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H K Trade International Ltd.

BSE: 539337 Sector: Industrials
NSE: N.A. ISIN Code: INE725P01012
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VOLUME 184000
52-Week high 23.15
52-Week low 14.50
P/E 46.34
Mkt Cap.(Rs cr) 5
Buy Price 18.50
Buy Qty 8000.00
Sell Price 0.00
Sell Qty 0.00
OPEN 19.00
CLOSE 19.25
VOLUME 184000
52-Week high 23.15
52-Week low 14.50
P/E 46.34
Mkt Cap.(Rs cr) 5
Buy Price 18.50
Buy Qty 8000.00
Sell Price 0.00
Sell Qty 0.00

H K Trade International Ltd. (HKTRADEINTER) - Director Report

Company director report

To The Shareholders H.K. Trade International Limited

Your Directors have pleasure in presenting the 3rd Annual report on the business andoperation of the Company together with the Audited Financial Statements for the year endedMarch 31 2016.

1. FINANCIAL SUMMARY OR HIGHLIGHTS / PERFORMANCE OF THE COMPANY: TheBoard’s Report shall be prepared based on the stand alone financial statements of theCompany.

Particulars Year Ending March 2016 Year Ending March 2015
Amt. in Rs. Amt. in Rs.
Total Income 50567495 42263851
Less: Expenditure 48711754 40338056
Profit/(Loss) before Interest Depreciation & Tax 1855742 1925795
Less: Interest 630 113
: Depreciation And Amortization Cost 353225 343485
Profit/(Loss) before Tax 1501887 1582198
Tax Expense 489056 524637
Profit/(Loss) after Tax 1012831 1057561

2. BRIEF DESCRIPTION OF THE COMPANY’S OPERATIONS DURING THE YEAR / STATE OFCOMPANY’S AFFAIR

During the current period your company has shown an increase in revenue to the extentof 19.65 % from Rs. 4.22 crores during F.Y. 2014-15 to Rs. 5.05 crores during F.Y.2015-16. PAT has shown a decrease to the extent of 4.23% from Rs. 10.57 lakhs during F.Y.2014-15 to Rs. 10.12 lakhs during F.Y. 2015-16.

3. FINANCIAL YEAR

The report of Directors along with its Annexure Management Discussion and AnalysisCorporate Governance Report Financial Statements along with their Notes are prepared forthe period April 01 2015 to March 31 2016 (a period of 12 months). Pursuant to theprovisions of Section 2(41) of the Companies Act 2013 a ‘financial year’ inrelation to the Company means the period ending on the 31st day of March every year inrespect whereof financial statements of the Company is made. Your Company is in compliancewith the provisions of the Companies Act 2013.

4. DIVIDEND

The company has decided to sustain the growth in line with the long term growthobjective of the Company by retaining the profits and utilizing the same for opportunitiesin hand.

5. SHARE CAPITAL

The Paid up equity share capital as at March 31 2016 stood at Rs. 2.632 crores. ThePaid up Capital of your Company was Rs. 1.36 Crores at the beginning of the year i.e April01 2015 which was subsequently increased to Rs. 2.632 Crores by the end of the year i.eMarch 31 2016 due to the maiden IPO of 2632000

Equity Shares of Face Value of Rs. 10.00/- each fully paid up at Rs. 18.00/- includingpremium of Rs. 8.00/. The Company got listed at BSE SME Platform on September 14 2015.

6. RESERVES

No amount has been transferred by the Company to Reserves during the year.

7. PUBLIC DEPOSITS

The Company has neither invited nor accepted any public deposits during the periodunder review.

8. SUBSIDIARY AND ASSOCIATE COMPANIES

As on March 31 2016 the Company has no subsidiary or Associate Company or JointVenture Companies.

9. CONSOLIDATED FINANCIAL STATEMENT

The Company is not required to consolidate its financial statements in terms ofprovisions of Companies Act 2013 and rules thereunder.

10. DIRECTOR AND KEY MANEGERIAL PERSONNEL

In accordance with the provisions of the Section 152 Companies Act 2013 read withapplicable Rules if any Ms. Megha Chandawalla retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers herself for a re-appointment..

Mr. Kamlesh Kapadia and Mr. Santosh Sawant are Independent Directors of theCompany.Based on the confirmations received from Directors none of the Directors aredisqualified from appointment under Section 164 of the Companies Act 2013.

