tata motors ltdsuppliers.tatamotors.com/project_docs/purchasing_agreement.pdf · tata motors wishes...

TATA MOTORS LTD PURCHASING AGREEMENT This agreement made and executed as of the______day of __________2003 between TATA MOTORS LIMITED – a company registered under Companies Act 1956, having its registered office at Bombay House, 24, Homi Mody Street, Mumbai 400 001. And ______________________________________________ having its registered office at ______________________________________________ hereinafter referred to as a ‘Supplier’. Tata Motors wishes to purchase auto components and parts for the manufacture and sale of motor vehicles, chassis thereof and other products from the Supplier and the Supplier is willing to sell these components and parts to Tata Motors, both the parties wish to enter into this basic purchase agreement. I This Basic Purchase Agreement establishes the essential principle

governing the relations between Tata Motors and the Supplier for the purchase / supply of components and parts for mutually beneficial business relationship.

II The supplier shall observe the guidelines laid down in Tata Code of Conduct governing the relations and conduct of the parties in the fields of business, which will have a bearing on this agreement.

III Supply of component and parts in the correct quantity, at the correct time (as per the supply schedule issued to the Supplier), with the correct quality level (as specified) and at the correct price (as mutually agreed) are the basic fundamentals of this agreement.

IV Tata Motors shall inform Supplier of its targets for cost, quality and delivery on year-to-year basis. Continuation, expansion and diversification of business relationship shall depend on the supplier’s ability to meet / surpass these targets. Tata Motors commits to provide objective feedback on supplier’s performance on various areas of cost, quality and delivery. This evaluation system shall be used as a basis by Tata Motors to continue relationship

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with the supplier.

V The supplier commits to demonstrate continuous improvements in all areas of cost reduction, quality improvements and delivery performance. Supplier is expected to foster spirit of innovation and continuously upgrade the products and services offered to Tata Motors to meet the common aim of customer satisfaction.

VI The supplier is expected to show commitment towards this by actually practising Kaizen, Six Sigma and adopt CII Exim bank award philosophy to achieve Business Excellence.

VII The supplier is expected to work in spirit of partnership and support Cross Functional Working in the areas of New Product Introduction, Cost reduction and Quality Improvement.

VIII To ensure correct Quality level for each and every supply to Tata Motors the Supplier is committed to achieve Self Certification Status so that all supplies to Tata Motors get further processed without incoming inspection. The long term objective of this Quality Agreement is for the Supplier to achieve QS 9000 / TS 16949 certification – an internationally accepted and widely practiced Quality system in the manufacturing industries.

IX This agreement would cover such items as stipulated in the Purchase Orders issued by Procurement departments of Tata Motors at various locations, including Spare Parts Division, from time to time. Actual purchase / supply of components shall be made against specific purchase orders and supply schedules issued to Supplier from time to time. The PO will specify the relevant details of the items such as Part No, Description, price and other terms and conditions. The PO and Delivery schedules issued from time to time shall form an integral part of this Agreement

X All the categories of parts and assemblies, O.E. as well as spares, supplied to Tata Motors after completing development process and approval of the parts for regular supplies shall be covered under Warranty Terms and conditions between the Supplier and Tata Motors.

1 VALIDITY:

This agreement shall come in force from ________________________ and shall be valid for a period of 10 years unless a desire is expressed by either party to terminate it prior to this period or unless otherwise rendered obsolete due to violation of other clauses of this agreement.

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2 DELIVERY:

2.1 The items agreed to be sold and supplied shall be delivered at designated points within Tata Motors premises at various locations or any other location specified for Spare parts. The property and risk of the items shall pass on to Tata Motors only when the said items are delivered to Tata Motors at designated points and the supplier shall be responsible for any shortfall in quantity / damage /loss to the said item till the same is delivered in good condition to Tata Motors.

2.2 The supplier shall supply components in reusable containers. Exceptions, if any, will have to be informed to buying agency in advance and mutually agreed upon. The supplier shall ensure proper preservation of the components. Specific handling, packaging and preservation standards will be prepared and submitted for each component of Tata Motors for approval. Each shipment will be made under a separate invoice indicating Part Number, Description, Modification status, quantity supplied and accompany PDI report and Material Engineering report for the shipment, and other relevant particulars. Each shipment will be marked with date of manufacturing and a lot number for Quality Control and traceability.

2.3 Delivery against supply schedule:

2.3.1 Tata Motors shall indicate to the supplier, likely production plan for the year in advance by Feb 28th of the previous year to enable them to plan their production facilities.

2.3.2 Tata Motors shall indicate delivery schedule from time to time with specific quantities to be delivered at a time. The frequency of delivery could be shift-wise / day-wise / week-wise. This schedule shall be deemed to be accepted by the supplier, unless the supplier conveys within 24 hours his anticipated difficulties to meet this schedule for specific items to Tata Motors, if any.

2.3.3 Any revision in supply schedule shall be as per the mutual agreement only.

2.3.4 It is clearly understood between the parties to the agreement that time of delivery is the essence of the agreement and is of utmost importance. Therefore, the components must be supplied strictly as per the supply schedule released to the Supplier.

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2.3.5 It is the responsibility of the Supplier to ensure that the material being physically supplied conforms exactly in relation to quantity, part description, part number, modification status etc. to the delivery documents made by the Supplier for the supply.

2.3.6 In case of short supplies, the count by Tata Motors personnel would be considered to be final and payment will be made as per the receipt quantity only. Repetitive short supplies may lead to termination of the agreement.

