available for appropriation ||2120.35 ||1649.80 |
|Proposed Dividend ||- ||49.84 |
|Corporate Dividend Tax ||- ||10.13 |
|Debenture Redemption Reserve ||105.81 ||59.83 |
|General Reserve ||30.85 ||26.70 |
|Balance carried forward ||1983.69 ||1503.30 |
Your Company continues its leadership position as largest Fitness Chain with 211fitness centres on consolidated basis across 85 cities and towns. At Talwalkars wegenerate multiple fitness and wellness streams that extend beyond core gymming whichcomprise of value-added services like Transform Reduce NuForm nutrition spa massageaerobics yoga and dietary regimes among others.
Review of Operations
Riding brand goodwill and management competence our Income from Operations (Net) on astandalone basis grew at a 3 year CAGR (FY15 - FY17) of 13.32% achieving Rs2571.18 millions during Fiscal 2017. Similarly our EBITDA and Profits after Tax on astandalone basis for the year ended 31st March 2017 were
Rs 1583.70 millions and Rs 617.07 millions respectively growing at a 3 year CAGR(FY15 - FY17) of 18.54% and 19.82% respectively. During the year along with the financialperformance your Company's profit before tax as well as profit after tax and minorityinterest recorded a healthy growth of 21.21% and 19.28% respectively. The volume of thebusiness also displayed an increase of 10.99% over last year.
No material changes affecting the financial position of the Company have occurredbetween the end of the financial year 2016-17 and the date of this Report 30thMay 2017.
As per the order dated 9th March 2017 of the Mumbai Bench of the NationalCompany Law Tribunal (NCLT) directing to convene a meeting of shareholders a CourtConvened Meeting was held on 27th April 2017 for the purpose of consideringand if thought fit approving the Scheme of Arrangement between Talwalkars Better ValueFitness Limited ("Demerged Company") and Talwalkars Lifestyles Limited("Resulting Company") and their respective shareholders. As per theScrutiniser's Report dated 27th April 2017 the Shareholders of the Companyhave approved the said Scheme of Arrangement. As on the date of this Report the saidScheme is now pending approval from NCLT and applicable regulatory authorities.
Your Directors are pleased to recommend for the consideration of shareholders adividend @ 15% (Rs 1.50/- per equity share of
Rs 10/-) for the year ended on 31st March 2017. The dividend has beenrecommended in accordance with your Company's policy of balancing dividend pay-out withthe requirement of funds for its growth plans.
The Directors proposes to transfer Rs 30.85 millions (5% of the net profit) to theGeneral Reserve out of the amount available for appropriations and an amount of Rs1983.69 millions is proposed to be retained in the Profit and Loss Account.
During the year under review Company has not accepted any fixed deposits from thepublic falling within the purview of Section 73 of the Companies Act 2013 (herein afterreferred to as "the Act") and rules framed there under.
Subsidiaries and Associate Company
The Company has 9 subsidiaries as on 31st March 2017. There is 1 associatecompany within the meaning of Section 2(6) of the Act. There has been no material changein the nature of the business of the subsidiaries.
Pursuant to the provisions of Section 129(3) of the Act a statement containing thesalient features of financial statements of the Company's Subsidiaries and AssociateCompany in Form AOC-1 is attached to this Report as Annexure - I. Further pursuant to theprovisions of Section 136 of the Act the financial statement of the Company consolidatedfinancial statement and the financial statements of subsidiaries are available on thewebsite of the Company. The Company has formulated a policy for determining materialsubsidiaries. The Policy may be accessed at the link:http://www.talwalkars.net/admin/investor/policyformaterialsubsidiary12716164544408-7249c.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 educationmedical checkups promotion of Art and culture etc. The Board plans to increase CSRexpenses.
The initiatives undertaken by the Company on CSR activities during the year are set outin Annexure - II of this Report in the format prescribed in the Companies (CorporateSocial Responsibility Policy) Rules 2014. The policy on CSR as approved by the Board hasbeen uploaded on the Company's website. Weblink to Company's CSR Policy:http://www.talwalkars.net/ admin/investor/CSRPolicy12716164414123-0a542.pdf
DIRECTORS BOARD COMMITTEES KMP AND REMUNERATION Directors and Key ManagerialPersonnel
Your Company has thirteen Directors including seven Independent Directors and a womanDirector in accordance with Corporate Governance norms of the Listing Agreement with theStock Exchanges SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(herein after referred to as "SEBI Listing Regulations") and the provisions ofthe Act.