The Company has appointed Mr. Chintan Mehta as the Chief Financial officer of theCompany and Mr. Mahesh Mehta as a Managing Director. Mr. Dhaval Parekh was appointed asCompany Secretary and Compliance Officer of the Company w.e.f March 11 2015 and furtherhe resigned from the post of Company Secretary and Compliance Officer of the Company w.e.fJuly 31 2015. Further Mr. Deep Shah was appointed as Company Secretary and ComplianceOfficer of the Company w.e.f August 01 2015 and further he resigned from the post ofCompany Secretary and Compliance Officer w.e.f October 31 2015.

11. DIRECTOR’S RESPONSIBILITY STATEMENT

Pursuant to the Directors’ Responsibility Statement referred to in clause (c) ofsub-section (3) of Section 134 of the Companies Act 2013 the Board of Directors of theCompany state that — a) In the preparation of the annual accounts the applicableaccounting standards have been followed along with proper explanation and there are nomaterial departures from the same; b) The Directors had selected such accounting policiesand applied them consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the company at theend of the financial year viz. March 31 2016 and of the profit and loss of the companyfor that period; c) The Directors had taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of this Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; d) The Directors had prepared the annual accounts on a going concernbasis; and e) The Directors had laid down internal financial controls to be followed bythe Company and that such internal financial controls are adequate and were operatingeffectively and f) The Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

12. NUMBER OF MEETINGS OF THE BOARD

In the Financial Year 2015-16 the Board met thirteen times. The meetings were held onApril 30 2015 July 14 2015 July 31 2015 August 08 2015 August 12 2015 August 182015 September 08 2015 September 12 2015 October 31 2015 November 12 2015December 7 2015 February 13 2016 and March 31 2016. Frequency and quorum at thesemeetings were in conformity with the provisions of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 entered into by thecompany with the Stock Exchanges. All the Board members and the senior managementpersonnel have affirmed compliance with the Code of Conduct during the year ended on 31stMarch 2016.

13. COMMITTEES OF THE BOARD

1. Audit Committee

2. Remuneration and Nomination Committee

3. Stakeholders’ Relationship Committee

Details of Committee and their meetings are detailed in Corporate Governance Report.

14. BOARD EVALUATION

Pursuant to the provisions of Companies Act 2013 and SEBI ( Listing Obligations andDisclosure Requirements) Regulations 2015 the board has carried out an annualperformance evaluation of its own performance the Directors individually as well as theevaluation of the working of its Audit Committee Nomination and Remuneration Committeeand Stakeholders Relation Committee. The manner in which the evaluation has been carriedout has been explained in the Corporate Governance Report.

15. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 (if any) are given in the notes to the FinancialStatements.

16. CONSERVATION OF ENERGY TECHNICAL ABSORPTION FOREIGN EXCHANGE

EARNING:

(A) Conservation of Energy

Your company is taking continuously taking initiatives to ensure optimum utilization ofenergy available in day to day operations. Your company uses energy efficient lightingdevices light fittings to save energy capacitor bank/devices to maintain power factorwhich are environment and power efficient.

(B) Technology Absorption

Your company is doing its business by ensuring optimum utilisation of its availableresources. Your company has not taken any research & development activity so far.

(C) Foreign Exchange Earnings and Outgo

The Company has not incurred in foreign currency during the financial year 2015-16.

17. VIGIL MECHANISM AND WHISTLE BLOWER POLICY

The Company has a Whistle Blower Policy to report genuine concerns or grievances. TheWhistle Blower Policy has been posted on the website of the Company (www.hktrade.in).

18. REMUNERATION AND NOMINATION POLICY

The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members.

19. CORPORATE SOCIAL RESPONSIBILITY

The provisions of Section 135 of the Companies Act 2013 are not applicable to theCompany.

20. SIGNIFICANT AND MATERIAL OREDERS PASSED BY REGULATORS OR COURTS

There are no significant and material orders passed by the Regulators/Courts that wouldimpact the going concern status of the Company and its future operations.

21. ADEQUACY OF INTERNAL CONTROL SYSTEM

The Company has adequate internal control systems for the business processes in respectof all operations financial reporting compliance with laws and regulations etc. Themanagement information system forms an effective and sound tool for monitoring andcontrolling all operating parameters. Regular internal audits ensure that responsibilitiesare executed effectively. The Audit Committee reviews the adequacy of internal controls onregular basis.

22. CODE OF CONDUCT

The Board has laid down a Code of Conduct for all Board members and senior managementpersonnel of the Company which is available on website of the company. The Company hasobtained confirmations for the compliance with the said code from all its Board membersand senior management personnel for the year ended March 31 2016.

