General Terms and Conditions For
TML RFQ
TABLE OF CONTENTS
1. 2.
Applicability and General Terms Provisions relating to Supply of Product 2.1 Definitions 2.2 Supply, Price, Delivery & Payment 2.3 Payment Terms 2.4 Local Facility 2.5 Service and Replacement parts, SPARE PARTS AND SERVICE SUPPORT 2.6 Product Specifications 2.7 Tooling 2.8 Forecast and Orders 2.9 Packing and Transport 2.10 Delivery Clauses 2.11 Penalty Clause and Liquidated Damage 2.12 Short shipment, incorrect quantity or type, Non-confirming Goods 2.13 Acceptance of Goods 2.14 Warranty 2.15 Co-operation 2.16 Recall Campaign 2.17 Evolution of Product and Engineering Changes 2.18 Indemnity 2.19 Continuity in supply of Products
3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
Ingredients Quality / Inspection Material Provided by Tata Motors Secrecy and Confidentiality Sub-Contracting Intellectual Property Rights (IPR) Advertising Force-majeure Damage to Third Person and related Liabilities Compliance with Rules and Regulations and Norms Audit Rights, Financial Information and Certification Language and Communications Severability
Page 2 of 22
ANNEXURES
1. TATA Code of Conduct - Please refer Annexure 1 2. Confidentiality Understanding - Please refer Annexure 2 3. List of Hazardous Material - Please refer Annexure 3
Page 3 of 22
1. Applicability and General Terms 1.1 TATA MOTORS LTD., is a corporation duly organized and existing under the laws of the Republic of India and having its Registered Office at Bombay House, 24 Homi Mody Street, Mumbai 400 001, India (hereinafter referred to as “Tata Motors” or TML or customer), which expression shall unless repugnant to the context or meaning thereof, mean and include its successors and permitted assigns. 1.2 The Supplier is a business entity, as a result of long experience in the business of design, development and manufacture of automobile components and assemblies for vehicles for the worldwide market, has developed and has acquired and or possesses specific knowledge, knowhow, and technical information in the fields, inter alia, of engineering, design, development and manufacture of automotive components, to whom Tata Motors have approached for supplying such components, assemblies or services so that Tata Motors can use the same in the vehicles manufactured by it at its facilities, on the terms and subject to the conditions contained herein. 1.3 These General Terms and Conditions apply to a Request for Quotation, that TML may send to any supplier for the intention of procurement of production goods and/or services from the Supplier such as (a) production and service parts, components, assemblies and accessories; (b) raw materials; (c) tooling; and (d) design, engineering or other services: 1.3.1
The Supplier must observe the guidelines laid down in TATA Code of Conduct attached as ‘Annexure - 1’ governing the relations and conduct of the parties in the fields of business.
1.3.2
Supply of Products and/or Services in the correct quantity, at the correct time, with correct quality level and at correct price, as stipulated in the Purchase Orders and Supply Schedule issued by various Procurement Departments of Tata Motors at various locations, including the Spare Parts Division, from time to time. Actual purchase/supply of components shall be made against specific purchase orders and supply schedules issued to the Supplier from time to time.
1.3.3
The Purchase Order such as Production Purchase Order, Production Tool Order, Prototype Purchase Order, Prototype Tool Order, etc specifies relevant details of the items such as Part No, Description, Price describe the goods and services being purchased, specify the name and address of the Tata Motors Ordering Plant and the Supplier along with other terms and conditions. The Purchase Order and the Delivery Schedules are issued from time to time are the basis of supply of goods/services to Tata Motors.
NOTE: Purchase Order terms as mentioned above may be adjusted against targets for cost, quality and delivery from time to time.. 1.3.4
Tata Motors expect suppliers to work in the spirit of partnership and support cross functional working in the areas of Product Development, Cost Reduction and Quality Improvement.
1.3.5
The supplier is required to demonstrate continuous improvements in all areas of cost reduction, quality improvements and delivery performance. Supplier is also 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 and show commitment towards this by actually practicing tools such as Kaizen, Six Sigma etc. to achieve Business Excellence.
1.3.6
The Supplier is expected to achieve Self Certification Status so that all supplies to Tata Motors, at the sole discretion of Tata Motors, may get further processed without incoming inspection. All suppliers of Tata Motors are expected to achieve QS 9000 / TS 16949 certification – an internationally accepted and widely practiced Quality system in the manufacturing industries.
Page 4 of 22
1.3.7
All 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 are covered under Warranty Terms and Conditions.
1.3.8
Tata Motors evaluates suppliers’ performance against targets and provides such objective regular feedback to suppliers related to achievements against targets on various areas of cost, quality and delivery. Continuation, expansion and diversification of business relationship with Tata Motors depend on the supplier’s ability to meet/surpass these targets.
1.3.9
Unless otherwise specifically agreed in writing, the Law of India shall govern the business terms shall in all respects.
1.4
A Purchase Agreement is a formal agreement that will be entered into before a Purchase Order is issued. It lets the Supplier know that details of specific terms and conditions which will govern the general business between supplier and TML. A Purchase Agreement is a long term agreement which needs renewal after every 10 years, and is not item specific and therefore is executed only once with a supplier. In some specific cases, an additional Supply Agreement and/or Technical Assistance Agreement and Warranty Agreement can also be entered, prior to issuing a Purchase Order, confirming TML decision of business award to a supplier, subject to the terms and conditions of these Agreements. These agreements are part/aggregate specific.
2.
Provisions relating to Supply of Products
2.1
DEFINITIONS
As used in this document, the following terms shall, unless repugnant to the context or meaning thereof, have the following meanings: 2.1.1
“Imported Products” shall mean Products / components manufactured outside India meeting specifications as defined by Tata Motors
2.1.2
“Local Products” shall mean Products / components manufactured in India meeting the specifications as defined by Tata Motorsand also the Imported Products as and when they get manufactured in India.
