DIRECTORS' REPORT

THE MEMBERS OF KEYNOTE CORPORATE SERVICES LIMITED

Dear Shareholder(s),

Your Directors have pleasure in presenting their 23rd Annual Report together with the Audited Accounts of your Company for the year ended 31st March, 2016.

DIVIDEND

Your directors are pleased to recommend a dividend of Rs. 1/- per Equity Share of face value of Rs. 10/- each (i.e. 10%) for the year ended 31st March, 2016. The dividend will be paid subject to approval of members at the 23rd Annual General Meeting (AGM).

OPERATIONS

The year 2015-16 witnessed a major revival in the Initial Public Offer (IPO) markets after nearly 4 dismal years. Though the year witnessed turbulent secondary market, the primary market showed signs of revival as many IPOs hit the market during the financial year. During the financial year 2015-16, 24 Main Board IPOs were launched in the primary market and significant activity was also witnessed in the IPOs on SME platforms where 50 SME IPOs were launched. The mobilization of resources through Rights issue also recorded an increase with 12 Rights issues being completed during the financial year. The enhanced equity resource raising through primary market is seen with enthusiasm by market participants and investors. Your company also witnessed major activity in these areas and has performed well as compared to the previous financial year.

Your company completed many capital market transactions during the financial year. Keynote acted as 'Financial Advisor' for a large IPO of a Company engaged in 'Fragrance & Flavours' business and also sole Lead Managed

a Main Board IPO of a Company engaged in manufacturing of dyes and dye intermediates alongwith fertilizers. Company lead managed 3 Rights issues and also completed an SME issue on NSE platform i.e. EMERGE. The Company played a major role in the capital market transactions pertaining to one of the Chinese Major who entered India by acquiring a listed Company. The Company advised the Chinese promoter for 'Offer for Sale' and also in respect of Rights issue amounting to Rs. 100 crores. Besides this, Company was also able to complete a few transactions in respect of Scheme of Arrangement, Valuation & ESOP Advisory etc. The total income during the year was Rs. 997.87 lacs, an increase of 71% as against the total income for the previous year. Consequently the PAT has reached Rs. 348.42 lacs registering substantial increase over the previous year's profit after tax. There has been a general sense of buoyancy in the capital market and company expects to bag few more mandates on IPOs & other capital market transactions.

OPERATIONS OF SUBSIDIARIES

Presently your company has two subsidiaries namely Keynote Capitals Limited (KCL) an integrated broking house and Keynote Fincorp Ltd. (KFIN) a NBFC. KCL is a member of BSE & NSE as well as Depository Participant of Central Depository Services India Limited. KCL has a subsidiary namely Keynote Commodities Ltd. which is member of Multi Commodity Exchange of India (MCX). KCL focuses on institutional trading & other trading activities of large and high net worth investors. KCL posted a total income of Rs. 1,033.27 lacs for 31st March, 2016 as compared to Rs. 618.41 lacs for 31st March, 2015. Profit after Tax stood at Rs. 86.19 lacs as compared to Rs. 79.17 lacs for the previous year.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

Keynote Capitals Limited (KCL) and Keynote Fincorp Limited (KFIN) are subsidiary companies. Presently Keynote Capitals Limited has one wholly owned subsidiary namely Keynote Commodities Limited.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company's subsidiaries in Form AOC-1 is attached to the financial statements of the Company.

Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company.

The financial statement of the subsidiary Companies are kept for inspection by the shareholders at the Registered Office of the Company. The company shall provide free of cost, the copy of the financial statement of its subsidiary companies to the shareholders upon their request. The statements are also available on the website of the Company i.e. www.keynoteindia.net

As stipulated by Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements). Regulations, 2015 ["Listing Regulations"] the consolidated financial statement have been prepared by the Company in accordance with the applicable Accounting standards. The audited consolidated financial statements together with Auditors Report form part of the Annual Report.

The company has formulated a policy for determining 'material' subsidiaries and such policy is disclosed on the company's Website <http://www.keynoteindia.net/document-hosting/financial> results/ Material Subsidiary Policy.pdf

TRANSFER TO RESERVES

During the year your Company has not transferred any amount to general reserve.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34 of the Listing Regulations with Stock Exchanges, the Management Discussion and Analysis Report is enclosed as a part of this report.

CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION

The Companies Act, 2013 and Listing Regulations require compliances with specified Corporate Governance practices. These practices have been fully implemented and a certificate from the Practicing Company Secretary

as well as a detailed report on Corporate Governance approved by the Board of Directors of the Company is set out in the annual report. The Company is regularly complying with Corporate Governance practices and also uploading the information under Corporate Filing & Dissemination System (corpfiling). Your Company has also been enlisted in the new SEBI complaint redressal system (SCORES) enabling the investors to register their complaints if any for speedy redressal.