23.DECLARATION OF INDEPENDENCE BY INDEPENDENT DIRECTORS

All the Independent Non-Executive Directors of the Company viz. Mr. Santosh Sawant Mr.Kamlesh Kapadia have submitted the declaration of independence as required pursuant toSection 149(7) of the Companies Act 2013 stating that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.The Independent Directors have also confirmed that they have complied with theCompany’s Code of Conduct.

24. STATUTORY AUDITORS

M/s. Nirmal Nahata & Associates Chartered Accountants (ICAI Registration No.116034W) who are the Statutory Auditors of the Company hold office up to the forthcomingAnnual General Meeting and expressed their unwillingness to continue as StatutoryAuditors’ of the Company. M/s. R T Jain & Co. Chartered Accountants (FirmRegistration No. 103961W) has consented to act the Auditors’ o the Company arerecommended for appointment for a period of five years to carry out the audit the accountsof the Company beginning from the financial year 2016-17. As required in terms of theprovisions of section 139 of the Companies Act 2013 the Company has obtained writtenconfirmation from M/s. R T Jain & Co.; that their appointment if made would be inconformity with the limits specified in the said Section.

25. EXTRACT OF ANNUAL RETURN

As required pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in MGT9 as a part of this Annual Report as Annexure I.

26. NOMINATION AND REMUNERATION COMMITTEE

The Company follows a policy on "Nomination and Remuneration of Directors Keymanagerial Personnel and Senior Management". The policy is approved by the Nomination& Remuneration Committee and the Board. More details on the same are given in AnnexureII.

27. RELATED PARTY TRANSACTIONS

Form AOC-2 as required under the Companies Act 2013 for related party transaction isannexed as Annexure III to the Directors Report.

28. SECRETARIAL AUDITORS

The Board of Directors have appointed M/s. R. M. Mimani & Associates as SecretarialAuditors to conduct Secretarial Audit for the Financial Year 2015-16. The SecretarialAudit Report issued by M/s. R. M. Mimani & Associates Company Secretaries in Practiceis self-explanatory and does not call for further comments. The Secretarial Audit Reportand Management reply on the qualifications stated in the said Report forms a part ofDirectors Report in Annexure IV.

29. AUDIT COMMITTEE

The composition of Audit Committee is as follows:

Name of Directors Designation in Committee Category
Mr. Kamlesh Kapadia Chairman Non-Executive and Independent
Mr. Santosh Sawant Member Non-Executive Independent
Mr. Mahesh Mehta Member Chairman & Managing Director

During the Financial Year 2015-16 Audit Committee met 6 times on April 30 2015 July14 2015 August 8 2015 August 12 2015 November 12 2015 and February 13 2016. Allthe recommendations made by the audit committee were accepted by the board. Frequency andquorum at these meetings were in conformity with the provisions of the Companies Act2013 Listing Agreement and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 entered into by the company with the Stock Exchanges.

30. BUSINESS RISK MANAGEMENT

The Company has a robust Business Risk Management (BRM) framework to identify evaluatebusiness risks and opportunities. This framework seeks to create transparency minimizeadverse impact on the business objectives and enhance the Company’s competitiveadvantage. The business risk framework defines the risk management approach across theenterprise at various levels including documentation and reporting. The framework hasdifferent risk models which help in identifying risks trend exposure and potential impactanalysis at a Company level as also separately for business. The Company has adopted riskmanagement policy.

31. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013

The Company has always believed in providing a safe and harassment free workplace forevery individual through various interventions and practices. The Company alwaysendeavours to create and provide an environment that is free from discrimination andharassment including sexual harassment. The Company has in place an Anti-Sexual HarassmentPolicy in line with the requirements of The Sexual Harassment of Women at the Workplace(Prevention Prohibition

& Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up toredress complaints received regarding sexual harassment. All employees (permanentcontractual temporary trainees) are covered under this policy. The following is asummary of sexual harassment complaints received and disposed of during the year 2015-16:• Number of complaints received: NIL • Number of complaints disposed of: NIL

32. PARTICULARS OF EMPLOYEES

Particulars of employees as required u/s 134 of the Companies Act 2013 are not annexedsince there are no employees drawing remuneration of more than Rs. 6000000/- per annumduring the year under review if employed for full year or more than Rs. 500000/- permonth if employed for part of the year. Further the information required pursuant toSection 197 of the Companies Act 2013 (the Act) read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company will be provided upon request. In terms of Section 136 of the Act theReport and Accounts are being sent to the Members and others entitled thereto excludingthe information on employees’ particulars which is available for inspection by theMembers at the Registered Office of the Company during business hours on working days ofthe Company up to the date of the ensuing Annual General Meeting. If any Member isinterested in obtaining a copy thereof such Member may write to the Compliance Officer inthis regard.

33. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report under requirements of SEBI (ListingObligation and Disclosure Requirements) Regulations 2015 forms part of this AnnualReport for the year ended 31st March 2016.

34. CORPORATE GOVERNANCE

With reference to the captioned subject and regulation 15(2) (b) of the saidregulations the compliance with the corporate governance provisions as specified inregulations 17 18 19 20 21 22 23 24 25 26 27 and clauses (b) to (i) ofsub-regulation 46 and para C D and E of the Schedule V shall not apply to those listedentity which has the specified securities on the SME Exchange. Further please note thatH.K. Trade International Limited is listed on the SME Platform of BSE Limited. HenceCompliance with above mentioned provisions relating to Corporate Governance are notapplicable and the Company is not required to file report on Corporate Governance Reporton quarterly basis with the Stock Exchange

35. AUDITORS’ REPORT

The Auditors’ Report does not contain any qualification. Notes to Accounts andAuditors remarks in their report are self-explanatory and do not call for any furthercomments.

36. VIGIL MECHANISM

The Vigil Mechanism of the Company which also incorporates a whistle blower policy interms of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015includes an Ethics & Compliance Task Force comprising senior executives of theCompany. Protected disclosures can be made by a whistle blower through an e-mail ordedicated telephone line or a letter to the Task Force or to the Chairman of the AuditCommittee. The Vigil Mechanism / Whistle Blower Policy has been uploaded on theCompany’s Website i.e. www.hktrade.in

37. CAUTIONARY STATEMENT

Statements in this Report Management Discussion and Analysis Corporate GovernanceNotice to the Shareholders or elsewhere in this Annual Report describing theCompany’s objectives projections estimates and expectations may constitute‘forward looking statement’ within the meaning of applicable laws andregulations. Actual results might differ materially from those either expressed or impliedin the statement depending on the Market conditions and circumstances.

38. INTERNAL FINANCIALS CONTROLS

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weaknesses were observed.

39. HUMAN RESOURCES

Your Company treats its "human resources" as one of its most importantassets. Your Company continuously invest in attraction retention and development oftalent on an on-going basis. A number of programs that provide focused people attentionare currently underway. Your Company thrust is on the promotion of talent internallythrough job rotation and job enlargement.

40. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Your Company did not have any funds lying unpaid or unclaimed for a period of sevenyears. Therefore there were no funds which were required to be transferred to InvestorEducation and Protection Fund (IEPF).

41. DISCLOSURE ABOUT COST AUDIT

As per the Cost Audit Orders Cost Audit is not applicable to the Company.

42. LISTING WITH STOCK EXCHANGES

The Company was listed on BSE SME segment for the Financial Year 2015-16. The Companyconfirms that it has paid the Annual Listing Fees for the year 2016-2017 to BSE where theCompany’s Shares are listed.

43. ACKNOWLEDGEMENTS

The Directors wish to thank and deeply acknowledge the co-operation assistance andsupport extended by the Regulatory Authorities Company’s Bankers CustomersShareholders and other business constituents during the year under review. The Directorsalso wish to place on record their appreciation for all round co-operation andcontribution made by employees at all levels.

For and on behalf of the Board
H. K. Trade International Limited
Sd/- Sd/-
Place: Mumbai Mahesh Mehta Megha Chandawalla
Date: September 03 2016 (Chairman & Managing Director) (Director)

ANNEXURE II

NOMINATION AND REMUNERATION POLICY OF THE COMPANY

In pursuance of the Company’s policy to consider human resources as its invaluableassets to pay equitable remuneration to all Directors Key Managerial Personnel (KMP) andemployees of the Company to harmonize the aspirations of human resources consistent withthe goals of the Company and in terms of the provisions of the Companies Act 2013 and theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended fromtime to time.

The Board of Directors of H. K. TRADE INTERNATIONAL LIMITED ("theCompany") reconstituted the "Nomination Committee" as "Nomination andRemuneration Committee" consisting of three (3) Independent Directors. The policy onnomination and remuneration of Directors Key Managerial Personnel and Senior Managementhas been formulated by the Committee and approved by the Board of Directors. Objective andpurpose of the Policy:

OBJECTIVE:

The Nomination and Remuneration Committee and this Policy shall be in compliance withSection 178 of the Companies Act 2013 read along with the applicable rules thereto andRegulation 19(4) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (as may be amended from time to time). The Key Objectives of theCommittee would be:

I. To guide the Board and lay down criteria in relation to appointment and removalof Directors Key Managerial Personnel and Senior Management.