2.4 The Supplier shall inform to Tata Motors at the earliest, of the likelihood of any event or circumstances, which may render it difficult for the Supplier to fulfill commitments under this Agreement. The Supplier shall also inform the specific steps being taken by them to contain the problem as also the time frame within which they would be able to overcome the problem. However, Supplier shall strive to meet his obligations covered by this Agreement.

2.5 The Supplier agrees to supply the items from a local manufacturing plant or to establish storage facility in the vicinity of each plant of Tata Motors to provide uninterrupted and streamlined supply of materials, in case the manufacturing plant of the Supplier is located at a considerable distance from the Ordering plant. The Supplier shall maintain adequate stock at this facility to avoid the consequences of delays in transportation, interruption of work due to any unforeseen reasons at the supplier’s end.

2.6 In case the Supplier fails to meet the supply schedule released on him and Tata Motors incurs any additional expenditure by way of air freight, etc. or pay any extra price for procuring the material from other source (S) for keeping Tata Motor’s production lines running, such extra expenditure or extra payment shall be debited to the supplier’s account after mutual discussions.

2.7 SERVICE AND REPLACEMENT PARTS:

2.7.1 At the request of Tata Motors the Supplier shall sell to it (i) the supplies against a purchase order for production parts or components necessary to fulfill their current model service and replacement requirements for such supplies at the price specified in the purchase order plus any actual cost differential for packing and (ii) if such supplies are assemblies, service and replacement parts of the assemblies at prices such that the total price of all parts of the assembly does not exceed the price of the assembly less assembly costs , plus any actual cost differential for packaging . At the request of Tata Motors during the 10year period after Tata Motors complete current model purchases, Supplier shall sell to it supplies to fulfill Tata Motors ‘ past model service and replacement requirements at

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the prices specified in a purchase order plus actual cost differentials for packaging and manufacturing. During the 10th year of such period, Tata Motors and Supplier will negotiate in good faith with regard to Supplier’s continued manufacture of service and replacement supplies.

2.7.2 Supplier commits not to supply to any third party the products meant for supply to Tata Motors without prior written consent from Tata Motors, if they are made using any of the following: (i) Any intellectual property rights of Tata Motors or its promoters in the form of patents, know-how, designs, copyrights or other rights (whether registered or not);

(ii) Secret knowledge of manufacturing processes (know-how) of Tata Motors; or (iii) Dies, moulds, models, patterns, jigs, tools or accessory equipment that were acquired from or for Tata Motors. If the products are of the standard type of the Supplier, then the Supplier shall ensure that the material similar to the products / their packaging supplied by the supplier to the third parties shall not bear any mark or reference, either intellectual property rights of Tata Motors / promoters of Tata Motors or otherwise.

2.8 SPARE PARTS AND SERVICE SUPPORT:

Besides supplying to Tata Motors for O E requirements, the Supplier shall also supply components as spare parts to Spare Parts Division of Tata Motors as per the schedule that may be indicated by them. Warranty for spare parts will be same as warranty offered for the same parts for O.E supplies. Prices of spare parts requirement will be benchmarked with OE prices. Whenever the Supplier supplies parts as per their own design, they shall ensure adequate steps to attend to any complaint in the field by providing a wide service network. Tata Motors shall, also, indicate in advance territories in which company’s product are likely to be exported, and supplier shall take adequate steps to ensure service supports in these territories, either by their own facilities or that of their collaborators / JV Partners.

3 INGREDIENTS:

The Supplier shall furnish the details of any hazardous ingredients in the components supplied by it. If such hazardous nature is unknown at the

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time of sale, special notice shall be given to the Tata Motors immediate after the supplier’s discovery thereof. (A list of hazardous material is enclosed).

The Supplier undertakes the responsibility to follow the regulations so that the recycling at the end of the life of the product does not violate the regulations. The Supplier commits to change the processes / designs, if required, to comply with this from time to time.

4 QUALITY / INSPECTION:

4.1 All components delivered by the supplier shall be subject to Tata Motors decision on acceptance or rejection after its Inspection formalities. In addition to meeting the delivery commitment, meeting the Quality criteria as specified and agreed is the essence of this Agreement. All liabilities arising out of any shortfall in Quality expectation will be to Supplier’s account including any loss of production due to rejection of supplies by Tata Motors on account of Quality problems.

4.2 Quality Audit: Tata Motors will carry out an initial and subsequent periodic assessment of Supplier’s Quality System. Any areas noted for improvement action in the system will be communicated to the Supplier for Corrective Action. The Supplier in time bound manner, not exceeding 30 days from the date of such communication unless authorized by Tata Motors, will implement the agreed Corrective Action Plan. The Supplier is further obligated to implement effective Corrective Action to resolve process and / or product problem to prevent nonconforming supplies in total product cycle time.

4.3 Production Part Approval Process (PPAP)” The Supplier shall not start production intent supplies to Tata Motors unless the PPAP is completed and formally approved. On approval of the PPAP submitted, Tata Motors shall provide the Supplier with a signed Part Submission Warrant copies. In specific circumstances waiver must be obtained for starting supplies before completion of PPAP indicating special controls, which will be exercised while dispatching material to Tata Motors. Prior to implementation of any product / process changes, Supplier shall communicate all changes to process, methods or materials affecting dimensional, metallurgical, chemical, functional or appearances characteristic.. The Supplier is obligated to implement the changes only after receipt of formal written approval from Tata Motors and approval of re-PPAP submission, if required.