LISTING WITH STOCK EXCHANGES

The Equity Shares of the Company continued to be listed and traded on the BSE Limited (BSE) and National Stock Exchange of India Ltd. (NSE). The scrip code number of the Equity Shares of the Company on BSE is 512597/KEYCORPSER and on NSE is KEYCORPSER. The Company has paid upto date listing fees to both the stock exchanges.

Further, the Securities and Exchange Board of India (SEBI) issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") on 2nd September, 2015. The Listing Regulations were effective from 1st December, 2015. Accordingly, all the listed entities were required to execute fresh listing agreement with Stock Exchanges where the shares of the Company were listed. The fresh agreement had to be executed within six months from the effective date. The Company entered into fresh Listing Agreement with BSE Limited (BSE) and National Stock Exchange of India Ltd. (NSE) on 1st December, 2015.

DEMATERIALIZATION

The Equity Shares of the Company can be held in dematerialized form. The Company has signed the tripartite agreement with National Securities Depository Ltd., (NSDL) Central Depository Services (India) Ltd., (CDSL) and existing Registrar & Transfer Agent for dematerialization of existing holding of the shareholders. The International Securities Identification Number (ISIN), allotted to the Company is INE681C01015. The Equity Shares of the Company are listed and traded on BSE and NSE. On BSE the equity shares of the Company are traded in "B" segment. The Equity Shares of the Company are being traded in compulsory dematerialized mode. Presently 96.54% of equity capital of the company is in dematerialized mode.

PUBLIC DEPOSIT

Your Company has neither accepted nor renewed any deposit within the meaning of Section 73 and other applicable provisions, if any, of the Companies Act, 2013 and the necessary rules made there under during the year ended 31st March, 2016.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, guarantees and investment have been disclosed in the notes to the financial statements.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is well defined. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to Managing Director. The Accounts Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and based on the report of internal audit the management undertakes corrective action in the respective areas and thereby strengthens the controls. Significant audit observations and recommendations if any, along with corrective actions thereon are required to be presented to the Audit Committee of the Board. During this financial year no such observations have been made.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company understands and values Corporate Social Responsibility (CSR) initiatives of the Government and has also noted the requirements of CSR activities in terms of Companies Act, 2013. The requirement of mandatory implementation of CSR activity is presently not applicable to your company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

(A) Conservation of energy:

Considering the nature of business activities carried out by the Company, your directors have nothing to report with regard to conservation of energy as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

(B) Technology absorption:

The management keeps itself abreast of the technological advancements in the industry and has adopted the state of the art transaction, billing and accounting systems and also risk management solutions.

(C) Foreign exchange earnings and Outgo:

a) The foreign exchange earnings Rs. 25.85 lacs (previous year Rs. 45.17 lacs).

b) The foreign exchange expenditure Rs. 0.82 lacs (previous year Rs. 2.20 lacs).

STATE OF AFFAIRS

During the year under review, your Company enjoyed cordial relationship with employees at all levels. DISCLOSURES UNDER SECTION 134(3) (l) OF THE COMPANIES ACT, 2013

There are no material changes and commitments which could affect the Company's financial position have occurred between the end of the financial year of the Company and date of this report.

DIRECTOR AND KEY MANNEGERIAL PERSONNEL (KMP)

(i) Changes in Director and Key Managerial Personnel (KMP):

During the period, Ms. Shruti Jayant Deshmukh resigned from the post of Company Secretary and Compliance Officer of the Company with effect from 11th February, 2016 and Ms. Saloni Dilip Maru joined as Company Secretary and Compliance Officer of the Company with effect from 25th February, 2016.

(ii) Retirement by rotation:

As per the provisions of Section 152 of the Companies Act, 2013, Shri Vineet Suchanti (DIN:00004031) retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment. Your Directors recommend their approval.

(iii) Appointment of Independent Director

At the 22nd Annual General Meeting (AGM) of the Company held on 29th September, 2015, Shri Shishir Dalal (DIN: 00007008) was appointed as an Independent Director of the Company.

DECLARATION OF INDEPENDENCE

Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of Companies Act, 2013 read with the Schedules and Rules issued there under as well as Regulation 25 of the Listing Regulations.

BOARD EVALUATION

The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed under Listing Regulations. Listing Regulations mandates that the Board shall monitor and review the Board evaluation framework.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed.

DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES

In accordance with Section 178 and other applicable provisions if any, of the Companies Act, 2013 read with the Rules issued there under and Regulation 19 of the Listing Regulations the Board of Directors at their meeting held on 7th August, 2014 formulated the Nomination and Remuneration Policy of your Company on the recommendations of the Nomination and Remuneration Committee. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters have been outlined in the Corporate Governance Report which forms part of this Report. The information required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/ employees of your Company is set out in "Annexure [A]" to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3) (c) of the Companies Act, 2013, Directors of your Company hereby state and confirm that:

(a) In the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) They have prepared the annual accounts on a going concern basis;

(e) They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

STATUTORY AUDITORS

M/s. Haribhakti & Co. LLP, Chartered Accountants, retired as Statutory Auditors of the Company after conclusion of 22nd Annual General Meeting (AGM) dated 29th September, 2015 as they were not seeking re-appointment. With this retirement, vacancy was caused and appointment of Statutory Auditors was required to be approved by the shareholders. The Company had received consent from M/s. NMAH & Company (Firm Registration No. 135966W) for appointment of Statutory Auditors subject to shareholders approval. Accordingly the matter of appointment of M/s. NMAH & Co., Chartered Accountants, Mumbai (Firm Registration No. 135966W) as Statutory Auditors to hold office from the conclusion of 22nd Annual General Meeting, until the conclusion of sixth Annual General Meeting to be held after that meeting, subject to ratification at every Annual General Meeting (AGM) was approved by the members.

However, later on M/s. NMAH & Co. Chartered Accountants, Mumbai, tendered their resignation on account of technical reasons at their end vide their letter dated 23rd October, 2015 from the position of the Statutory Auditors of the Company.

The Company received consent from M/s. S M S R & CO LLP Chartered Accountants, Mumbai (Firm Registration No. 110592W/W100094) willing to act as a Statutory Auditor of the Company to fill-up the Casual Vacancy caused by the resignation of M/s. NMAH & Co. Chartered Accountants. As per the recommendation of the Audit Committee, the Board proposed and recommended that M/s. S M S R & CO LLP Chartered Accountants, Mumbai (Firm Registration No. 110592W/W100094) be appointed as Statutory Auditors of the Company and to hold the office till the conclusion of ensuing AGM. Accordingly, M/s. S M S R & CO LLP Chartered Accountants, conducted the Statutory Audit of the Company for the period ended 31st March, 2016.

The Casual Vacancy caused by the resignation of the erstwhile Auditors was filled by the Board subject to the approval of the members, through Circular Resolution dated 26th October, 2015 and Postal Ballot Notice dated 14th November, 2015 was sent to shareholders. Shareholders/Members approved the appointment of M/s. S M S R & CO LLP Chartered Accountants, as Statutory Auditors vide special resolution passed through Postal Ballot Notice dated 14th November, 2015 results of which were declared on 29th December, 2015. M/s. S M S R & CO LLP Chartered Accountants, Mumbai (Firm Registration No. 110592W/W100094) are willing to act as a Statutory Auditor of the Company for the financial year 2016 - 2017. The Company has received a written consent letter No. SMSR/AAS/AB/16-17/002 dated 27th April, 2016 from them for their reappointment. Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s. S M S R & CO LLP Chartered Accountants, Mumbai (Firm Registration No. 110592W/W100094), the Statutory Auditors of the Company have been appointed for a term of five years. However, their appointment as Statutory Auditors of the Company shall be required to be ratified by the Members at the ensuing Annual General Meeting. The Company has received a confirmation from the said Auditors that they are not disqualified to act as the Auditors and are eligible to hold the office as Auditors of the Company.

Necessary resolution for ratification of appointment of the said Auditors is included in the Notice of AGM for seeking approval of members.

AUDITORS' REPORT

The Auditors have referred to certain routine matters in their report and the respective notes to the accounts are self-explanatory.

EXTRACT OF THE ANNUAL RETURN

Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rule, 2014, the Extract of Annual Return (Form No. MGT-9) as on the financial year ended on 31st March, 2016 is enclosed as "Annexure - [B]" to the Directors' Report.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/S Uma Lodha & Co., Practicing Company Secretaries to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as "Annexure - [C]" to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS AND AUDIT COMMITTEES

Your Board of Directors duly met four (4) times during the financial year i.e. on 28th May, 2015, 10th August, 2015, 14th November, 2015 and 11th February, 2016 in respect of which proper notices were given and the proceedings were properly recorded and signed in the Minute Book maintained for the purpose. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

The Audit Committee duly met six (6) times during the financial year i.e. on 28th May, 2015, 10th August, 2015, 2nd September, 2015, 26th October, 2015, 14th November, 2015 and 11th February, 2016 in respect of which proper notices were given and the proceedings were properly recorded and signed in the Minute Book maintained for the purpose.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

In pursuance to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for Directors and Employees to report genuine concerns has been established.