2.1.3
“Products” shall mean both imported products and local products which in combination constitute the Product.
2.1.4
“Spare Parts” shall mean all parts that are intended for maintenance of the Products.
2.1.5
“Vehicles” shall mean all vehicles manufactured by Tata Motors which also incorporate the Supplier’s Product along with other components and aggregates.
2.1.6
Terms such as "CIF", “FOB” assumes the meaning as defined in Incoterms2000.
2.2 2.2.1
Supply, Price, Delivery and Payment Tata Motors purchase Products from supplier, subject to supplier meeting system specifications, quality, reliability, performance, delivery, price requirements etc of Tata Motors as detailed in various sections in this General Terms and Conditions, RFQ, Drawings, Tata
Page 5 of 22
Motors Standards, Purchase Orders and other agreements, such as Purchase Agreement, Supply Agreement etc that may have been executed with the supplier. 2.2.1
Supplier must extend the status of a very important global customer to Tata Motors and deal with Tata Motors as the supplier would deal with other similar customers. Such status, however, neither confers any legal rights on Tata Motors nor does it impose any legal liability on supplier.
2.2.2
Supplier must not supply to any third party without prior written consent from Tata Motors, if the products in Purchase Order are manufactured using any of the following: A) B) C)
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) Secret knowledge of manufacturing processes (know-how) of Tata Motors, or Dies, moulds, models, patterns, jigs, tools or accessory equipment that were acquired from without payment obligation or fully paid by Tata Motors.
2.2.3
If the supplier supplies standard product to Tata Motors, then supplier must ensure that similar products or their packaging supplied by supplier to the third parties shall not bear any mark or reference of, either intellectual property rights of Tata Motors or the Promoters of Tata Motors.
2.2.4
The items agreed to be sold and supplied by the supplier must 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 and thus acknowledged by Tata Motors.
2.2.5
The supplier needs to supply components in reusable containers. Exceptions, if any, will have to be informed to buying agency in advance and mutually agreed upon. The supplier is expected to 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.
2.2.6
Each shipment by the supplier must be made under separate invoice indicating Part Number, Description, Modification status, quantity supplied and accompany PDI report (format as approved by Tata Motors) 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.
2.2.7
Prices 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. Tata Motors then release Purchase Order on the supplier for the price thus settled. Unless agreed to specifically, any qualifying terms and conditions of the Supplier contained in their quotations / purchase order acceptance or any other form of communication shall not govern the business with Tata Motors. Together with Tata Motors, the supplier is expected to commit offsetting inflationary increases in costs 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
Page 6 of 22
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. 2.2.8
The unit price of the Products supplied from local facilities needs to be quoted in Indian Rupees only. They will include the transportation / packing / marking costs.
2.2.9
In case the quoted price has any foreign currency exposure, such exposure must be clearly and completely defined with respect to the currency, amount, and exchange rate.
2.2.10 If there are changes in the said Product specifications, which are approved by Tata Motors, to improve quality, reliability, performance and / or delivery requirements, the impact will be reviewed jointly and if found appropriate, the Tata Motors will carry out the consequential amendments in the Purchase Order. 2.2.11 Unless specifically agreed, unit rate applicable for serial production goods will also be applicable for all requirements on prototypes and for service and replacements. 2.2.12 For all supplies, other than cases where Tata Motors is responsible for import actions, supplier must ensure compliance with all relevant formalities pertaining to payment of duties and taxes and documentations 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 Tata Motors, to avail of credit/refund of any duty/taxes paid by the supplier. The supplier shall also furnish relevant documents for claiming duty draw-back, and if required by Tata Motors for any other reasons. Any financial loss incurred by the supplier / Tata Motors, on account of non-compliance of relevant documentations by the supplier will be to the supplier’s account. 2.2.13 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, the remaining balance amount. 2.2.14 Price revision effected for an item, due to Value Engineering exercises or changes in supply conditions or specifications shall normally be considered only once a year, or at intervals mutually agreed upon. The revised prices and effective date thereof will be arrived at through discussion with the supplier. Till the time the revised prices are mutually agreed upon and come into effect, only the prices in the applicable Purchase Order shall remain valid and the supplier shall maintain uninterrupted supply of the Products. 2.2.15 Any applicable development expense, such as Styling, Engineering, Integration, Validation, tooling etc, is settled with the Supplier considering the supplier delivers the product achieving the specified system level targets. Development expense is never settled for number of iterations required by the supplier to achieve the expected performance levels as specified in the RFQ. Supplier therefore is required to make the best estimate of engineering effort and provide the estimate together with break-up to Tata Motors. This estimate serves only as the supporting calculation of the quotation and the supplier is solely responsible for correctness of this estimate. 2.2.16 Unless there are fundamental changes in system level performance targets during the course development which is demanded by Tata Motors, supplier understands that the development cost agreed as in Article 2.2.15 is at the upper ceiling level. Tata Motors do not accept any subsequent claim/request from Supplier on cost escalation due to changed iterations/efforts to meet agreed system level targets. 2.3
Payment Terms
Page 7 of 22
2.3.1
Local Products: Payment will be made as per payment terms as mentioned in the Purchase Order, by the respective purchasing agencies in Tata Motors, which are made in Indian Rupees for all procurements done in India, and is generally made within 30 days of satisfactory acceptance of Products at Tata Motors i.e. 30 days after Goods Inward Notification, against documents such as (i) Lorry receipt / Rail receipt (ii) Commercial invoice (iii) Packing list etc.