4.4 The cost of any segregation / rework carried out by Tata Motors shall be

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debited to the Supplier. To ensure that bad quality parts do not even accidentally get recycled, rejections will be scrapped at Tata Motors. Cost of such scrapping action will be debited to the supplier. Exceptions if any, will have to be discussed with appropriate authorities in Tata Motors.

4.5 Documentation Control: Both Tata Motors and Supplier are jointly responsible for ensuring latest revision of drawings, specifications, data sheets, CAD / CAM data and standards are available.

4.6 Record Retention: The Supplier is obligated to store all quality performance records (Control Chart/ Inspection and Test results etc) for one calendar year. The records of internal quality system audit and management review must be retained for three years. PPAP records and tooling history records are to be maintained for the component life and one subsequent calendar year.

4.7 In addition to this, following internal records shall be retained for one year from date of creation.

(a) First piece approval report as per the process plan (b) Dimensional report as per the Quality Plan jointly agreed (b) PDI reports (c) Calibration Records of gauges, in section fixtures, instruments etc. (d) Verification records of production tooling and equipments.

4.8 Functional and Reliability Testing: Whenever requested by Tata Motors,

the Supplier shall conduct all functional and / or reliability test that are specified on a periodic basis at least once a calendar year. Tata Motors standards describing the testing if applicable, will be made available and shall form basis for such testing. All such test results shall be submitted to Tata Motors for review and approval. In case such test results show failures to meet specified performance level, the Supplier shall submit and implement effective action within 45 days of such tests.

4.9 PPM Defect level:

The Supplier shall maintain the PPM defect level at incoming and “ 0 “ Km rejection as per agreed norms for year to year targets leading to 200 ppm level which is objective of Tata Motors.

4.10 Other Requirements: 1. The identification mark provided on the product will be Unique and

as agreed upon (e g color code, LH, RH etc). 2. Supplier shall inform Tata Motors in case of any change in product

/ process / sub-contractor.

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3. The Supplier shall provide necessary work instructions and process qualifications for special processes identified.

4. The Supplier shall communicate the validity status of certification to ISO 9001 / QS 9000 / TS 16949 possessed by them on yearly basis.

In case of change in manufacturing premises, production line and major process / tooling changes, the Self Certification status shall become invalid and will call for fresh certification

5 TRACEABILITY:

Supplier will maintain a system of tracing back the exact source of any quality problem as well as the suspected defective parts and will take Immediate corrective and preventive actions.

6 ENGINEERING CHANGES:

Tata Motors reserves the right to make, at any time, changes in the products as per the requirements. Tata Motors shall furnish and / or specify the details of such engineering changes to the supplier in writing. Any changes in the supplier’s design, input materials, production process, toolings, indigenisation of parts shall be informed to Tata Motors in advance. These changes shall not be implemented without prior approval of Tata Motors. Tata Motors shall evaluate these parts as per the prescribed procedures.

7 COMMUNICATION:

The supplier shall install necessary software and align their internal system to facilitate digitized communication in all areas of interaction, whether technical or commercial. The cost of such software interface shall be borne by the supplier.

8 SECRECY AND CONFIDENTIALITY:

8.1 The drawings and documents and any other information furnished by Tata motors to the Supplier shall always remain the property of Tata Motors. The supplier further agrees with Tata Motors that he shall not reproduce or disclose any information to third parties in relation to the items manufactured by him and acknowledges that the Patents, Design, Drawings and information relating to the manufacture of the items are proprietary and confidential to Tata Motors. The supplier further covenants that he shall use the highest degree of care to prevent unauthorized disclosure of Design, Drawings and information to third parties.

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8.2 On the other hand, Tata Motors also undertakes to ensure adequate secrecy of the designs / drawings of proprietary items submitted by the supplier to Tata Motors. The supplier further covenants that in the unlikely event of this agreement being terminated for any reason whatsoever he shall forthwith return to Tata Motors all Designs, Drawings and information given to him by Tata Motors.

8.3 Supplier further covenants that he shall not manufacture, sell, market, consign or deliver, directly or indirectly, products using information, technology, tooling, drawings or specifications supplied by Tata Motors , except to Tata Motors unless Tata Motors agrees in writing for any specific product.

8.4 The Supplier shall not use Tata Motor’s Logo or any design which is similar thereto or any of its registered or unregistered trade marks either on the components to be supplied to Tata Motors or on any container or packing materials used for marketing of such components without prior and specific approval of Tata Motors and on such terms and conditions as may be mutually agreed to between them. In any case, the Supplier shall not use Tata Motor’s logo and its registered or unregistered trade marks on the components or the packing material for sale and distribution of the components to a party other than Tata Motors.

8.5 In the event of any breach of the terms and conditions, supplier shall pay to Tata Motors as liquidated damages for the breach there of. Further, if Supplier breaches any material provision hereof, Tata Motors shall be entitled to an injunction to prevent further breach. In addition, Tata Motors may, without prejudice to any other lawful remedy, cancel all Supply, Development and / or Purchase Agreements between Tata Motors and Supplier without notice if supplier has violated any material provision of this Agreement.