II. To evaluate the performance of the members of the Board and provide necessaryreport to the Board for further evaluation of the Board.

III. To recommend to the Board on Remuneration payable to the Directors KeyManagerial Personnel and Senior Management.

IV. To provide to Key Managerial Personnel and Senior Management reward linkeddirectly to their effort performance dedication and achievement relating to theCompany’s operations.

V. To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage.

VI. To devise a policy on Board diversity

VII. To develop a succession plan for the Board and to regularly review the plan.

The Nomination and Remuneration Policy has been formulated in order to bring aboutobjectivity in determining the remuneration package while striking a balance between theinterest of the Company and the shareholders.

In the context of the aforesaid criteria the following policy has been formulated bythe Nomination and Remuneration Committee and adopted by the Board of Directors at itsmeeting held on March 11 2015.

DEFINITIONS:

I. "Act" means the Companies Act 2013 and Rules framed there under asamended from time to time.

II. "Board" means Board of Directors of the Company.

III. "Directors" mean the Directors of the Company.

IV. "Key Managerial Personnel" (KMP) means:

Chief Executive Officer or the Managing Director or the Manager; Whole-time director;Chief Financial Officer; Company Secretary; and Such other officer as may be prescribedunder the Act.

"Senior Management" mean personnel of the company who are members of its coremanagement team excluding the Board of Directors and KMPs comprising of all members ofmanagement one level below the Executive Directors including Functional Heads.

CONSTITUTION OF THE NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration Committee comprises of following Directors:

Name Position
Santosh Sawant Chairman (Independent Non-executive)
Kamlesh Kapadia Member (Independent Non-executive)
Megha Chandawalla Member (Independent Non-executive)

The Board has the power to reconstitute the Committee consistent with theCompany’s policy and applicable statutory requirement.

APPLICABILITY

The Policy is applicable to:

Directors (Executive and Non-Executive) Key Managerial Personnel Senior ManagementPersonnel

ROLE OF COMMITTEE:

The Committee shall:

- Formulate the criteria for determining qualifications positive attributes andindependence of a Director.

- Identify persons who are qualified to become Director and persons who may beappointed in Key Managerial and Senior Management positions in accordance with thecriteria laid down in this policy.

- Recommend to the Board appointment and removal of Director KMP and SeniorManagement Personnel.

Appointment criteria and qualifications:

The Committee shall identify and ascertain the integrity qualification expertise andexperience of the person for appointment as Director KMP or at Senior Management leveland recommend to the Board his / her appointment. Criteria for identifying persons who arequalified to be appointed as a Directors / KMP /Senior Management Personnel of theCompany:

a) Directors

Section 164 of the Companies Act 2013 states disqualifications for appointment of anyperson to become Director of any Company. Any person who in the opinion of the Board isnot disqualified to become a Director and in the opinion of the Board possesses theability integrity and relevant expertise and experience can be appointed as Director ofthe Company.

b) Independent Directors

For appointing any person as an Independent Director he/she should possessqualifications as mentioned in Rule 5 of The Companies (Appointment and Qualification ofDirectors) Rules 2014

c) Senior Management Personnel and KMP

The Company has an hierarchy structure displaying positions of Senior Managementincluding KMP and other positions with the minimum qualifications and experiencerequirements for each positions which commensurate with the size of its business and thenature and complexity of its operations. Any new recruit in the Company is to match therequirements prescribed in the hierarchy structure of the Company.

A person should possess adequate qualification expertise and experience for theposition he / she is considered for appointment. The Committee has discretion to decidewhether qualification expertise and experience possessed by a person is sufficient /satisfactory for the concerned position.

The Company shall not appoint or continue the employment of any person as Whole-timeDirector who has attained the age of seventy years. Provided that the term of the personholding this position may be extended beyond the age of seventy years with the approval ofshareholders by passing a special resolution based on the explanatory statement annexed tothe notice for such motion indicating the justification for extension of appointmentbeyond seventy years.