Independent Directors of your Company have given declaration confirming theirindependence and fair conduct in performance as provided in Section 149 of the Act and theListing Requirements of the Stock Exchanges.
In accordance with the provisions of the Act and the Articles of Association of theCompany Mr. Madhukar Talwalkar and Mr. Harsha Bhatkal Directors of the Companyretire by rotation at the ensuing Annual General Meeting and being eligible offerthemselves for reappointment. Resolutions for the re-appointment will be placed for yourapproval at the ensuing Annual General Meeting.
Six Board meetings were held during the Financial Year 2016-17 with requisite quorumpresent for each of them the details of which are given in the Corporate GovernanceReport.
Pursuant to provision of Section 2(51) and 203 and other applicable provisions of theCompanies Act 2013 Mr. Girish Nayak was appointed as Chief Financial Officer of theCompany with effect from 9th February 2017.
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual Directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by SEBI Listing Regulations. Theperformance of the Board was evaluated after seeking inputs from all the Directors on thebasis of criteria such as the Board composition and structure effectiveness of Boardprocesses information and functioning etc. as provided by the Guidance Note on BoardEvaluation issued by the Securities and Exchange Board of India on 5th January2017.
The performance of the Committees was evaluated by the Board after seeking inputs fromthe Committee Members on the basis of criteria such as the composition of Committeeseffectiveness of committee meetings etc.
The Board and the Nomination and Remuneration Committee reviewed the performance ofindividual Directors on the basis of criteria such as the contribution of the individualDirector to the Board and Committee meetings like preparedness on the issues to bediscussed meaningful and constructive contribution and inputs in meetings etc.
In a separate meeting of Independent Directors performance of non-independentDirectors and the Board as a whole was evaluated taking into account the views ofExecutive Directors and Non-Executive Directors. The same was discussed in the BoardMeeting that followed the meeting of the Independent Directors at which the performanceof the Board its Committees and individual Directors was also discussed. Performanceevaluation of Independent Directors was done by the entire Board excluding theIndependent Director being evaluated.
Company's Policy on Directors' Appointment and Remuneration
The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which forms part of this report.
The details pertaining to composition functions performed and meetings of AuditCommittee are included in the Corporate Governance Report which forms part of thisreport.
Your Directors highly value the suggestions of the Audit Committee and have neverturned down any of it.
Related Party Transactions
During the year under review all related party transactions entered into by theCompany were in the ordinary course of business and on an arm's length basis. No relatedparty transaction was in conflict with the interests of the Company. All Related PartyTransactions were placed before the Audit Committee for its review and approval. Thesetransactions were entered as per the Company's Policy on Related Party transactions. YourCompany has not entered into materially significant related party transactions with any ofits related parties. The policy on Related Party Transactions as approved by the Board hasbeen uploaded on the Company's website. (Weblink:http://www.talwalkars.net/admin/investor/PolicyonRelatedPartyTransactions12716165958474-995fe.pdf)
Your Company has constituted Risk Management Committee to identify and mitigate variousrisks faced by the Company from time to time. The details of the Risk Management Committeeand 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 thefinancial statement forming part of this Annual Report and the same were given for theprincipal business activities.
Particulars of Employees
Pursuant to Section 197 of the Act read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 None of the employees of the Companywas in receipt of the remuneration during the financial year 2016-17 which in aggregatewas 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 Directoror Whole-time Director or Manager and holds by himself or along with his spouse anddependent children two percent or more of the equity shares of the Company. The statementof particulars of appointment and remuneration of managerial personnel pursuant to Rule 5of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is asunder: (i) Ratio of the remuneration of each Director to the median remuneration of theEmployees of the Company for the financial year 2016-17 and the percentage increase inremuneration of each Director Chief Executive Officer Chief Financial Officer andCompany Secretary during the financial year 2016-17:
|Name of Director/KMP ||Designation ||Ratio of remuneration of each Director to median remunera- tion of Employees ||Percentage increase in remuneration |
|1 Girish Talwalkar ||Executive Chairman ||2.94 ||- |
|2 Madhukar Talwalkar ||Whole-time Director ||2.94 ||- |
|3 Prashant Talwalkar ||Managing Director & CEO ||2.94 ||- |
|4 Vinayak Gawande ||Whole-time Director ||- ||- |
|5 Anant Gawande ||Whole-time Director ||- ||- |
|6 Harsha Bhatkal ||Whole-time Director ||- ||- |
|7 Manohar Bhide ||Independent Director ||0.04 ||- |
|8 Raman Maroo ||Independent Director ||0.03 ||- |
|9 Mohan Jayakar ||Independent Director ||0.04 ||- |
|10 Avinash Phadke ||Independent Director ||0.07 ||- |
|11 Abhijeet Patil ||Independent Director ||0.07 ||- |
|12 Dinesh Afzulpurkar ||Independent Director ||0.04 ||- |
|13 Mrunalini Deshmukh ||Independent Director ||0.03 ||- |
|14 Avanti Sankav ||Company Secretary ||Not Applicable ||9.78 |
|15 Girish Nayak ||Chief Financial Oficer ||Not Applicable ||Not Applicable |
(ii) The percentage increase in the median remuneration of employees in the financialyear: 28.88%.