9 MAINTENANCE OF TOOLS, GAUGES AND EQUIPMENT PROVIDED BY TATA MOTORS:

Supplier takes the responsibility of maintenance and calibration of the tools, gauges and equipment provided by Tata Motors or where financial assistance has been extended by Tata Motors for the same. The supplier shall also provide safe custody, proper storage, adequate insurance cover against fire, theft etc and proper usage for these tools, gauges and equipment. The Supplier shall not use any of these items for anything other than converting / manufacturing / assembling materials to be supplied to Tata Motors. The Supplier shall keep proper accounting for such tools, gauges and equipments and provide the same to Tata Motors

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as and when required. Further, the Supplier agrees to facilitate physical verification by officials of Tata Motors or any other persons duly authorized by Tata Motors in this behalf at all reasonable times.

Since the supplier is having the custody of the toolings, gauges and equipments from Tata Motors, in case of theft, destruction, damage or perils suffered by the tooling for any reason, the same shall be informed by the suppliers to Tata Motors for further action towards salvaging / claiming the insurance.

The prevailing tooling at the point of discontinuation of active manufacture shall continue to remain a property of Tata Motors, provided Tata Motors have partially or fully funded the tooling expenditure.

The Supplier shall identify all such toolings, gauges and equipments and mark as ‘ Property of Tata Motors’ .

10 PAYMENT:

10.1 The payment shall normally be released to the Supplier as per the terms specific to the Purchase order released by Purchasing Agency from time to time and mutually agreed upon.

10.2 In the event of any dispute as to products quality/quantity/packing/ delivery schedule, etc. the terms of payment agreed upon shall not be binding.

10.3 If any sum of money is recoverable from and payable by the Supplier, Tata Motors shall be entitled to recover such sums from any sums due to the supplier or which at any time thereafter may become due to the Supplier under any purchase orders. Should that sum be not sufficient to cover the full amount recoverable the Supplier shall pay to Tata Motors on demand, remaining balance due.

10.4 The Supplier shall ensure compliance with all relevant formalities pertaining to payment of duties and taxes and documentation thereof, and in particular, ensure that valid excise invoice / any other documents as specified by the relevant laws from time to time, is provided along with the delivered goods to enable Telco to avail of credit / refund of any duty / taxes paid by the Supplier. The Supplier shall also furnish relevant documents required by Tata Motors for any other reason, Any financial loss incurred by supplier or Tata Motors on account of non compliance of relevant documentation will be to the supplier’s account.

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11 PRICE :

11.1 Initial price for every item shall be settled between Tata Motors and the supplier, based on the quotation and detailed cost break-up provided by the supplier and mutually agreed between Tata Motors and the supplier. The price thus settled shall normally remain firm for the period of this agreement. Unless agreed to specifically, the terms and conditions of the Supplier contained in their quotations / purchase order acceptance shall not govern the business under this agreement.

11.2 Both Tata Motors and the supplier are committed to offsetting inflationary increases through productivity gains and reducing cost further through value engineering, six sigma and Kaizen exercises, increased volumes of procurement from Tata Motors leading to lower Fixed cost per unit, achievement of higher productivity, effect of learning curve and by initiating other cost reduction measures, and Supplier agrees to bring down the prices as per the targets set from year to year with help of these measures.

11.3 PRICE REVISION:

11.3.1 Material / Input cost: Revision in price for an item shall be considered only once a year, in the event of any major variation in the cost inputs such as, changes in the prices of raw materials and other inputs of Power and Fuels, as well as changes in statutory duties. The revised prices and effective date thereof will be arrived at through discussion with the supplier.

11.3.2 Till the time the revised prices are mutually agreed to, only the prices on the existing purchase orders shall remain valid and the supplier shall maintain uninterrupted supply of the items.

11.4 The Supplier also agrees to work with Tata Motors in a spirit of continuous improvement to reduce costs through Value engineering and the reduction in cost thus achieved will be shared as per mutual agreement between both the parties.

11.5 Taxes and Duties: The price stipulated in the P O shall be exclusive of all taxes and duties levied on the said items by Central / State/ local Authorities, unless specified otherwise. Any change in taxes and duties therein from time to time at actuals shall be borne by Tata Motors. Tata Motors shall be

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entitled to claim any admissible exemption / concession accrued under Excise, Sales Tax or any other laws for the time being in force and for the purpose it shall furnish to the supplier the declaration forms or other documents as may be prescribed therefore. The Supplier shall furnish to Tata Motors all the documents necessary for obtaining duty draw back and any other exemption / concession admissible on their supplies to specific customer / exports.

12 WARRANTY:

12.1 The Supplier shall warrant all components supplied by him against defective design / material and / or workmanship. Such warranty shall be valid for the same period as that of the vehicle in which the said item is fitted. Present duration of warranty from the date of sale of vehicles and applicable to domestic as well as export market through out the world as per the categories is indicated in the Annexure I. However, Tata Motors will review this coverage annually in line with the demands of market place. Supplier is required to support such decisions and extend warranty coverage in line with these decisions. In case any change in warranty period of vehicle / product sold by Tata Motors is required, the same may be mutually decided between Tata Motors and the Supplier.

12.2 The Supplier commits to demonstrate continuous improvement to reduce warranty failure level in the supplies made by him to Tata Motors. Tata Motors shall inform Supplier of its targets to address warranty failures on year to year basis and continuation, expansion and diversification of business relationship shall depend on Supplier’s ability to meet / surpass these targets.

12. 3 Regarding acceptance of warranty, Tata Motor’s decision, after due consideration to Supplier’s views if any, shall be final and binding on the supplier. Tata Motors will debit the Warranty expenses to vendor as below:

12.3.1 Warranty cost at 2 times the OE purchase price. Where no OE purchase price exists, spare purchase price will be used for this purpose.