Term / Tenure

a) Managing Director/Whole-time Director:

The Company shall appoint or re-appoint any person as its Executive Chairman ManagingDirector or Executive Director for a term not exceeding five years at a time. Nore-appointment shall be made earlier than one year before the expiry of term.

b) Independent Director:

The maximum tenure of Independent Directors shall be in accordance with the CompaniesAct 2013 and clarifications/ circulars issued by the Ministry of Corporate Affairs inthis regard from time to time At the time of appointment of Independent Director itshould be ensured that number of Boards on which such Independent Director serves isrestricted to seven listed companies as an Independent Director and three listed companiesas an Independent Director in case such person is serving as a Whole-time Director of alisted company or such other number as may be prescribed under the Act.

Evaluation

The Committee shall carry out evaluation of performance of every Director KMP andSenior Management Personnel at regular interval (yearly)

a) Criteria for evaluating Non-executive Board members:

Section 149 of the Companies Act 2013 read with Schedule IV of the said Act statesthat the Independent Directors shall at its separate meeting review performance of non-independent directors and the Board as a whole and the performance evaluation ofIndependent Directors shall be done by the entire Board of Directors excluding theDirector being evaluated.

b) Criteria for evaluating performance of Key Managerial Personnel and SeniorManagement Personnel

Criteria for evaluating performance of KMP and Senior Management Personnel shall be asper the HR Guideline on Performance Management System and Development Plan of the Company.

Removal

Due to reasons for any disqualification mentioned in the Act or under any otherapplicable Act rules and regulations thereunder the Committee may recommend to theBoard with reasons recorded in writing removal of a Director KMP or Senior ManagementPersonnel subject to the provisions and compliance of the said Act rules and regulations.

Retirement

The Director KMP and Senior Management Personnel shall retire as per the applicableprovisions of the Act and the prevailing policy of the Company. The Board will have thediscretion to retain the Director KMP Senior Management Personnel in the same position/remuneration or otherwise even after attaining the retirement age for the benefit of theCompany.

REMUNERATION FOR THE WHOLE-TIME DIRECTOR KMP AND SENIOR MANAGEMENT PERSONNEL

The remuneration to the Whole-time Director KMP and Senior Management Personnel willbe determined by the Committee and recommended to the Board for approval. The remuneration/ compensation / commission etc. shall be subject to the prior/post approval of theshareholders of the Company and Central Government wherever required.

The remuneration and commission to be paid to the Whole-time Director shall be inaccordance with the percentage / slabs / conditions laid down in the Articles ofAssociation of the Company and as per the provisions of the Act.

SITTING FEES

Board is empowered to fix the sitting fees for the Directors however the amount ofsuch fees shall not exceed such amount as may be prescribed by the Central Government fromtime to time per meeting of the Board or Committee.

COMMISSION

Commission may be paid within the monetary limit approved by shareholders subject tothe limit not exceeding 1% of the profits of the Company computed as per the provisions ofSection 197 the Companies Act 2013.

STOCK OPTIONS

An Independent Director shall not be entitled to any stock option of the Company.

MEMBERSHIP FREQUENCY OF MEETINGS

Chairperson of the Committee shall be an Independent Director. The Committee shallconsist of a minimum 3 non-executive director. Membership of the Committee shall bedisclosed in the Annual Report. Term of the Committee shall be continued unless terminatedby the Board of Directors. The meeting of the Committee shall be held at such regularintervals as may be required.

MINUTES OF COMMITTEE MEETING

Proceedings of all meetings must be minutised and signed by the Chairman of theCommittee at the subsequent meeting. Minutes of the Committee meetings will be tabled atthe subsequent Board and Committee meeting.

COMMUNICATION OF THIS POLICY

For all Directors a copy of this Policy shall be handed over within one month from thedate of approval by the Board. This Policy shall also be posted on the web-site of theCompany and in the Annual Report of the Company.

AMENDMENT

Any change in the Policy shall on recommendation of Nominations and RemunerationCommittee be approved by the Board of Directors of the Company. The Board of Directorsshall have the right to withdraw and / or amend any part of this Policy or the entirePolicy at any time as it deems fit or from time to time and the decision of the Boardin this respect shall be final and binding.