2.3.2
Imported Products: Payment will be made as per payment terms as mentioned in the Purchase Order. The payment terms are generally against irrevocable letter of credit or cash against documents. Payments shall be released within 30 working days from submission of documents such as (i) Bill of Lading/Airway bill, (ii) Commercial invoice, (iii) Packing list, and (iv) Certificate of Origin etc.
2.3.3
For Local Products, Unit Prices stipulated in the Purchase Order are exclusive of all taxes and duties levied on the said items by Central / State/ local Authorities, unless specified otherwise. Tata Motors is entitled to claim any admissible exemption / concession accrued under Excise, Sales Tax or any other laws being in force at that time and for the purpose it shall furnish to the supplier the declaration forms or other documents as may be prescribed thereof. Supplier shall clearly and separately show on its invoice any duties, sales tax, VAT, Turnover Tax etc and provide all such documents to Tata Motors.
2.3.4
For the development cost to be paid in foreign currency, the agreed cost is always gross of the Withholding tax as applicable under Double Taxation Avoidance Treaty between India and supplier’s country of origin. This means, while payment, Tata Motors deduct applicable Withholding tax from the agreed payment amount and issue necessary certification of tax deduction to the supplier. Unless otherwise agreed specifically, all taxes applicable in supplier’s country of location, is also included in the development cost that is agreed with the supplier.
2.3.5
The payment terms of development expenses, is generally in three instalments against achieving specific and pre-defined development mile-stones, with the last instalment being 30%.
2.3.4
The supplier understands that in the event of any prolonged dispute, involving repeated nonconformance of the Product’s quality/quantity/packing/ delivery schedule, etc. by the supplier, the terms of payment agreed upon shall not be binding on Tata Motors.
2.4
Local Facility Supplier shall normally establish its manufacturing facilities near assembly location of Tata Motors with an objective of JIT supplies to Tata Motors. In the event Supplier’s manufacturing location is not in the vicinity of Tata Motors’ ordering plant, supplier shall establish storage facility near the ordering plant of Tata Motors to provide uninterrupted and streamlined supply of materials. In case the initial supplies are imported, in its endeavour to remain price competitive, supplier shall aggressively explore possibility of setting up facilities in the same country of Tata Motors’ ordering plant in the earliest possible time for which the supplier shall commit to a time-bound action plan for setting up a local production facility.
2.5 2.5.1
Service and Replacement Parts, Spares Parts and Service Support At the request of Tata Motors during the period after Tata Motors complete current model purchases, say 15 years, supplier shall make supplies to fulfill Tata Motors past model service and replacement requirements at the prices specified in a purchase order plus actual cost differentials for packaging and transport. During the final year of such period, the Supplier and Tata Motors shall negotiate in good faith with regard to the Supplier’s continued manufacture of service and replacement supplies.
Page 8 of 22
2.5.2
Supplier shall supply components as spare parts to Spare Parts Division of Tata Motors as per schedule indicated by them at the settled unit rate, which are at par with OE unit rate till the time the vehicle platform is in regular production by Tata Motors.
2.5.3
Supplier must ensure adequate steps to attend to any complaint in the field by providing a wide service network for which Tata Motors will define target markets in the RFQ and thus shall take adequate steps to ensure service supports in all these territories, either by their own facilities or that of their collaborators / JV Partners or their representatives.
2.5.4
Supplier must provide such sale and after-sale service related information as mutually agreed by the parties, such as (but not limited to) parts, catalogue, workshop manual, training manual and maintenance guide, diagnostic equipment etc.
2.6
Product Specifications The products to be sold and supplied by the supplier to Tata Motors against the released Purchase Orders terms shall meet the specifications as finalised and agreed in writing between the supplier and Tata Motors hereto on completion of development work on the Product. Product specification, thus finalised, is generally documented in the form of drawings. Supplier is expected to participate in preparing this drawing jointly with Tata Motors, although the responsibility of approval and release of such drawings and specs sheets is solely with Tata Motors. The specifications can not be changed unilaterally by the supplier without prior written approval from Tata Motors.
2.7
Tooling
2.7.1
Tata Motors assume ownership of tools to the extent Tata Motors have funded the tools and either directly paid for the tooling costs or fully), or agreed to pay for the tooling costs through amortization (fully), or have specific understanding with supplier towards tool ownership, irrespective of source of funding, as the case may be.
2.7.2
Tools thus owned by Tata Motors, as above, for which the Supplier is the custodian of such tools, gages, equipments owned by Tata Motors, supplier ensure safe custody, proper storage and usage, due care, adequate insurance cover against fire, theft etc. In the event of theft, destruction, damage, perils suffered by the tools for any reason, the same shall be promptly informed to Tata Motors for further actions as necessary.
2.7.3
The Supplier must keep proper accounting for such tools, gauges and equipments and provide the same to Tata Motors 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.
2.7.4
In any of the conditions above, the supplier must not use any of these tooling for anything other than converting / manufacturing / assembling materials to be supplied to Tata Motors without obtaining consent from Tata Motors. Tata Motors holds the exclusive rights of tools for parts specific to Tata Motors applications, irrespective of their source of financing. Supplier is expected commit to use these tools exclusive for Tata Motors’ requirements and not for any other applications.
2.7.5
The prevailing tooling, owned by Tata Motors as above, at the point of discontinuation of active manufacture shall continue to remain a property of Tata Motors.
