Financial Statements - Hemas Holdings, Ltd

Hemas Holdings PLC - Annual Report 2007 - 2008Notes to the Financial Statements35. COMMITMENTS AND CONTINGENCIES (Contd…)(f)Hemas International Freight (Private) Ltd.(1) The Company has obtained Guarantee from Standard Chartered Bank favouring Sri Lankan Airlines amounting to Rs. 5 Mn.(2) The Company has obtained Guarantee from Standard Chartered Bank favouring Green Lanka Shipping Ltd. amounting to Rs. 4 Mn.(3) The Company has obtained Guarantee from Standard Chartered Bank favouring James Finlay & Company (Colombo) Ltd. amountingto Rs. 2.5 Mn.(g) Exchange & Finance Investments Ltd.(1) The Company has obtained Guarantees from Nations Trust Bank PLC favouring Kenya Airways and Alitalia Airlines amounting toRs. 4 Mn and Rs.7 Mn. respectively.(2) Mr. K.T.D Samarasinghe has filed a case against the Company claiming damages for Rs.5Mn. and the trial is still being continued.However no provision has been made in the accounts in this regard.(h)Hemtours (Private) Ltd.The Company has filed cases against Mr. Irosh Fernando and UVI Holidays for the purpose of recovering the receivables due from them.35.3 Lease Commitments(a)Hemas Hospitals (Private) Ltd.Operating Lease Commitments - Company as LesseeThe Company has entered into an operating lease agreement to lease a land from Nihila Garments (Pvt) Ltd. This lease has a life of 30years with no renewal option included in the contract. There are no restrictions placed upon the lessee by entering into this lease.Future minimum rentals payable under operating lease as at 31 March are as follows:2008 2007Rs.Rs.Within 01 year 15,000,000 15,000,000After 01 year but not more than 05 years 78,000,000 75,000,000More than 05 years 564,744,000 579,744,000657,744,000 669,744,00035.4 Commitments and Contingencies of the Jointly Controlled EntityHeladhanavi Ltd. - The Group has 50% share of following;Operations and Maintenance Agreement with Lakdhanavi Ltd.According to this agreement, the fixed fee payable after the final completion date is US$ 625,000 per annum paid in equal monthlyinstallments.Heladhanavi is liable to pay Lakdhanavi an additional sum of US $ 2 Mn. for each remaining year of the term or pro rata for part of termupon the early termination of this agreement. A variable fee, depends on the Net Energy output generated.Fuel Transport Agreement with LTL Projects (Pvt) Ltd.Heladhanavi has entered into a contract during the period with LTL Projects (Pvt) Ltd, for the transportation of fuel. According to thearrangement the company needs to pay a fixed charge of US$ 10,500 per month from the date of commencement of power generation inthe plant.Fuel Supply Agreement with Ceylon Petroleum CorporationIf the company is unable to accept fuel under supply schedule (subject to change) and/or comply with its obligations under this agreementand costs,expenses,damages and losses incurred as a direct and exclusive result of such failure or inability should be paid by the companywithin 30 days. However, the company's liability under this agreement is limited to a maximum of US$ 500,000 per annum.According to the clause 3.5 (C) of fuel supply agreement, company has established a Letter of Credit at Hatton National Bank PLC in favourof Ceylon Petroleum Corporation to the value of Rs. 280 Mn.91