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Apr 10, 2013, 04.50 PM IST | Source: CNBC-TV18

New products to help maintain profits in FY14: Talwalkars

Anant Gawande, CFO, Talwalkars Better Value Fitness is confident of maintaining the growth trajectory seen in the last 9 months.

Anant Gawande, CFO, Talwalkars Better Value Fitness is confident of maintaining the growth trajectory seen in the last 9 months.

Gawande said they have seen a robust demand in 60 out of the 75 towns that they are present in .They have also added two value added products Zumba and REDUCE (a weight loss programme). “These innovative products will hold us in terms of our profitability and sales for the next 12 months,” he added.

However, since there is competition in the market, he says one has to be innovative and so they provide some combined deals. “We don’t sell only a gym membership. So, one can take a gym membership or opt for a package of gym, Zumba, REDUCE. One can also add in 6-10 sessions of a massage or a spa,” he added.

Below is the verbatim transcript of his interview on CNBC-TV18

Q: We have seen consumption trends in several categories slipping. How has the experience been at your end? Have you been seeing a fall in the number of fresh additions?

A: The last scheme that we did which was an annual subscription or a long-term subscription scheme was in January-February. In January and February on a same-store sales basis which means exactly in the same stores as earlier year to that, we were ahead of what we did in January 2012 and February 2012.

March too was a very robust month. In April we generally don’t have an annual scheme. In the last three months we have increased the intake of value added products like Zumba and a weight loss programme like REDUCE.

We are in 75 towns now and out of this about 60 towns are the towns of below 25 lakh and in these we have not seen any let-up of demand or any hesitation of purchasing power in the top 12-14 cities including the main metro and mini metro. We opened a gym in Airoli near Mumbai, where we opened to a pre-launch opening of about 280 members in the first three days at about Rs 14,000-15,000 each.

Q: In the Mumbai suburbs we have seen a lot of competition now coming in from the unorganised players. Is that impacting you because some of them are aggressive in terms of pricing, for that matter even Gold Gym has come out with few aggressive schemes? How is that going to shape up in terms of business going forward?

A: If I divide this into two parts, two gyms we have opened in the last one quarter near Mumbai; one at Kalva and the other at Airoli. We don’t sell only a gym membership. So, one can take a gym membership or opt for a package of gym, Zumba, REDUCE. One can also add in 6-10 sessions of a massage or a spa. Each of our gym has a massage or spa but not all gyms whether in organised space or unorganised space have a combination of all these four factors.

However, coming to pricing, in Airoli we have been getting a price on the basic gym membership of about Rs 14,000-15,000. In Kalva, which is a little older gym we have started REDUCE (the weight loss programme) and combined it with a gym membership. The average productivity because of that has increased by about 18-20 percent on same-store sales basis.

So, although it is true that there is competition but one has to be innovative. We offer combined deals and this make the clients believe they are getting value for money.

Q: What do you think you will do by way of revenue and by way of margins for the quarter gone by (Q4) and more importantly FY14?

A: We expect the results for the quarter gone by to be declared in the first week of May. A board meeting has been setup, so unfortunately I cannot give the precise results.

However, there is no issue in being able to deliver the growth rate which we have done in the first nine months or the projected figure given for the first 12 months through interviews and interaction with investors.

For the next year, we are adding new products like REDUCE and Zumba into our basket. These innovative products will hold us in terms of our profitability and sales for the next 12 months. If ever there are difficulties which might face in the top towns then these new products will more than counter that through increase in same-store sales and total revenue growth.

Q: Is it likely there will be another equity issuance before 2013 is out?

A: No, I am 100 percent sure of it.

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