2.7.6
Maintenance of the tooling, returnable containers and other bailed properties: The supplier shall at its expense:
Page 9 of 22
2.7.6.1 Maintain the tooling, including its repair or replacement, in the condition necessary to produce the components in accordance with the terms of Purchase Order. Supplier is responsible for part quality arising out of tool wear and tear due to improper tool maintenance. 2.7.6.2 Supplier is also responsible for all wear and tear of tools, Returnable Containers and other bailed properties. In any case, should there be concerns in Tools/ Returnable Containers, as mentioned above which may potentially impact on Product quality; supplier must promptly notify Tata Motors about the concern with corrective action plan. 2.7.6.3 Prominently mark the tools which are paid by Tata Motors as the property of Tata Motors or its Affiliate Company and / or subsidiary with part number. 2.8
Forecast and Orders
2.8.1
Actual purchase / supply of components shall be made against specific purchase orders.
2.8.2
Tata Motors provide an annual non-binding forecast to the supplier. This forecast may be used by the supplier for planning purposes only.
2.8.3
Volume projection provided in by Tata Motors (including spare parts) is not a commitment by Tata Motors to purchase the quantities specified. Supplier acknowledges that Volume Projections, like any other forward looking projections, are based on a number of economic and business factors, variables and assumptions which may not be with in the control of Tata Motors and some or all of which may change over time and may or may not be accurate at the time they were made or later on. Tata Motors makes no representation, warranty, guaranty or commitment of any kind or nature, expressed or implied, regarding any Volume Projection. Initially Purchase order / Scheduling is released by Tata Motors like an open order. After start of production of the Product, Tata Motors issue monthly supply schedule, time to time, with specific quantities to be delivered at a time. The frequency of delivery can be month-wise or such other schedule as may be agreed by the parties. This schedule is deemed to be accepted by supplier, unless supplier convey within three (3) business days their anticipated difficulties to meet this schedule for specific items to Tata Motors, if any. 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.
2.9 2.9.1
Packing and Transport For Local supplies, 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. For imports, Packing shall be in suitable sea worthy/airworthy packing depending on the mode of transport, complying with international standards, strong enough to withstand multiple handlings at various ports and also tropical conditions of India. Packing for imports shall be non-returnable. Supplier shall provide a mutually agreed Unique Identification mark including location of Identification (such bar code, color code etc) on each and every Product supplied, which shall be as agreed upon jointly before start of serial production supply.
2.9.2
Unless agreed otherwise, product prices are inclusive of such marking fees. Supplier must specifically provide cost details and obtain approval of Tata Motors, if they are proposing expendable packing for Local Products. In case of imported supplies, product prices are always expected to be inclusive of expendable packing.
Page 10 of 22
2.9.3
Phytosanitory Certificate: For imported supplies, the supplier must ensure to provide phytosanitory certificate from the Country of Origin, to comply with requirements from Indian authorities, if articles have been packed with packing materials of plant origin used for packing which include hay, straw, wood shaving, wood chips, saw dust, wood waste, wooden pallets, dunnage mats, wooden packages, coir pith, peat or sphagnum moss etc. or the supplier may use pressed pallets instead of wooden pallets for packing.
2.10 Delivery Clauses 2.10.1 Supplier must supply products as per Tata Motors schedules as indicated in Purchase Order or as communicated from time to time. Supplier is expected to agree on a specific logistics protocol with Tata Motors prior to commencement of production. 2.10.2 Documentation of each shipment to confirm article 2.2.6. It is the responsibility of Supplier to ensure that the material being physically supplied conforms exactly to the delivery documents made by supplier for the supply. 2.10.3 Any revision in delivery schedule shall be as per the mutual agreement only. 2.11
Penalty Clause / Liquidated Damages
2.11.1 Supplier recognises that Tata Motors depends on the supplier for requirement of Products for manufacturing of vehicles. As time is the essence in a high volume production operation, the risk of delays in supplies needs to be mitigated. Therefore, in case of any delay in the supply of Products from the agreed delivery term supplier causing Tata Motors to stop its production line, the supplier would be subject to liquidated damages. 2.11.2 In case supplier fails to meet the supply schedule released on the supplier and accepted by the supplier as defined in this document, 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. 2.11.3 Tata Motors may also be constrained to, upon prior notice, charge penalties to the suppliers under the following circumstances: a. Repetitive or major quality problems leading to severe disruption and / or severe loss of reputation for Tata Motors’ products; b. Infringement of Intellectual Property Rights of Tata Motors; c.
Violation of TATA Code of Conduct.
Page 11 of 22
2.12
Short Shipment, Incorrect Quantities Or Type, Non-Confirming Goods
2.12.1 Supplier must 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, which is prepared in line with the Products ordered. 2.12.2 If, after delivery, Tata Motors discovers any discrepancy between (i) the quantities or type of Products ordered by Tata Motors and that received by Tata Motors or (ii) the quantity or type of Products invoiced by the supplier and that received by Tata Motors, Tata Motors will notify the supplier thereof. In the circumstances where an item is covered under invoice but short-shipped by the supplier, Tata Motors has to pay duty/taxes on the item again as such shortage is noticed only at Tata Motors works, and Tata Motors cannot claim refund of duty/tax paid on such shortshipped items, in such cases, Tata Motors will not be liable for payment of the short-shipped items. If Tata Motors has been charged for shipment of the short-shipped items, then the supplier will be responsible for shipping costs of replacement items. The supplier shall also reimburse Tata Motors such any duty/tax incurred. 2.12.3 If the quantity discrepancy is a shortage, the supplier shall, at Tata Motors' option, as quickly as practicable, on Tata Motors' demand and at supplier's cost and expense, supply the number of units in such shortage to Tata Motors. 2.12.4 In case of an excess supply in any shipment, irrespective of when and by which party discovered, Tata Motors shall, on learning of such excess supply, at its option, either (i) keep such quantity and pay the amount invoiced or the amount to be invoiced if the invoice did not include such overage, or (ii) dispose of overage Products in consultation with the supplier, in which case, all reasonable costs and expenses incurred by Tata Motors in so doing shall be reimbursed by the supplier. 2.12.5 If the discrepancy is non-conformity as to type or incorrect quality, Tata Motors shall return the non-conforming Products to supplier at supplier's expense and supplier shall, upon Tata Motors' election, (i) supply Tata Motors with the conforming Products at its own expense, (ii) refund the purchase price together with duty /taxes /levies paid by Tata Motors and reasonable expenses for returned non-conforming Products, or (iii) settle such discrepancy in such other manner as agreed upon between Tata Motors and the supplier. If Tata Motors selects option (i) above, the supplier shall use its best efforts to supply such conforming goods as soon as possible and the supplier shall advise Tata Motors of the earliest delivery date which meets Tata Motors expectations. 2.13
Acceptance of Goods If the Products supplied by the supplier are not as per the requisite specifications / quality / drawing or are received in rusted / damaged / broken condition on account of inadequate packing, subject to inspection and acceptance by the supplier, Tata Motors shall be entitled to reject such material and recover the costs from the supplier. The amount will be recovered via the issuance of a debit memo by Tata Motors to the supplier and a credit memo by the supplier to Tata Motors, both to be issued in a manner and timeframe to be as decided by Tata Motors.
