The company enters into a ship management agreement with a ship owner based on either the company's standard Ship Management Agreement or on BIMCO'S " SHIPMAN " agreement ( Appendix B ) but logically modified, if necessary, to the satisfaction of both the parties.

Management of vessels can be done either on a lump sum fixed contractual cost basis or on an actual cost plus management fee basis depending upon the owner's preference.

In the former case, the owner pays a lump sum agreed amount per month but in the latter case the procedure is as follows:

A running cost estimate is prepared and discussed in detail with the owner. It will not be immodest to point out here that historically our variance between budgeted and actual costs is within 3-4%.

The management fee varies between USD 5000 to USD 9000 per month. This amount is included in the aforesaid running cost estimate.

Major non-recurrent and extraordinary expenses such as dry docking and special surveys projections are deducted from the estimate. Thereafter, a monthly average of the projected expenses is worked out.

This monthly average is then rounded off to the nearest thousand and used as unit to establish the initial funding level.

We, as ship managers, are funded by the owners with one months' projected monthly average as an imprest fund to operate from.

The first remittance is made fifteen days in advance of commencing management.

We diligently apply the imprest funds towards the vessel's running expenses and the owners are given a telex / telefax account on the 1st day of the subsequent month.

A complete vouchered account is dispatched by air courier by 10th day of the month.
The owners would on receipt of the account, transmit the amount of money spent in the previous month so that the imprest fund level is restored.

Our standard management agreement (Appendix A) stipulates on board attendance of our superintendents for a period of time of 30 days per vessel per year at no extra charge. However, all costs associated with travel, accommodation, essential communications and incidental expenses during this time period are charged to the owner.

Additional time spent aboard in excess of 30 days per year will be charged at USD 350/¬per day along with aforesaid travel, accommodation etc. costs.

Time allocation to each vessel is based on our experience and is considered satisfactory by most owners.

QUARTERLY REPORTS
The following reports are forwarded to each owner every three months:
-Variance report- Between actual and projected running costs
-Trial balance
-Technical performance
-Financial performance
-Superintendent's visit report
-Any other report as per owner's requirements.