12.3.2 In case of major failure, where the failure seriously jeopardises the reputation of brand / product image, Tata Motors reserves option to debit additional cost as it considers necessary to compensate for such damages.

12.3.3 In case of major failures related to safety, regulation and performance, retro-fitment will be carried in the field as decided by Management of Tata Motors. The costs associated with such retro-fitment will be borne by the Supplier.

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12.3.4 The Supplier shall bear the cost of disposal of warranty returns, if not

collected by Vendor in stipulated time Supplier will be allowed to review warranty failed parts collected at designated locations and present root cause analysis / corrective action plan along with the validation test plan, within 30 days of notification of such failures. The Supplier shall subsequently submit the results of the validation tests certifying the efficacy of the Corrective Action in a reasonable period of time. (While Tata Motors shall give due consideration to the failure analysis given by the Supplier regarding such failures, decision by Tata Motors on the reasons for failures and consequent liability shall be final and binding on the supplier) In case of export warranty, the failed parts will not be brought back and Supplier may visit the actual site to study the failure.

12.3.5 In case the part supplied by the Supplier has gross deficiencies leading to recall of vehicles operating in the field, the entire cost of such recall operation and an additional sum as damages may be debited to the Supplier at the discretion of Tata Motors

12.3.6 Items covered under Emission warranty will have to simultaneously

comply with terms and conditions applicable to Emission Warranty.

12.3.7 In the event Tata Motors carries out a modification of their design to address specific field complaint or failure, the liability of the Supplier shall be reviewed and appropriately modified. The decision of Tata Motors will be final and conclusive in such matters.

13 RESEARCH AND DEVELOPMENT EFFORTS:

The Supplier shall continue to invest in Research and Development

efforts to upgrade products being supplied to Tata Motors in terms of their quality, features and functionality. The Supplier shall take steps to build adequate competencies in the areas of product design and development to support Tata Motors’ efforts on new product development.

14 INDEMNITY:

The Supplier shall at all times indemnify Tata Motors against all claims which may be made in respect of the components supplied by the Supplier against defective design, material, processing and assembly. Tata Motors shall notify the Supplier who shall as his own expense either

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settle any such dispute in consultation with Tata Motors or conduct any litigation that may arise there from. Any litigation that may arise shall be at the cost and consequence of the Supplier.

If the Supplier provides the design, drawing, specifications, information and data for component, the supplier agrees to defend, indemnify and hold harmless Tata Motors, its customers and users of its product against all claims, losses, damages, liabilities arising out of any infringement of any patent, design, trade mark or other rights of intellectual property in any other person resulting from the purchase, use or resale by Tata Motors and its assignees.

15 DAMAGE TO THIRD PERSON / PROPERTY:

Supplier shall be responsible for any damage caused to third person or property as a consequence of the components supplied by Supplier and attributed directly to it, especially those which are considered as Safety items. In such cases Supplier and Tata Motors shall consult each other to arrive at solution of the issue appropriately. An indicative list of such safety items is enclosed at Annexure “A”. The Supplier agrees to defend, indemnify and hold harmless Tata Motors against all claims for injury or damage to any person or property, arising out of the performance of the supplies by the supplier, its sub-contractors or representatives under this agreement.

16 ADVERTISING:

The Supplier shall not use Tata Motors’ name and logo or their status as supplier to Tata Motors for promoting their products in print and electronic media without permission of Tata Motors.

17 MATERIAL PROVIDED BY TATA MOTORS:

If any materials are supplied by Tata Motors to the Supplier on free of cost basis for manufacturing / assembling into items to be supplied to Tata Motors, it shall be supplier’s responsibility to provide safe custody, proper storage, adequate insurance cover and proper usage for these materials. The Supplier shall not hypothecate such materials to financial institutions for his financing or divert any of these materials for any use other than conversion / manufacture / assembling in components to be supplied to Tata Motors. The Supplier shall keep proper accounting for these materials and provide the reconciliation statements with confirmation of the balances at the end of every year to Tata Motors and return the

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material when required by Tata Motors. Further, the Supplier agrees to facilitate physical verification by officials of Tata Motors or any other persons duly authorized by Tata Motors in this behalf at all reasonable time. The Supplier commits to complete the documentation required by law regarding such material provided by Tata Motors.

18 TERMINATION:

This agreement would remain in force until terminated by either party by giving three month’s notice. Termination under this clause is independent of clause 1 of the Agreement. Tata Motors also will have the right to terminate the agreement in the event of repetitive failure on the part of the supplier in terms of punctuality of supplies and quality of items supplied

18.1 The Supplier shall continue to have the following obligations after expiration or termination of this Agreement.

18.1.1 The warranty of quality set forth in clause 10 for the component supplied and accepted

18.1.2 Satisfactory indemnification of claims, if any, raised by the customers on components supplied by it.

18.1.3 The matters of intellectual property rights set forth in clause 19

18.1.4 Not to sell components and imitation goods and to observe confidentiality and secrecy as set forth in Clause 8.

18.1.5 Supply the balance components under this agreement / Purchase order on the date of termination / expiry of Agreement in case Tata Motors wants the same.

18.1.6 Return the drawings, toolings gauges, equipment and raw material work in progress, and finished goods in the custody of the Supplier for which the ownership resides with Tata Motors.