Page 12 of 22
Cost of any segregation / re-work carried out by Tata Motors shall be debited to the supplier. Also, to ensure the bad quality parts are not accidentally mixed-up/recycled, rejections will be scrapped at Tata Motors and cost of such scrapping action be debited to the Supplier after intimation. 2.14
Warranty Terms and Conditions
2.14.1 The Supplier shall warrant the Product 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. 2.14.2 Tata Motors reserves the right to 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. 2.14.3 The Supplier commits to demonstrate continuous improvement to reduce warranty failure level in the supplies made by him to Tata Motors. In addition, Tata Motors may initiate various actions/programs designed to improve quality, and customer satisfaction or to reduce cost or warranty returns. The supplier is required to participate in these programs to the extent requested by Tata Motors. 2.14.4 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: 2.14.4.1 Unless otherwise agreed, Warranty cost shall be at 2 times the OE purchase price. 2.14.4.2 Where no OE purchase price exists, spare purchase price will be used for this purpose. 2.14.5 In case of major failures related to safety, regulation and performance, retro-fitment will be carried in the field as decided by Tata Motors. The supplier understands that the costs associated with such retro-fitment, either part/full, as decided by Tata Motors in consultation with the supplier, will have to be borne by the Supplier. 2.14.6 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 is expected to submit failure analysis together with Corrective Action Plans and results of validation tests certifying the efficacy of the Corrective Action in a reasonable period of time. While Tata Motors gives 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 is final and binding on the supplier. 2.14.7 The Supplier understands that it has to bear the cost of disposal of warranty returns, if not collected by the supplier in stipulated time. 2.14.8 In case of export warranty, the failed parts are not brought back and Supplier is expected to visit the actual site for studying the failure. 2.14.9 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, as considered appropriate by Tata Motors, may be debited to the Supplier. 2.14.10 In the event Tata Motors carries out a modification of the design to address specific field complaint or failure, the liability of the Supplier shall be reviewed and suitably modified, as considered appropriate by Tata Motors.
Page 13 of 22
2.14.11 Warranty for service and spare parts will be same as warranty offered for the same parts for OE supplies. 2.14.12 On specific cases, more detailed Warranty terms may be separately decided between Tata Motors and the supplier and a separate Warranty Agreement may be executed accordingly. 2.15
Cooperation
2.15.1 The supplier must agree to provide reasonable assistance to Tata Motors in responding to any inquiries from any statutory authority of any country relating to an alleged defect in the Products or in responding to any third party claim or litigation alleging defect in the Products. 2.15.2 Supplier is expected to assist Tata Motors in identifying a problem in the Vehicle related to the Products. 2.16
Recall Campaign In the event that during the warranty period and thereafter for a maximum period of 3 (three) years, or as decided specifically, if there is a design or workmanship defect which is attributable to supplier solely, and a recall campaign is requested, supplier’s liability is limited to those recall campaigns (a) ordered by a regulatory authority, (b) conducted in response to a specific and justifiable threat by a regulatory authority, or (c) conducted after Tata Motors demonstrates the existence of a significant safety or liability concern. In case of any such event Tata Motors will inform supplier as soon as practicable and the supplier shall be fully involved in the technical analysis with Tata Motors. Supplier understands that cost of such total recall may have to be borne by the supplier. In case of claims related to Defective Products in the field, but not causing any Product Liability claim from a third party, supplier shall be fully involved in the technical analysis with Tata Motors to decide the necessity of a recall campaign for Products. If it is established that the supplier is liable for the defect, by a technical analysis and mutual agreement between Tata Motors and supplier, or as determined by a court of competent jurisdiction, supplier shall pay selling price of Products under the prevailing Purchase Order (similar to recovery of cost towards rejected materials) + reasonable costs incurred for sorting out, repair, removal or exchange of the defective parts and handling costs as decided specifically per exchanged Product, which may be estimated in consultation with the supplier but considered appropriate by Tata Motors.
2.17
Evolution of Products and Engineering Changes Tata Motors reserves the right to make, at any time, changes in the products as per requirements. In the event of such request of changes in product specification, the supplier will agree with the revised product specification with Tata Motors. The parties shall also reach an appropriate agreement regarding implementation of the changes, such as time schedule, effect on existing stocks, effect on spare parts availability and commercial implications, if any. The supplier shall continue to invest in its Research and Development efforts to upgrade products being supplied to Tata Motors in terms of their performance, quality, features and functionality. Any change made to the product by the supplier should be approved by Tata Motors and IPR would rest with parties as spelt out in IPR section of this Terms and Condition document. When justified, due a to product obsolescence or technical evolution, supplier will submit to Tata Motors an alternative solution for ‘Products’ which can be implemented by Tata Motors at a cost to be mutually agreed.
