Fitness (Gym) Industry in India

Fitness club, commonly referred to as a gym, is a place which houses exercise equipment for the purpose of physical exercise.[i] Fitness industry is a nascent and fast growing in India and constitutes more than 20%[ii] of the overall wellness industry which includes other segments such as beauty services, spa, beauty products, personal health counselling, rejuvenation, yoga, etc.[iii]

Market Size and Growth[iv]

Fitness industry in India is worth Rs.4,500 crore and is growing at 16-18% annually and is expected to cross Rs.7,000 crore by 2017.[v] The industry is fragmented with majority of the market dominated by unorganized and independent gyms outlets. The organized or modern fitness retail is around 28% currently but growing a 22-27% yearly growth rate.[vi] There are over 21,000 health and wellness centers across India as of 2014.

India’s Top Fitness Centers[vii]

Market share of top 5 players in India around 15% compared to 40% in Japan and Singapore and about 20% in China, Australia and New Zealand. Thus, the organized players in India have huge scope of consolidation going forward. There is tremendous opportunities for new players to bring brand differentiation, qualified trainers and affordable pricing. Some of the top players and key expansion plans of these fitness clubs are provided below:

• Talwalkar’s Gym[viii]:

CEO: Prashant Talwalkar

Total centers: increased from 63 gyms in 2010 to 144 gyms in 2013

Total Membership: 1,33,000 in 2013

Presence: Have presence in 75 cities and 19 states

Fitness chain Talwalkars recently made a deal hat-trick; it bought 51% stake in Chennai basedInshapeHealth and Fitnez Private Ltd (IHPL), 19% stake in Gym trekker Fitness and 49.5% stake in Sri Lanka’s Power World Gyms (PWG).

• Fitness First:[ix]

CEO: Andy Cosslett

MD, Fitness First India: Vikram Aditya Bhatia

Total centers: 7 gyms as of 2014

Expansion Plans: Investing Rs.160 crore to open 30 new premium fitness clubs in Delhi, Mumbai and Bangalore over the next five years. The expansion drive will take its memberships to over 45,000

• Gold’s Gym:

Owner: Robert Rowling[x]

Total centers:[xi]80 centers as of 2015

Expansion:[xii] Plans to open 30 new centers in 20 cities (Tier II and Tier III cities) with an investment of Rs.90 crore.

• Fitness One:[xiii]

Founder:VivekanandPalaniappan[xiv]

Total centers: 100 across India as of 2015

• Ozone Fitness and Spa:[xv]

MD: Naveen Kandhari

Total centers: 17 centers as of 2015 out of which 4 are company owned and rest are franchised

Total membership: Over 10,000 members as of 2015

 

Key PE/ M&A Deals in Fitness Industry

Unlike other industries including other segments within wellness such as beauty, salon & spa, rejuvenation, etc, fitness industry requires large investments typically more than Rs.1 crore depending on the location, area required, equipment category, etc. Due to its highly capital intensive nature very few Private Equity or Venture Capital investments have occurred in the segment (except for software fitness apps).[xvi]

Year	Acquirer	Target	Target/Transaction – Note	Type
2015	Talwalkars[xvii]	Inshape Health and Fitnez (51%)	Renowned fitness center in Chennai with fascinating ambiance and professional services to meet desires you cherish.	M&A
2015[xviii]	Talwalkars	Power World Gyms (49.5%)	Market leader of the Sri Lanka fitness industry	M&A
2015[xix]	Talwalkars	GymTrekker (19%)	One stop portal to access any fitness center across the country.	M&A
2015[xx]	Tarun Arora, MD of Northern Collection and Credit Bureau (Individual)	Fitraq.com	India's first Gym discovery and Health and Fitness portal	PE
2015[xxi]	Gympik Health Solutions	FitnessPapa	Online marketplace for fitness services providers with 3,000 trainers across various categories	M&A

 

Venture Capital Investment in Fitness Industry

Year 2015 has been a very active for Venture Capital investments in Fitness applications. Mobile health app development industry reports state that the global health and fitness mobile app market was worth about $4 Bn in 2014 with a possibility to increase upto $26 Bn by 2017. Location based online health and fitness center discovery platforms have tremendous opportunity to bridge the exploding gap in demand and supply that exists in the fitness industry globally and in India[xxii]

Year	Investor	Target	Target/Transaction – Note	Amount
2015[xxiii]	Micromax Informatics	HealthifyMe	Weight loss app that gives access to customized expert advice, tracks progress and provides tools that helps you achieve your fitness and weight loss goals	N/A
2015[xxiv]	Gopal Srinivasan (TVS Capital), Sashi Reddi (AppLabs), Amit Gupta (InMobi), Pallav Nadhani (FusionCharts) and Roopa Nath, among others	HealthifyMe	Weight loss app that gives access to customized expert advice, tracks progress and provides tools that helps you achieve your fitness and weight loss goals	N/A
2015[xxv]	Kalaari Capital	Truweight	Honest Weight Loss through Super Foods. No pills. No gadgets. No false promises.	Between Rs.19.4-25.5 crore
2015[xxvi]	Green House Ventures	FitMeIn	Access all premium gyms & fitness studios near you at the cost of one.	Rs.60 Lakhs
2015[xxvii]	Harpreet Singh Grover (leading a group of angels) and Zishaan Hayath (leading Powai Lake Ventures)	Orobind	A personal fitness coach for those who need motivation	Rs.1.20 crores
2015[xxviii]	Round Glass Partners	Obino	India's 1st Mobile Weight Loss Coach combines Expert personal coaches, personalized Diet & Fitness plans & Mobile-App based tools for effective Weight Loss	N/A
2015[xxix]	Medi Assist	MobieFit	Mobile fitness app powered by celebrity trainers. It helps you become as fit as you want, in the way that you want.	Rs.6 crore

 

Valuation Metrics For Fitness Industry

The only publicly listed firm in this Industry is Talwalkars[xxx], valuation metrics for this company as of 2015 is shown below:

Financial Details	Value
EV	888 crore
EBITDA	125 crore
Sales	226 crore
EV/Sales	3.9x
EV/EBITDA	7.1x

 

Market Trend[xxxi]

• Market penetration rate in India is as low as 0.5% compared to 16% in USA and 12% in UK, which leaves tremendous room for growth.[xxxii]
• Organized fitness market is concentrated in top eight cities of India  -Delhi NCR, Mumbai, Bengaluru, Chennai, Kolkata, Pune, Hyderabad and Ahmedabad with more than 60% of top companies located here.
• While the market will continue to grow in these cities, high real estate costs will drive players to look at tier 2 and 3 cities for growth. Hence, a higher growth in the premium and mid-end of the market is anticipated.

 

Key Growth Drivers[xxxiii]

• Growing disposable income and higher discretionary expenditure
• Rising lifestyle diseases, obesity, diabetes
• Rising awareness of healthy lifestyle among Indians
• Industry least affected by slowdown in economy
• Growing young population which is the target market[xxxiv]
• Rapid urbanization and westernization[xxxv]