18.2 On the part of Tata Motors, if the Agreement is terminated as aforesaid the Supplier shall be paid for all the materials supplied and accepted in accordance with para 8.1 above

18.3 Tata Motors can terminate the agreement by notice to the supplier in case of (i) failure of supplier to meet schedule (ii) supplier insolvency (iii) voluntary liquidation of supplier (iv) joining of the supplier with anybody else without Tata Motors permission (v) lock out (vi) hypothecation by the suppliers

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19 INTELLECTUAL PROPERTY RIGHTS:

The Supplier shall respect all patent rights relating to the product and not

use any information provided by Tata Motors to obtain any patent rights on its own or through any other party. If the Supplier makes any invention, improvement on the product being supplied to Tata Motors, he shall forthwith intimate Tata Motors and grant to Tata Motors the right to use that intellectual Property Right, without any cost implication on Tata Motor’s part. Any component cost reduction as a result of the above would be shared with Tata Motors. Also the copy rights of the articles written / published shall rest with Tata Motors. The intellectual property right obtained through joint research of Tata Motors and supplier shall become joint property of both the parties. However, it may be made the sole property of either Tata Motors or Supplier upon consultation between Tata Motors and Supplier

20 SUB-CONTRACTING WITH TATA MOTOR’S CONSENT:

The Supplier may, with consent of Tata Motors, sub-contract the production of any item of component being supplied by it, and give to the sub-contractor such information as is necessary for this purpose. The supplier undertakes the responsibility to ensure that the sub-contractor shall be bound by the secrecy and confidentiality clause. The supplier shall be responsible for the quality and reliability of such parts sourced by the supplier from any sub-contractor.

21 COMPLIANCE WITH LAWS:

The Supplier in all matters arising in the performance of this agreement shall conform at his own expenses, with all statutes, law, bye-laws, regulations and other provisions having the force of law in places wherever vehicles are sold.

22 FORCE MAJEURE:

Notwithstanding anything contained in this agreement, the obligation of either party shall remain suspended and Tata Motors / the supplier, as the case may be, shall not be entitled to claim compensation from each other for any loss or damage caused by such suspension whether total or partial, by reasons of strike, lockout, cessation or restriction of work by workmen, fire, flood, power cut / breakdown, accident to machinery, sabotage, riots, disturbances, war, insurrection, restrictions imposed by Government, Act of Legislature or other authority or Acts of God. To encounter the situation out of foreseen labour agreement problems the supplier shall keep the provision for products / services to ensure

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uninterrupted activities of Tata Motors for the period of 30 days. The operation of the contract shall be resumed as soon as any such condition or circumstance has been removed. On the occurrence of a force majeure as above. Tata Motors / the Supplier, as the case may be, shall give notice in writing of such occurrence to the other party with all details and supporting evidence thereof, and also inform about progress in the situation on continuous basis.

23 PENALTY:

Tata Motors may be constrained to charge penalties to the vendors under the following circumstances:

23.1 Repeated failures on delivery of parts affecting Tata Motors’ production severely

23.2 Repetitive or major quality problems leading to severe disruption and / or severe loss of reputation for Tata Motors’ products

23.3 Infringement of intellectual property rights of Tata Motors

23.4 Violation of Tata Code of Conduct. Amount of penalty will be guided by the severity of the situation.

24 SETTLING OF DISPUTES AND ARBITRATION:

24.1 Tata Motors and Supplier shall consult each other and settle amicably all the matters which arise from interpretation of the provisions of this Agreement and Purchase order and other matters which are not provided in this Agreement and Purchase order.

24.2 This agreement, the Purchase order or any other agreement between the parties shall be governed by and interpreted in accordance with the laws of India.

All disputes or differences whatsoever arising between the parties to this agreement out of or relating to the construction, meaning, operation or effect of this agreement or breach thereof shall be amicably settled by mutual discussions; failing which such disputes or differences shall be referred to the arbitration of the sole arbitrator to be appointed / nominated by mutual consent of the parties, and the cost of such arbitrator shall be borne by the parties equally. Neither party shall unreasonably withhold its consent for selection and appointment of such sole arbitrator

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Any orders / direction / award of the arbitrator shall be final and binding on both the parties. Arbitrator shall pass a speaking order / award. The arbitration proceedings shall be held in accordance with The Arbitration and Conciliation Act, 1996 and the rules made there under, at the registered office of Tata Motors or at such other places indicated by Tata Motors. Pending resolution of any dispute /s, either through mutual discussions or through arbitration, the supplier shall and hereby undertakes to continue to supply the product of Tata Motors without any interruption, subject to terms and condition of this agreement and normal business condition.

24.3 The Supplier shall not stop the work during the settlement period. Any payment, if due from either party to the other as per terms of the agreement shall not be with held by either party unless the same happens to be a matter referred to the arbitrators.

25 JURISDICTION:

It is hereby agreed that the Courts at Mumbai shall have exclusive jurisdiction in respect of all disputes arising under or out of this agreement.

26 LIQUIDATION:

If Winding up proceedings start against the supplier for any reason Tata Motors shall be at liberty to:

A Terminate the agreement forthwith upon coming to know of the happening of any such event as aforesaid by notice in writing to supplier, to the receiver or liquidator or to any person in whom the Agreement may become vested.

B Or Give such receiver, liquidator, or other person the option of carrying out the performance under this Agreement subject to the receiver, liquidator or other person providing a guarantee upon an amount to be agreed upon by the Tata Motors and such receiver, liquidator or other person, for the due and faithful performance of the obligations under this agreement to Tata Motors.