ANNEXURE III

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014)

Form for disclosure of particulars of contracts/arrangements entered into by thecompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arm’s length transactions under third provisothereto

1. Details of contracts or arrangements or transactions not at arm’s lengthbasis:

a. Name(s) of the related party and nature of relationship: Not Applicable b. Natureof contracts/arrangements/transactions: Not Applicable c. Duration of the contracts/ arrangements/transactions: Not Applicable

d. Salient terms of the contracts or arrangements or transactions including thevalue if any: Not Applicable.

e. Justification for entering into such contracts or arrangements or transactions:Not Applicable

f. Date(s) of approval by the Board: Not Applicable

g. Amount paid as advances if any: Not Applicable

h. Date on which the special resolution was passed in general meeting as requiredunder first proviso to section 188: Not Applicable

2. Details of material contracts or arrangement or transactions at arm’slength basis:

1. Knowell Corporation:

a. Name(s) of the related party and nature of relationship: Knowell CorporationMr. Mahesh

Mehta Proprietor of Knowell Corporation and Managing Director of H. K. TradeInternational Limited

b. Nature of contracts/arrangements/transactions: Purchase of materials / goods atarm’s length price and in ordinary course of business

c. Duration of the contracts / arrangements/transactions: Not Applicable

d. Salient terms of the contracts or arrangements or transactions including thevalue if any: N. A.

. Date(s) of approval by the Board if any : April 30 2015

f. Amount paid as advances if any: N. A.

2. MNM Composites Pvt. Ltd.:

a. Name(s) of the related party and nature of relationship: MNM Composites Pvt.Ltd. Mr. Mahesh

Mehta Director of MNM Composites Pvt. Ltd. and Managing Director of H. K. TradeInternational Limited

b. Nature of contracts/arrangements/transactions: Purchase of goods at arms lengthprice and in ordinary course of business

g. Duration of the contracts / arrangements/transactions: Not Applicable

h. Salient terms of the contracts or arrangements or transactions including thevalue if any: Not

Applicable i. Date(s) of approval by the Board if any : April 30 2015 c. Amountpaid as advances if any: N. A.

For and on behalf of the Board
H. K. Trade International Limited
Sd/- Sd/-
Place: Mumbai Mahesh Mehta Megha Chandawalla
Date: September 03 2016 (Chairman & Managing Director) (Director)

ANNEXURE IV

MR-3

Secretarial Audit Report for the financial year ended on March 31 2016

[Pursuant to Section 204(1) of the Companies Act 2013 and the Rule 9 of the companies(Appointment and remuneration of managerial personnel) Rule 2014]

The Members

H.K. Trade International Limited

Mumbai

We have conducted the Secretarial Audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by H.K. Trade InternationalLimited (hereinafter called the "Company"). Secretarial Audit was conductedin a manner that provided us a reasonable basis for evaluating the corporateconducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the books papers minute books forms and returns filedand other records maintained by the Company and also the information provided by theCompany its officers agents and authorized representatives during the conduct ofsecretarial audit we hereby report that in our opinion the Company has during the auditperiod covering the financial year ended on March 31 2016 complied with the statutoryprovisions listed hereunder and also that the Company has proper Board-processes andcompliance-mechanism in place to the extent in the manner and subject to the reportingmade hereinafter:

We have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on March 31 2016 accordingto the provisions of:

(i) The Companies Act 2013 (the Act) and the Rules made there-under; (ii)The Securities Contracts (Regulation) Act 1956 (‘SCRA’) and theRules made there under;

(iii) The Depositories Act 1996 and the Regulations and bye-laws framedthere-under;

(iv) Foreign Exchange Management Act 1999 and the Rules and Regulations madethere-under to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings;

(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (‘SEBI Act’) to the extent applicableto the Company;

a. The Securities and Exchange Board of India (Substantial Acquisition of Sharesand Takeovers)Regulations 2011;

b. The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015;

c. The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements)Regulations 2009;

d. The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents)Regulations 1993 regarding the Companies Act and dealing with client;

(vi) Other law applicable specifically to the Company as detailed below;

i. Water (Prevention & Control of Pollution) Act 1974

ii. Air (Prevention & Control of Pollution) Act 1981

iii. Trade Mark Act 1999

We have also examined compliance with the applicable clauses of the following; i. SecretarialStandards issued by the Institute of Company Secretaries of India(ICSI)

ii. The SEBI (Listing Obligation and Disclosure Requirement) Regulation 2015

iii. The listing agreement entered into by the Company with Stock Exchanges inIndia.

We report that during the financial year under review the Company has complied withthe provisions of the Act rules regulations guidelines as mentioned above subject tothe following:

i. The Company has not complied with the provision of section 203 of the CompaniesAct 2013 and of regulation 6 of the SEBI (Listing obligation and Disclosure Requirements)Regulations 2015 of with regard to the appointment of Company Secretary and Complianceofficer.

ii. The Company has not complied with the regulation 33(1) (d) of the SEBI (Listingobligation and Disclosure Requirements) Regulations 2015.