Page 14 of 22
2.18 Indemnity 2.18.1 The supplier shall indemnify and hold Tata Motors harmless from and against any product liability claims, actions, or proceedings arising out of death of or injury to a third party or damage to property of a third party brought by third parties against Tata Motors in respect of the supplier supplied Products which are conclusively found to have a design or other defect solely attributable to the supplier. Provided that Tata Motors shall forthwith notify the supplier of any claim, action or proceeding, whether actual or threatened. In defending any claims or actions, Tata Motors shall consult and co-operate with the supplier and take all steps necessary to protect the integrity of the supplier supplied Products. The supplier shall indemnify and hold Tata Motors harmless from and against any claim by a third party that the use by Tata Motors of any Product(s) supplied by the supplier hereunder infringes the intellectual property rights of such third party, provided that Tata Motors: 2.17.1.1 2.17.1.2 2.17.1.3
2.17.2.1 2.17.2.2
2.17.2.3 2.17.2.4
Notifies the supplier in writing, within a time frame specifically agreed, after it first learns of such claim; Provides such information, assistance and cooperation as the supplier may request from time and time; and Allows the supplier full discretion to defend, compromise or settle any such claim or proceeding on such terms as the supplier sees fit
Nothing herein authorizes Tata Motors to defend, compromise or settle any claim or proceeding on behalf of the supplier If the use of a design feature of a Product or a component of a Product or the Product itself is permanently enjoined by reason of an infringement of a valid third party’s Intellectual Property Right, the supplier will use best efforts for Either to modify the design feature of the Product or the component of the Product or the Product itself to render it non-infringing Or to get a license from the third party who is the owner of the Intellectual Property Right.
2.17.3 Tata Motors shall indemnify and hold the supplier harmless from and against any and all claims, actions, or proceedings (including product liability claims) arising out of death of or injury to a third party or damage to property of a third party brought by third parties against the supplier in respect of Products which are found to be defective: 2.17.3.1
Due to a design or other defect attributable to drawings, designs, patents, knowhow, materials, equipment, tooling or specifications provided by Tata Motors to the supplier for the development of the Products;
2.17.3.2
Due to a manufacturing defect caused by defective material or workmanship not attributable to the supplier;
2.17.3.3
Where any identification or serial number on any Product has been removed, altered or defaced;
2.17.3.4
Where Products have not been properly maintained in accordance with the maintenance procedure recommended by the supplier as applicable or have been subjected to any misuse, unauthorized repair, replacement, modification or alteration;
Page 15 of 22
2.17.3.5
Where the Products have been combined with products supplied by third party vendors and the failure of the Products is as a result of incorrect combination of Products with products supplied by third party vendors.
The above shall apply provided that the supplier: a) Notifies Tata Motors in writing within a time frame specifically agreed, after it first learns of such claim; b) Provides such information, assistance and cooperation as TML may request from time and time; and c) Allows Tata Motors full discretion to defend compromise or settle any such claim or proceeding on such terms as Tata Motors sees fit. Tata Motors shall not, without prior written consent of the supplier, which will not be unreasonably withheld or delayed, settle any such claims with a third party. Each Party shall promptly communicate to the other any claims, actions or proceedings and investigate, as appropriate, all deaths, injuries or damages to property brought to their attention which are claimed to be the result of a design or manufacturing defect in the Products. 2.18 Continuity in Supply of Products The supplier is expected to assure continuity in supply of Products pursuant to the terms hereof recognizing that Tata Motors will be sourcing its requirements of Products from it.
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 time of sale, special notice shall be given to the Tata Motors immediately after the supplier’s discovery thereof. A list of hazardous material is enclosed in the Annexure3 (List of Hazardous Material). 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 of Tata Motors’ target markets as defined in the RFQ. The supplier commits to change the processes / designs, if required, to comply with this from time to time.
4.
Quality / Inspection
The products should adhere to the requirements listed in the clause “Product Specification.” 4.1 All components delivered by the supplier shall be subject to Tata Motors decision on acceptance for 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 Unless otherwise agreed, the Supplier is not expected to start production-intent supplies to Tata Motors till the time the PPAP (Production Part Approval Process), as per QS9000 quality systems, is completed and formally approved by Tata Motors. On approval of the PPAP submitted, Tata Motors shall provide the supplier a signed Part Submission Warrant copy. In specific circumstances, waiver must be obtained for starting supplies before PPAP, indicating special controls to be exercised by supplier while dispatching materials to Tata Motors.
Page 16 of 22
4.3 Tata Motors has the right to verify the products, processes and quality systems audit at supplier’s or its subcontractors’ or its suppliers’ premises. Such verifications however shall not absolve the supplier of the responsibility to meet the specified quality requirement. 4.4 Whenever Tata Motors communicates non-conformity, on product and the supplier must inform the corrective action taken and date of implementation to close the non conformity report. Further the supplier is expected to take preventive action to avoid recurrence of the defect/s. 4.5 The supplier is expected to make reasonable effort to maintain PPM level at ‘Zero’ Kilometre rejection related to non-conformity of agreed product specification, performance, quality etc, as per the specifically agreed PPM level, which for all general purpose applications, is under 50 PPM. 4.6 The supplier must ensure adequate surface protection, proper packaging, handling and delivery to secure product quality during transit. 4.7 The supplier must obtain prior permission from Tata Motors for any change affecting packaging, performance, specification, appearance etc in product/ process / sub-contractor and shall keep Tata Motors informed and updated accordingly. Once the changes are approved by Tata Motors and changes carried out by the supplier, the supplier must also update the after-sale service related information as detailed in the relevant clause of this document and keep Tata Motors’ dealers, Spare Parts Division and Service informed about these changes. 4.8 Documentation Control: Supplier is expected to always ensure to maintain updated documents such as the latest revision of drawings, specifications, data sheets, CAD / CAM data and standards etc pertaining to the Product. 4.9 The supplier must maintain First Piece Approval report as per the process plan. 4.10 The supplier must maintain dimensional report as per quality plans jointly agreed upon. 4.11 The supplier must maintain the quality record for the minimum period of two years from the date of creation for the following: 4.11.1 4.11.2 4.11.3 4.11.4 4.11.5
First Piece Approval Report as per the process plan Dimensional Report as per the Quality Plan Pre-Despatch Inspection (PDI) Report Calibration records of gauges Verification records of production tools and equipments
4.12
The supplier must inform separately and specifically to Tata Motors any introduction of new modification and also notify the same via PDI report promptly.