27 ASSIGNMENT:

The supplier shall not assign its rights and obligations under the Terms of this Agreement to any party without the written consent of the Tata Motors.

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28 ENTIRE AGREEMENT:

The terms and conditions herein shall constitute the entire Agreement

Understanding between the parties hereto and shall supersede all other communications except those referred herein, whether written or oral, between the parties hereto with respect to the subject matter thereof

29 WAIVER:

The individual remedies reserved in a purchase order will be in addition to any remedies provided by law. No waiver of any breach of any provision of a purchase order will constitute a waiver of any other breach of such or any other provisions.

IN WITNESS THEREOF the parties hereto have caused this agreement to be signed and executed in duplicate by their duly authorized representative as of the date indicated below and retain one copy each respectively.

FOR TATA MOTORS LIMITED

FOR SUPPLIER

19

TATA MOTORS ANNEXURE I

WARRANTY COVERAGE

Sr No Models / Aggregates Warranty period in months / Km

1 Sumo, Safari, Spacio and other 207 TATA Mobile Family of vehicles

18 months

2 MUV s in export market 36 Months or 1,00,000 Km whichever expires earlier.

3 Engine parts of Spacio and 207 DI Vehicles 36 months or 3,00,000 Km whichever expires earlier

4 909.1009,1109,1210,1210SA,1312,1313,1510 1510A,1612,1613,1616,2213,2213A,2416 1312C,1313C,1316C, 1512C, 1613C,1615C,1616C,2515C, 2516C,2521C,3015C,3016C,3516C,3521C and 4021C

18 months or 1,50,000 Km or 2,000 hours (for Models provided with hour meter) whichever expires earlier

5 407,609 and 709 36 Months or 3,00,000 Km whichever expires earlier

6 LCVs, MCVs and HCVs in Export market 36 months or 1,00,000 Km whichever expires earlier.

7 Cummins Engines 24 Months or 2,,00,000 Km or 3000 hours ( models provided with hour meter ) whichever expires earlier

8 Tata Engines and gear boxes fitted to Construction Equipment

3,000 hours or 1 year from the date of commissioning of Construction Equipment whichever is earlier

9 Industrial and Marine engines 180 days or 2000 operating hours from the date of commissioning, or 12 months from the date of delivery, whichever is earlier

10 Cars in domestic market registered for personal use.

18 months.

11 Cars in domestic market registered for 18 months or 50,000 km .

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commercial use. whichever expires earlier. 12 Cars in export market throughout the world 24 months

and Anti perforation warranty for 6 years.

ANNEXURE II List of Hazardous Materials: PRO: Proposed, RES: Restricted, REP: Reportable

IUPAC name of the

substances Alternative or generic name

Intended use

within Vehicle

Any restrictions or limitations of use, comments, etc Values stated are a maximum value NOT to be exceeded

Alkylphenol ethoxylates

PRO

4 Aminobiphenyl and its salts

PRO 0.1%

Asbestos PRO Benzene RES All products except

gasoline Biocides REP See also

organoarsenic and organotin

Bis-chloromethylether (BCME)

Oxy-bis-chloromethane

PRO All products including BCME formed from precursors such as methanal and hydrogen chloride

RES All products except those listed separately below

Brominated flame retardants

REP Electronic Components

(Mono) Bromomethane

Methyl bromide PRO All products

Butylbenzyl phthalate (BBP)

Phthalic acid RES All products

Cadmium and its compounds

PRO All products

21

IUPAC name of the


Intended use within

Vehicle


Carbon disulphide RES All products Carcinogenic

substances RES All products

Chlorinated hydrocarbons See separate entries for dichloromethane, tetracholorethene, tricholorethene, thrichloromethane, & chlorinated paraffins

RES All products

PRO All products including petroleum products, for eg. Oils, lubricants and metal working fluids

Chlorinated paraffins (chloroalkanes) Defined as: Liquied or solid chlorinated products of paraffins with a chain length of more than 6 carbon atoms and a chlorine content between 15 & 70%

PRO All products including flame retardants and plasticisers

Chloroethene (Monomer)

Vinyl Chloride (monomer) Monochloroethylene

PRO 0.0005% - All products

IUPAC name of the


Intended use

within Vehicle

Any restrictions or limitations of use, comments, etc

22

Values stated are a maximum value NOT to be exceeded

RES Corrosion protection coatings

Chromium, hexavalent (Cr6+)

REP All products Chromium, trivalent (Cr3+)

REP All products

Chlorofluorocarbon (CFCs)

PRO All products including halocarbon/ CFC blends except where legally permitted

4,4 Diaminobiphenyl Benzidine and its salts


4,4 Diaminodiphenyl-methane

5,5 Methylenedianiline

PRO All products

All products except sealers, see separate entry

Dibutyl phthalate (DBP) Res

Sealers,(by product of stoving)

Dichloromethane Methylene Chloride RES All solvent uses including surface coating removal & degreasing, aerosol propellant, blowing agent.