(iii) Permanent employees on the roll as on 31st March 2017 : 13 (iv)During the financial year 2016-17 there was an average 18.38% increase in the salaries ofemployees other than the managerial personnel in the last financial year. ManagerialRemuneration rose by 9.78% in line with the volume of the Company's business and profitsearned by it and their responsibilities.
(v) We hereby affirm that the remuneration paid is as per the remuneration policy ofthe Company.
DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Act your Directors confirmthat: (a) In the preparation of the annual accounts the applicable accounting standardshave been followed and there are no material departures; (b) The Directors have selectedsuch accounting policies and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company at the end of the financial year and of the profit of the Company for thatperiod; (c) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe 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) TheDirectors laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively.
(f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Based on the framework of internal financial controls and compliance systemsestablished by the Company work performed by the internal statutory and secretarialauditors including audit of internal financial controls over financial reporting by thestatutory auditors the Board is of the opinion that the Company's internal financialcontrols were adequate and effective during financial year 2016-17.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Conservation of Energy and Technology absorption are not applicable to the Company.
Foreign Exchange earnings and Outgo:
Rs In millions
|Particulars ||2016-17 ||2015-16 |
|Total foreign exchange earnings ||- ||0.01 |
|Total foreign exchange outgo ||6.17 ||5.43 |
AUDITORS Statutory Auditor
At the 13th Annual General Meeting (AGM) the Members appointed M. K.Dandeker & Co. Chartered Accountants (Firm Registration Number: 000679S) as theStatutory Auditors of the Company for a period of five years till the conclusion of the18th AGM subject to the ratification by members at every AGM. Pursuant to theprovisions of Sections 139(1) and 141 of the Act the Company has received a certificatefrom M.K. Dandeker & Co. certifying that if they are appointed as Auditors theirappointment would be as per the conditions prescribed by the said Sections. Pursuant tothe provisions of Section 139 of the Act read with Rule 6 of the Companies (Audit andAuditors) 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 14th AGM till theconclusion of the 15th AGM or any adjournment thereof.
Auditors' report and Secretarial Auditors' report
As regards auditor's comment of not obtaining independent confirmation for certainadvances trade payables receivables bank balances and borrowings the Company has sincethen obtained majority of the same. The Company has now instituted a process of obtainingsuch confirmation regularly at frequent intervals and reconciling the same.
As regards auditor's qualified opinion on operating effectiveness and internal controlsystems from revenue from operations with regards to fees and subscriptions corporatesales and franchisees fees is not commensurate with the size of company. In view ofprescription of Ind-AS there are going to be considerable changes in the treatment andpresentation of accounts. Having said that the company has taken a note of auditor'sopinion and has started a process to straighten the system and is seeking guidance fromthe auditors on the effectiveness of the same before implementing and making it fullyoperational by January 2018.
The Secretarial Auditors' report does not contain any qualifications reservations oradverse remarks. Report of the Secretarial Auditor is given as an Annexure - III to thisreport.
Details of the statutory orders impacting the Company
No significant and material orders were passed by the Regulators or Courts or Tribunalsimpacting the going concern status and the Company's operations in future.
Extract of the Annual Return
The extract of the Annual Return as provided under Section 92 (3) of the Companies Act2013 in Form No. MGT-9 is presented here under in Annexure - IV.
As per SEBI Listing Regulations Corporate Governance Report with a certificate ofPracticing Company Secretary thereon and Management Discussion and Analysis are attachedwhich form part of this report.
Your Directors take this opportunity to place on record its appreciation of sincereefforts put in by the employees of the Company in making the Company excel in the realm ofhealth and fitness.
Your Directors sincerely thank all the investors members bankers financialinstitutions business associates regulatory and government authorities for theircontinued 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 |
|DIN: 00341715 ||DIN : 00324734 |
|Date: 30th May 2017 || |
|Place: Mumbai || |