4.13
If requested by Tata Motors, supplier must conduct all functional and reliability tests on the Products, which shall be otherwise done as per the mutually agreed Quality Plan, with a minimum frequency of at least once in a year as a routine. 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 actions within the target dates as specified by Tata Motors on case to case basis.
4.14
Supplier must maintain a system of tracing back the exact source of any quality problem as well as suspected defective parts and will take immediate corrective and preventive actions.
4.11
The supplier is responsible to maintain gauges, inspection Fixtures and instruments used in a valid state of calibration and shall verify production tooling such as jigs and fixtures at frequent
Page 17 of 22
intervals. Calibration work at specified interval shall be carried out from calibration laboratories, which have traceability to International Standards. 4.12
The supplier is expected to exercise appropriate controls for Off-loaded / Bought-out items & any change by the sub contractor or vendor will be validated before introduction.
4.13
Whenever there are changes in process control parameters, the supplier must carry out process re-qualification as per TS formalities. The supplier is responsible to ensure similar control on sub-contractor or Tier II vendors when the item is off- loaded.
4.14
The supplier is responsible to ensure that its Process Quality Certification such as ISO/TS Certification etc always remains in its valid state of condition. For whatsoever reasons, if the validity of its Certificates expires/terminates, supplier is expected to communicate the same to Tata Motors immediately.
4.15
The supplier understands that the cost of any sorting out / segregation / rework carried out by Tata Motors on non-conforming Products shall be treated as detailed in ‘Acceptance of Goods’ section of this Document.
4.16
It is supplier’s responsibility to declare the complete information related to ingredients of the Products which are critical on (a) Shelf Life (b) Periodic Calibration (c) Storage and Handling Conditions etc and get specific approvals from Tata Motors on such special requirements. The supplier understands that loses if any, due to non-availability of prior information related to such special requirements will be to the supplier’s account.
5.
Secrecy and Confidentiality 5.1. 5.2.
6.
Please refer the Annexure II for details. At the discretion of Tata Motors, there may an additional requirement of executing a Confidentiality Agreement before proceeding with RFQ.
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 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 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.
7.
Sub-Contracting
7.1.1.
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 however, shall undertake the responsibility to ensure that the sub-contractors are bound by the secrecy and confidentiality clauses which govern this document. The supplier shall be responsible for the quality and reliability of such parts sourced by the supplier from any sub-contractor.
Page 18 of 22
7.1.2.
8.
The supplier shall inform Tata Motors in case of any change in the Sub-Contractor.
Intellectual Property Rights (IPR)
8.1.
For the purposes of the general understanding related to this RFQ, IPR shall mean all industrial and intellectual property rights, including, without limitation, rights in patents, patent applications and the subject matter thereof, inventions, ideas, software, technical information, know-how, design rights (whether registered or not) ideas, data, copy right, and all rights of the same or similar effect in nature and improvements therein in any part of the world.
8.2.
All IPR belonging to a party prior to intended contract through this specific RFQ which arise during the term of this intended contract but fall outside the scope of the Development Work involved in the Products hereunder under this intended contract shall be and remain the property of such party notwithstanding that such IPR or the subject-matter thereof or other relevant technology may be incorporated into the Product being developed by the supplier pursuant to this intended contract and / or the Product sold by the supplier to Tata Motors. No license, whether express or implied, in such IPR is hereby granted. Technical information provided under or pursuant to this Agreement shall be utilised solely and exclusively for Development Work and for no other purpose. It is expressly agreed that the recipient of any Technical Information shall not assert or obtain or claim any right, title or interest in the Technical Information provided to it hereunder which is adverse to the right, title and interest therein of the provider of such Technical Information.
8.3.
All parties agree that they will not do or cause to be done or omit to do any act, deed, matter or thing whatsoever which might prejudice the right, title or interest of any other party hereto in the IPR.
8.4.
New Inventions: Any new inventions arising or made in the course of the development work, will be dealt with as follows: a) IPR of the Product developed solely by Tata Motors will rest with Tata Motors; IPR of the Product developed solely by the supplier will rest with the supplier; b) IPR of the Product jointly developed by Tata Motors and the supplier will be jointly held by the Parties. c) IPR of the Product developed in association with a third party will be held by the concerned Parties d) However, in the above two cases, IPR may be made the sole property of Tata Motors or the supplier or the third party, as case may be, upon consultation and written agreement among Tata Motors, the supplier and the third party.
8.5.
If at anytime during the continuance of this Agreement, either party becomes aware of any infringement or likely infringement or any unauthorized use or violation of the IPR of the other, it shall promptly notify the concerned party in writing of the same, identifying the infringer or violator, if known, and the acts of infringement, likely infringement or violation, if known.
8.6.