Di-2-ethylhexyl-phthalate (DEHP)

RES All products

Di-isononylphthalate (DINP)

RES All products

Di-methylmethanamide Di-methylformamide RES All products

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IUPAC name of the substances

Alternative or generic name

Intended use

within Vehicle


Dioxins 2,3,7,8, tetrachlorodibenzop-dioxin (TCDD) polychlorinated dibenzodioxins (PCDD’s)

PRO All products

Ecotoxic substances RES All products Ethane –1,2-dol ethers / acetates

Monoethylene glycol ethers / acetates

RES

Fibres, mineral and synthetic

RES All products containing fibres or fibrils 5µm or less in ∅ with a length: ∅ ratio equal to or greater than 3:1. Asbestos fibres-see separate entry

Furans Polychlorinated dibenzofurans (PCDF’s)

PRO

Halons: including Bromochloro-difluoromethane (Halon 1211) Bromotrifluoromethane (Halon 1301)Dibromotetrafluoroethane (Halon 2402)

Pro All products

24

IUPAC name of the


Intended use

within Vehicle


Hexa-chlorobutadiene

Perchlorobutadiene PRO All products

Hexamines including hexamethylenetetramine diphenylamine

RES 0.2% Interior Trim (by weight in finished parts)

n-Hexane

Hexyl hydride RES 1% - All products except gasoline

Hydrobromofluorocarbons (HBFCs)

PRO All products

Hydrochlorofluorocarbons (HCFCs)

PRO All products containing or manufactured using HCFC’s including R22, solvents, blowing agents

PRO All vehicle applications except for refrigerants

Hydrofluorocarbons (HFCs)

RES All refrigerant applications

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Intended use

within Vehicle


PRO All products except exemptions below

PRO Electrocoat PRO Fuel tank & associated

components PRO Wheel weights for

vehicle type approved after 31.01.03

PRO Solder in electronic circuit boards & other electronic applications

PRO 0.35% - Steel alloy (inc. galvanized Steel)

PRO 4.0% - Copper alloys PRO 4.0% - Copper alloys as

friction matl. PRO 2.0% - Aluminum alloys

for machining PRO 0.4% (as impurity)

Aluminum Alloys RES 0.1% -Steel alloy

(including galvanized steel)

Lead and its compounds

RES Vibration dampers, vuclanising agent for fuel or high-pressure hoses, batteries, lead / bronze bearing shell and brushes

PRO All products Mercury and its compounds

PRO All products

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Intended use

within Vehicle


Methanal Formaldehyde RES 10mg / kg interior trim (by weight on finished parts )

Mutagenic substances

RES All products

2-Naphthylamine and its salts

β-Naphtylamine and its salts


RES All products except stainless steels and alloys containing metallic nickel

Nickel and its compounds

RES 0.5µg/cm2 / week (Ni release rate threshold) Component surfaces likely to be routinely touched e.g handles and buckles (release rate as determined by test method EN 1811) Phosphated surfaces are exempt.

4-Nitrobiphenyl and its salts


N-nitrosamines N-nitrosamides

PRO All products; includes N-nitrosamines & N-nitrosamides formed from precursors such as nitrites and amines / amides

Organoarsenic compounds


27



Intended use

within Vehicle


Ozone depleting substances – see Tetra Chloromethane, CFC’s Halons, HBFCs, HCFCs, Bromomethane & tricholorethane

PRO

Open systems (a system where under normal working conditions a leakage rate above 1% per year occurs)

Perfluorocarbons (PFCs gaseous)

PRO

Closed systems (a system that is normally hermetically closed )

Phenol Phenyl alchohol Carbolic acid

RES All products

Phenyl-2-naphthylamine

2-naphthalenamine PRO 0.1% All products

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Intended use

within Vehicle


Phthalates see also butylbenzyl phthalate, Dibutylphthalate, Diethylexylphthalate, disononylphthalate

REP All products except for those listed separately.

Polyaromatic hydrocarbons (PAHs)

PRO 3.0% (total) Petroleum mineral oil basestocks in lubricants, PAH content as determined by IP method 346

Polybrominated biphenyls (PBBS)


PRO All products except those containing decabromodiphenyloxide

Polybrominated diphenylethers (PBDEs)

RES Products containing decarbromodiphenyloxide

Polychlorinated biphenyls (PCBs)


Polychorinated terphenyls (PCTs)


Polyvinylchoride (PVC)

Chloroethylene Polymer

REP All products

29



Intended use

within Vehicle


Products of endangered species

PRO All products

Radioactive substances

RES All products

Reproductive toxicants

RES All products

Sensitizing substances

RES All products

Open system (a system where under normal working conditions a leakage rate above 1% per year occurs) for eg. Tyre inflation gas Processing (casting) of Magnesium

Suphur hexafluoride

PRO

Closed system (a system that is normally hermetically closed) for eg. Electrical installations.

Tetrachlorethene Tetrachloroethylene Perchloroethene

RES All solvent uses (including degreasing & cleaning)

Tetra chloromethane

Cabron Tetrachloride PRO All products

30

31

Toluene disocyanate including 2,4 diisocyanoto -1-methyl benzene 5,6,8 - nitroquinoline

Isocyanic acid RES 0.1% All products contining the unreacted monomer



Intended use

within Vehicle


1,1,1 trichloroethane

Methyl Chloroform PRO All products

Trichloroethane Trichloroethylene RES All solvent uses (including degreasing & cleaning) & heat transfer fluids

Trichloromethane Chloroform PRO 0.1% All products except laboratory reagents

Triorgano (Trialkyl and Triaryl Tin compounds) see Biocides

Trialkyl and Triaryl Tin compounds

PRO 0.05% All products

Tris (1 aziridinyl) phosphine oxide

PRO All products

Tris (2,3 Dibromonpropyl) phosphate (TRIS)

PRO All products

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