The purpose of the "Whistleblower Policy" is to allow employees to raise concerns about unacceptable, improper or unethical practices being followed in the organization. They will be protected against any adverse action and/ or discrimination as a result of such a reporting, provided it is justified and made in good faith. The Chairman of the Audit Committee has been designated for the purpose of receiving and recording any complaints under this policy. The Vigil Mechanism Policy has been uploaded on the website of the Company at <http://www.keynoteindia.net/documenthosting/financial> results/WHISTLE%20BLOWER%20POLICY.pdf

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large.

Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the particulars of contracts entered during the year as per Form AOC-2 is enclosed as "Annexure-D". The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules there under and the Listing Regulations. This Policy was considered and approved by the Board has been uploaded on the website of the Company at <http://www.keynoteindia.net/document-hosting/financial> results/ Keynote Policy% 20on%20Related%20Party%20Transactions.pdf

CODE OF CONDUCT

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Code has been placed on the Company's website www.keynoteindia.net

The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. All the Board Members and the Senior Management personnel have complied compliance with the Code.

RISK MANAGEMENT

Pursuant to Section 134 (3) (n) of the Companies Act, 2013 & Regulation 17 of Listing Regulations the Company has formulated risk management policy and the same has been placed on the company website. <http://www.keynoteindia.net/documenthosting/financial> results/Keynote Risk%20Management%20Policy.pdf

At present the company has not identified any element of risk which may adversely affect functioning of the company.

PREVENTION OF INSIDER TRADING

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. Said code of conduct is in line with SEBI (Prohibition of Insider Trading) Regulations, 2015 The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All the Directors and the designated employees have complied with the Code.

SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS

There is no disciplinary action taken/penalty imposed by Securities and Exchange Board of India (SEBI)/other regulatory authority during the financial year. However, Company received a prohibitory order dated 6th April, 2016 issued by Whole Time Member (WTM), SEBI in the matter of IPO of Emmbi Industries Ltd. Though said order was not received during the period of the financial year, same was placed before the Board of Directors as the meeting of Board of Directors was scheduled on 26th May, 2016. In terms of order No. WTM/RKA/EFD/46/ 2016 dated 6th April, 2016, Keynote Corporate Services Ltd. (KCSL) has been prohibited from taking up new assignment as 'Merchant Banker' for the period of one month & Keynote Capitals Ltd. (KCL), a wholly owned subsidiary, has been prohibited from taking up any new assignment as 'Underwriter' for a period of one month. The order to come into effect immediately on the expiry of twenty-one days from the date of the order. The Board of Directors after detailed discussion have observed that in the normal course of business there would be such regulatory risks. However, while conducting the business intentions shall be right. They also expressed satisfaction that the company for which the IPO was managed has implemented the project and have progressed very well on the business front which has reflected in the current market price of the Company. The Company is genuine and efforts put in by Keynote entities have yielded positive results. However, precautions shall be taken to avoid repetition of such instances. All the attempts shall be made to ensure that Company is not required to defend such regulatory actions.

GENERAL DISCLOSURES

• DISCLOSURE UNDER SECTION 43(a)(ii) OF THE COMPANIES ACT, 2013

The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a) (ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

• DISCLOSURE UNDER SECTION 54(1)(d) OF THE COMPANIES ACT, 2013

The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1) (d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

• DISCLOSURE UNDER SECTION 62(1)(b) OF THE COMPANIES ACT, 2013

The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no information as per provisions of Section 62(1) (b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

• DISCLOSURE UNDER SECTION 67(3) OF THE COMPANIES ACT, 2013

During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014 is furnished.

ACKNOWLEDGMENT

We take this opportunity to express deep sense of gratitude to Members of Board of Directors of the Company, Securities and Exchange Board of India (SEBI), BSE Limited (BSE), National Stock Exchange of India Limited (NSE), Registrar of Companies (ROC), National Securities Depository Limited (NSDL), Central Depository Services (India) Limited (CDSL), Association of Investment Bankers of India (AIBI), Link Intime India Pvt. Limited, M/s. S M S R & CO. LLP Statutory Auditors, M/s. R. B. Pandya & Co. Internal Auditors, our Clients, Bankers and other Government Agencies for their continued support.

By Order of the Board

For Keynote Corporate Services Limited

Uday S. Patil

Director & CFO (DIN: 00003978)

Vineet Suchanti

Managing Director

(DIN: 00004031)

Date: 26th May, 2016

Place: Mumbai