Term sheet for Subcontract

Project: Four Laning of Hospet-Bellary-Karnataka/AP Border from Km. 280.080 (Design Ch.) to
Km. 375.450 (Design Ch.), design length 95.370, NH-63 in the State of Karnataka under NHDP
Phase- IVB on EPC mode.
1. Subcontractor will be responsible for Satisfactory completion of balance works, performance
and fulfillment of all obligations of Gammon pertaining to the Subcontract Works including DLP
Period of one year under The Main Contract:
a. Approximate Total value of the works proposed to be subcontracted @ Rs. 559 Crore
(including all Taxes & Duties) + Applicable Escalation + value adjustment for GST complied
contract (as approved by the Employer).

b. Gammon’s margin on the total Subcontracted work value @6 % plus 2% TDS on IT which is
deducted by NHAI (Subcontracted work value includes Applicable Escalation and value
adjustment for GST complied contract as approved by the Employer).
c. TDS on IT for the sub contract portion shall be borne by sub-contractor.
d. TDS on GST shall be borne by the Subcontractor. However, on availing input by Gammon, the
same shall be reimbursed to the subcontractor.
e. Total labour Cess (as per Main contract for the subcontract value of work including Price
variation + GST) shall be borne by Subcontractor.
f. Monthly Recovery of Advance (including interest) from RA Bills shall be taken care of by the
subcontractor. However, this recovery shall be adjusted against the Gammon’s margin, Leasing
charges of Plant and Equipment, cost of site installations and establishments as per Clause 11
etc.,
g. Payment will be made to the Subcontractor as per Schedule – H and after release of the
corresponding payment from client.
h. Amount pertaining to Works executed but not yet claimed by GECPL due to non-qualification
ofSchedule-H length shall belong to GECPL and the same when received from NHAI shall be
paid to GECPL. However the Cost of Work done to qualify the Works executed but not yet
claimed by GECPL as per Schedule H length shall be payable to Sub contractor at market rate
or latest applicable SOR at mutually agreed rates and terms.
i. The Subcontract Value as mentioned above is based on the pre GST Main Contract price. The
applicable VAT, Labour Cess& Income Tax are inbuilt in the subcontract Price. On amendment
of the Main Contract by Employer as GST Contract; the agreed discount/ margin/ rebate will be
applicable on GST complied Main Contract price and subcontract price will be laid accordingly.
2. Approval of Employer: Subcontract approval as and when required shall be obtained from
the concerned authority.
3. Performance Security: The Subcontractor will mobilize the funds in the form of Performance
Security at site @ 10 crs to liquidate the current liabilities at site and to start the work
successfully which will be returned to the subcontractor immediately after the completion of
the contract. For smooth transition of operation of project to Sub contractor the schedule of
the payment of 10 crs is proposed as below.

a) Upon signing of term sheet : 5 crs

b) Upon singing of sub contract agreement : 5 crs
4. Retention Money: Retention Money shall be released subject to the completion of DLP of
one year.

5. Time for Completion: The total subcontracted works to be completed in 18 months from 30
days from the date of issuance of letter to proceed whichever is later. The EOT approved by the
NHAI will be passed on to the subcontractor and it will be binding on him.
6. Defect Liability Period (DLP): Defect Liability Period shall be 12 (twelve) months from the date
of completion of total works under main contract as certified by the employer.
7. Price Adjustment: Price Adjustment as applicable to the Main Contract shall be applicable for
Subcontract Works. The corresponding payment shall be passed on to Subcontractor after
deducting GECPL’s Margin of 8%. Base date / Base indices for the subcontract will be the date of
signing of this Term Sheet ie April 21.

8. Design & drawing: shall be in the scope of Gammon. The design and drawing cost to be
incurred after signing of this contract to be borne by Subcontractor.
9. Insurance CAR policy will be obtained and maintained by Gammon. The proportionate cost
for renewal of the same (proportionate to the subcontracted works) to be borne by
Subcontractor. All other insurances as applicable to this subcontract works shall be obtained
and maintained by the subcontractor.
10. a) Amount equivalent to hire charges of Plant and Equipment available at Site and used by
Sub contractor shall be adjusted in recovery of mobilization advance in each RA bill submitted
by Sub contractor and approved by Client and the same Plant and Equipment shall be handed
over to Sub contractor immediately for operation and maintenance for the execution and
completion of project. The leasing charges of P&M for the use by Sub contractor will be
charged at mutually agreed rates by GECPL. How ever all the recurring expanses such as cost of
operation & maintenance, Spares, Consumables, Insurance, RTO expanses, maintenance
contracts and others related to the Plant & Equipments from the date of signing sub contract
agreement till completion of project to be borne by Sub contractor.
b). Value of Construction Materials available at Site, Store Materials available at Site, P&M
Spares available at Site used by sub contractor shall be billed by GECPL to sub contractor. This
will be paid by Sub contractor on monthly basis.

11. Cost of site installations and establishments shall be calculated proportionate to

percentage of work executed and adjusted against monthly recovery of Mobilization advance
at mutually agreed/Actual rates and terms.
12. Any manpower or other services, if provided to Subcontractor shall be charged at mutually
agreed/Actual rates and terms. This will be paid by Sub contractor on monthly basis.
13. Recurring cost towards land rentals, electricity bills, water charges, etc. to be borne by the
subcontractor from the date of signing of the Subcontract Agreement.
14. Various deposit amount, already paid by Gammon to various Govt. / private Authorities;
shall be collected by GECPL on completion of works. Sub-contractor to assist GECPL for
collecting the same.
15. Gammon will facilitate to the subcontractor for or all permissions to enter the premises of
JSW for GSB material. The contractor has to follow and comply with all JSW regulations while
working in their premises.

16. In case any Contractual claims (corresponding to the Subcontract Works) under the Main
Contract got approved by Employer, shall be shared between Gammon &Subcontractor at a
ratio of 25:75. All cost in this context shall be borne by the Subcontractor.
17. In case of any variation in scope under the main contract got approved by employer, the
corresponding payment shall be passed on to subcontractor after deducting “GAMMON”
Royalty as specified in Clause 1b of this term sheet.
18. Sub contractor shall be responsible for any liquidated damages, recoveries, penalties, etc.,
along with applicable taxes if any levied by the employer only on account of subcontractor’s
default after signing of the Subcontract Agreement.
Once the term sheet is signed then sub contract agreement will be signed&Letter to Proceed
will be issued and this term sheet shall be part of Subcontract Agreement.