The fitness mix

Talkwalkars’ growth strategy: offering new concepts such as NuForm, Zumba Fitness and Reduce in its gyms and making an entry into Tier II and Tier III cities

POORNIMA KAVLEKAR

PRASHANT TALWALKAR, MANAGING DIRECTOR, TALWALKARS BETTER VALUE FITNESS

India’s population is six times that of Brazil’s. However, Brazil has 16 times the health clubs that India has. No wonder then that the gym penetration in India is currently below 0.50 per cent. Even if this increases to 1 per cent, it will translate into a need for another 4,000 health clubs. This is the kind of opportunity Talwalkars Better Value Fitness Ltd.  (Talwalkars), the only publicly listed fitness player in the country, is looking at and gearing up to face. India’s growing urban population with a high disposable income understands the importance of staying physically fit, especially with lifestyle changes leading to many related diseases. This has become a major growth driver for fitness players in India and Talwalkars is all set to capitalise on this demand by expanding its offerings to its existing customers and expanding into new markets, especially in the Tier 2 and Tier 3 cities and towns of India.

Since March 2011 (when we last wrote about the company), Talwalkars has increased its presence from 94 health clubs to 130 health clubs, spreading fitness across 69 cities and towns of India. It has consistently increased 30-35 stores every year and plans to add 30-35 stores in all formats this year too.  For the fiscal ended March 2012, it witnessed a 27 per cent growth in its turnover which increased to Rs. 132.10 crore from Rs. 104.34 crore for the year ended March 2011.  Continuing its growth, its revenues have increased by 23 per cent while the bottomline grew by 40 per cent for the first quarter of the current fiscal ended June 2012.

Growing strong

One of the key areas for Talwalkars is its entry into small-town India. It sees a strong potential in the Tier 2 and Tier 3 cities and is now present in smaller towns of India like Bhilai (Chhattisgarh), Ajmer(Rajasthan), Sinhagad (Pune) and  Bhimavara (Andhra Pradhesh).  As for the urban cities, it is constantly innovating to engage its existing members. “We believe in bringing innovative concepts to our members to enhance our member experience and grow same-store sales,” shares Prashant Talwalkar, managing director.  Since March 2011, the company has introduced three new concepts – Talwalkars NuForm, Zumba® fitness programme and Reduce. It has entered the new area of weight loss with technology from Germany’s Miha Bodytec and launched NuForm, an electric muscle stimulation training.  Zumba® Fitness, a Latin dance-inspired fitness programme, is currently being offered in 11 centres and will soon be launched in all its gyms. “We also intend to expand the Zumba®programme beyond our gyms by taking it to schools and colleges,” shares Talwalkar. With the launch of Reduce (currently operational only in Bengaluru) the company has entered the dietary food segment. Currently, the company offers 38 products under Reduce and various others are in pipeline.

Since March 2011, Talwalkars has increased its presence from 94 health clubs to 130 health clubs, spreading fitness across 69 cities and towns of India. It has consistently increased 30-35 stores every year and plans to add 30-35 stores in all formats this year too.

The business model

The health club business is highly capital intensive and it takes about Rs. 2 crore to start a 500 square feet health club.  Hence, Talwalkars operates in these three models – 100 per cent owned health clubs, 51 per cent subsidiary health clubs (with a buy back option) and Healthy Indi-Fit India (HiFi), the franchised gym concept.  “To penetrate in to smaller towns of India we developed a new format called HiFi which is a franchise based model,” says Talwalkar.

The company is clear that the quality of services at its own gyms and franchise gyms remains the same. “Apart from technical and training support, we also provide support to the franchisee for procuring gym equipment. The employees at the franchisee are given complete training support which ensures quality service,” he shares.  Talwalkars has a training academy in Thane, Mumbai and all employees are trained at the academy.

Spreading fitness 

The Indian fitness industry is currently at a nascent stage with neighbourhood gyms continuing to dominate the sector. There are very few organised players in this market and Talwalkars has a share of 8 per cent to 10 per cent here.  With its quality service, advanced gym equipment and innovative concepts, the company aims to spread its footprint across the country. It wants to have 240 to 250 stores in all formats on a pan-India basis, three years from now. While its strategy to expand in the smaller towns is through the franchisee model, its other initiatives will help increase the same-store sales growth.  Clearly, Talwalkars is committed to spreading fitness to every corner of the nation in a bid to keep India healthy.


GROWTH DRIVERS

  • Innovative concepts like NuForm, Zumba Fitness Programme and Reduce to enhance member experience and same-store sales growth
  • Catering to demand for fitness centres in the Tier 2, Tier 3 and Tier 4 cities
  • Engaging growing urban population who realise the importance of staying healthy and fit
  • Quality service and use of advanced equipment

INTERESTING FACTS

  • Talwalkars opened its first health club in 1932 in Mumbai
  • It is the only listed company in the fitness space India
  • It has a 25,000 square feet residential training academy in Thane where every trainer is trained for a minimum of 150 hours
  • Its NuForm requires a workout of only once a week for just 20 minutes unlike the regular gym format that requires 3 to 4 days of workout

THEN AND NOW

TOTAL INCOME  Rs. 104.34 crore  Rs. 132.1 crore
PROFIT AFTER TAX Rs. 16.03 crore Rs. 22.06 crore
NUMBER OF  BRANCHES (TOTAL/OWN/FRANCHISE)  94  130*
NUMBER OF CITIES 42 69
NUMBER OF CUSTOMERS 83,000 1,26,000*

Poornima Kavlekar has been associated with The Smart CEO since the time of launch and is the Consulting Editor of the magazine. She has been writing for almost 20 years on a cross section of topics including stocks and personal finance and now, on entrepreneurship and growth enterprises. She is a trained Yoga Teacher, an avid endurance Cyclist and a Veena player.