The concerned party, whose IPR has been violated, shall have control of any proceedings arising out of infringement or likely infringement of their IPRs and other party shall provide all reasonable assistance in relation to any action they do pursue.
Page 19 of 22
8.7.
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, the supplier forthwith intimate Tata Motors and should Tata Motors request, grant to Tata Motors the right to use that Intellectual Property Right for its own business, 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. Copy rights of the articles written / published by Tata Motors shall rest with Tata Motors.
9.
Advertising The supplier shall not use Tata Motors name or logo or their status as supplier to Tata Motors for promoting its products in print and electronic media without written authorisation from Tata Motors.
10.
Force Majeure
10.1.
No Party shall be liable for any failure to comply with, or delay in compliance with, the terms and conditions of this RFQ when such failure or delay is caused by any or all of the following, i. ii. iii.
iv. v. vi. vii.
Fire, storm, tempest, earthquake, unavoidable accident or any other act of God Any act of a public enemy Any act of any Government or any instrument created thereby which has the necessary power to prevent or delay the due performance of any or all of the requirements of this Agreement, save and except where such act or instrument is attributable to a Party’s negligence or default Any act of war, any act of any person engaged in subversive activity or sabotage Epidemics or quarantine restrictions Strikes, slow-downs, lockouts or labour stoppages or disputes of any kind or freight embargoes Any other cause or event whatsoever which is beyond reasonable control and is not attributable to any negligence or default of the Parties.
10.2.
In case the event of force majeure lasts for more than a continuous uninterrupted period of three months and substantially affects the fulfilment of the obligations of a Party, the Parties will meet in order to discuss and agree on the future course of action.
11.
Damage to the Third Person / Property and Related Liability
11.1.
The supplier shall be responsible for any damage caused to third person or property as a consequence of the Defective Products supplied by the supplier and attributed directly to it.
11.2.
Liability for injury or death caused by Defective Products supplied by the supplier is extended to the normal use / lifetime of the Products for a minimum of 15 years (fifteen years), from the date of start of model year production, regardless of the mileage driven.
11.3.
During the period, as mentioned above, the supplier shall be responsible for product liability claims, in the event that the failure of the Product and/or related Products supplied by the supplier, resulted in any and all claims in relation to supplier’s default or negligence in performing obligations, including any breach of warranties given by the supplier or in respect of any claims following termination, supplier’s liability limitations shall be specifically decided at time of business award.
Page 20 of 22
12.
Compliance With Rules, Regulations & Norms
12.1.
The supplier and Tata Motors shall comply with applicable provisions of federal, state and local laws, ordinances, rules, codes, regulations and applicable government notifications of India, and in places wherever vehicles are sold. Tata Motors will share the list of such countries in advance with the supplier at the time of RFQ and also subsequent amendments, if any.
13.
Audit Rights, Financial Information and Certification
13.1. If requested by Tata Motors, the Supplier will permit Tata Motors or authorized representatives of Tata Motors to, upon an advanced notice: 13.1.1. Examine all pertinent documents, data and other information relating to the Product, Tooling, the Supplier's obligations under the Purchase Order, any payment made to the Supplier or any claim made by the Supplier; 13.1.2. Supplier will provide the most current Financial Reports: (a) for the Supplier; and, (b) for any Related Company of the Supplier involved in producing, supplying, or financing the Goods or any component part of the Goods. Financial Reports include income statements, balance sheets, cash flow statements and supporting data, which Tata Motors may need to assess the Supplier's ongoing ability to perform its obligations under the Purchase Order. 13.1.3. View any facility or process relating to the Product or the Purchase Order, including those relating to production quality; and 13.1.4. Audit any facility or process to determine compliance with the requirements of the Purchase Order.
13.2
The Supplier shall facilitate Tata Motors to obtain from its subcontractors and/or vendors, the information and permission to conduct the reviews specified in Sections 13.1.1, 13.1.2 and 13.1.3 above, regardless of any other right Tata Motors may have to that information or facilities. 13.2.1 Supplier understands that such verifications however shall not absolve the supplier of the responsibility to meet specified quality requirements as specified in Section 4 or follow the guidelines as specified by various sections in the document, including that in Section 12.
13.3
Various Audits and Certifications that can be covered may include, not limited to:
13.3.1
13.3.2 13.3.3 13.3.4 13.3.5 13.4
Compliance such as on Tata Code of Conduct, and other industrial practices as specified in this document, Purchase Order, Purchase Agreement, Confidentiality Agreement or any other related Agreement or understanding with the Supplier in relation with the Product. Supplier’s Financial Health Reports from independent auditors Process Audit towards supply quality or productivity. Kaizen / Productivity Improvements Events Quality Certifications such as ISO/QS/TS etc
Supplier understands that cost of such Audit and Certification process is always borne by the Supplier.
Page 21 of 22
14.
Communications and Language
14.1. Unless otherwise specifically agreed, the language of communication will be English. 14.2. The Parties will conduct periodic program reviews. 14.3. In the event of change in address, phone number, fax number, contact person details etc for the purpose of regular communication required/provided for in this RFQ and Terms and Conditions document, the supplier shall promptly inform the changes in writing to Tata Motors within 3 working days.
15.
Severability Should any or one or several of the provisions of this terms and conditions for intended supply contract be or become invalid, this shall not affect the validity of the other provisions. The supplier shall agree to replace the legally invalid provision, if possible, by an effective provision whose economic effect is as similar as possible to the original provision, and the Parties agree that this new provision shall be deemed to have been agreed upon from the time when the original provision became invalid. Irrespective of the business decision taken by Tata Motors with respect to this RFQ, terms and conditions related to Secrecy and Confidentiality will survive for 10 years.
Page 22 of 22