We further report that there was no action/event in pursuance of;

a) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations2009; and

b) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998;

c) The Securities and Exchange Board of India (Issue of Debt Securities) Regulations2008

d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999

We have relied on the representation made by the Company and its Officers for systemsand mechanism formed by the Company and test verification on random basis carried out forcompliances under other applicable Acts Laws and Regulations to the Company.

The compliance by the Company of the applicable direct tax laws indirect tax laws andother financial laws has not been reviewed in this Audit since the same have been subjectto review by the other designated professionals and being relied on the reports given bysuch designated professionals.

We further report that based on the information provided and representation made bythe Company and also on the review of compliance reports taken on record by the Board ofDirectors of the Company in our opinion adequate system and process exits in the companycommensurate with the size and operations of the Company to monitor and ensure compliancewith the applicable general laws like labour laws competition law and environmental laws.

We further report that the Board of Directors of the Company is not duly constitutedwith proper balance of Executive Directors Non-Executive Directors and IndependentDirectors. The changes in the composition of the Board of Directors that took place duringthe period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent generally at least seven days in advance and in viewof the non-existence formal system we are not in position to comment on existence ofsystem for seeking and obtaining further information and clarifications on the agendaitems before the meeting and for meaningful participation at the meeting.

As per the minutes of the meeting duly recorded and signed by the Chairman majoritydecision carried through while the dissenting members’ views if any are capturedand recorded as part of the minutes.

We further report that during the financial year under review the Company hasundertaken following events / actions;

The Company has raised money through issue of shares to the public (IPO). The shares ofthe Company got listed on September 14 2015 on SME segment of BSE Limited.

For R M MIMANI & ASSOCIATES LLP

[COMPANY SECRETARIES]

SD/-

RANJANA MIMANI

(PARTNER)

FCS No: 6271

CP No : 4234

Place: Mumbai

Dated: September 02 2016

Note: This report is to be read with our letter of even date which is annexed as"Annexure A" and forms and integral part of this report.

Annexure – "A"

The Members

H.K. Trade International Limited

Mumbai

Our Secretarial Audit Report of even date is to be read along with this letter;

1. Maintenance of secretarial records is the responsibility of the management ofthe Company. Our responsibility is to express an opinion on these secretarial recordsbased on our audit;

2. We have followed the audit practices and the processes as were appropriate toobtain reasonable assurance about the correctness of the contents of the secretarialrecords. The verification was done on test basis to ensure that correct facts arereflected in secretarial records. We believe that the processes and practices we followedprovide a reasonable basis for our opinion;

3. We have not verified the correctness and appropriateness of financial recordsand Books of Accounts of the Company;

4. Where ever required we have obtained the Management Representation about thecompliance of laws rules and regulation and happening of events etc.;

5. The compliance of the provisions of corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedure on test basis;

6. The Secretarial Audit report is neither an assurance as to the future viabilityof the Company nor of the efficacy or effectiveness with which the management hasconducted the affairs of the Company.

For R M MIMANI & ASSOCIATES LLP

[COMPANY SECRETARIES]

SD/-

RANJANA MIMANI

(PARTNER)

FCS No: 6271

CP No : 4234

Place: Mumbai

Dated: September 02 2016

MANAGEMENT REPLY FOR QUALIFICATIONS MENTIONED IN THE SECRETARIAL AUDITORS’ REPORT

Dear Members

With Reference to the captioned subject matter please find below the Management Replyto the qualifications mentioned in the Secretarial Auditors’ Report.

1. The Company has not appointed Company Secretary as required in terms of theprovision of section 203 of the Act.

Management Reply: Mr. Deep Shah resigned from the post of Company Secretary w.e.fOctober 31 2015. To fill in the vacancy the Company has given newspaper advertisementfor requirement of Company Secretary in the Financial Year 2015-16. However the Companycould not find suitable Candidate for the appointment. The Company is in process ofappointing Company Secretary.

2. The Company has not complied with the regulation 33(1) (d) of the SEBI (Listingobligation and Disclosure Requirements) Regulations 2015.

Management Reply: In the opinion of the Board it is a technical in nature howeveron notice the Board has taken the necessary steps and in process of complying the same.

For and on behalf of the Board
H. K. Trade International Limited
Sd/- Sd/-
Place: Mumbai Mahesh Mehta Megha Chandawalla
Date: September 03 2016 (Chairman & Managing Director) (Director)