Senior citizen-friendly apartments
Bangalore-based Alliance Group has launched Gardens@Orchid Springs, a novel residential project targeting senior citizens. The project to come up in Chennai is tailored to their need for healthcare, security and amenities and features that support the elderly.
According to Mr Manoj Namburu, Chairman and Managing Director, Alliance Group, the aim is to target specific niches to drive sales in the slow market.
Alliance which has primarily targeted large projects such as integrated townships is now also looking at various market segments to widen its market reach.
Gardens, for which statutory approvals are awaited, will offer 225 senior citizen-friendly lifestyle apartments, with a host of safety and convenience features such as anti-skid floors, grab bars in bathrooms and panic alarm buttons, and wider passages and doorways to enable free movement for wheelchairs, he said. Healthcare facilities like a 24-hour clinic/nursing centre through a tie up with local hospitals will also be available.
Residents can also utilise the services of a resident manager, service coordinator and various helpers, he said. These additional features would not be costlier than if the residents were to go elsewhere for such services, according to Mr Namburu.
These apartments have been designed by international architects, Surbana of Singapore, he said.
The apartments are available in two sizes: single-bedroom of 650 sq.ft at Rs 19.49 lakh and two-bedroom of 890 sq.ft at Rs 26.69 lakh, at a launch rate of Rs 2,999/sq.ft.
Located near Anna Nagar, Gardens@Orchid Springs apartments will be part of a secure, gated facility with community centre, parks, and library.
The complex will have in its vicinity grocery and departmental stores, an ATM and a chemist shop.
Maintenance and housekeeping services, common pool of chauffeur-driven cars, and guestrooms on payment will also be provided for the residents, according to a press release.
Tata BlueScope gets FM certificate
Tata BlueScope Steel’s Building Solutions (BS) division has received the Factory Mutual (FM) Approval certification for its MR-24® standing seam roof system and BR-II™ roof panel lap seam roof system — both roofing systems of Butler™ Building Systems, according to a press release from the company.
For Tata BlueScope, the FM Approval is a certification for the product quality and reliability of these roof systems.
This approval qualifies the company to provide world-class Pre-Engineered Building (PEB) solutions to all the FM Global insured clients investing in India and the SAARC region.
The certification recommends better tested products against fire protection and loss prevention. Butler Manufacturing, a division of BlueScope Buildings North America, Inc., and BlueScope Buildings (Guangzhou) Ltd are already FM Approved for the same products.
The release, quoting Mr H. G. Chandrashekhar, Vice-President - Building Solutions, Tata BlueScope Steel, said, “The approval will serve as a key market differentiator. As a leading supplier of world-class PEB solutions, the Building Solutions division of Tata BlueScope will now also be able to cater to the comprehensive PEB needs of all the FM Global insured clients, who seek protection for their steel buildings in India.”
Tata BlueScope is an equal joint venture between Tata Steel and BlueScope Steel, Australia, in the field of coated steel, steel building solutions and related building products.
The division is a leading supplier of PEB solutions that offers Butler™ Building Systems in India and the SAARC region. It provides a single source capability for the design, manufacture and erection of the premium Butler™ Building Systems to cater to PEB needs of the industrial, infrastructure and commercial sectors.
Friday, April 24, 2009
Real estate Pune
The eastern section of Pune has been slow to develop compared with the west, but in terms of potential, this section is coming into its own, say developers.
The Mula Mutha river cuts Pune into two equal halves, with the western part comprising Aundh, Baner, Pashan, Balewadi and Bhavdhan, and the eastern belt, Kalyani Nagar, Vimana Nagar, Nagar Road and Kharadi.
Residential demand
With the creation of IT corridors, the western quadrant has emerged as an IT hub. This, in turn, has been driving the residential demand in the past few years, and the trend is expected to continue.
With the development of the World Bank-funded Nagar Road, residential demand is expected to grow further.
However, the eastern section too is making its mark. According to Mr Ravi Varma, President, National Association of Realtors, India, the eastern corridor of Pune has been witnessing gradual development over the years.
The locations such as Kalyani Nagar, Viman Nagar, Kharadi have been attracting investors, both in the commercial and residential segments, over the past few years. “The fast-paced development in Kalyani Nagar began in 2001 when about 1.2 million sq.ft was taken up by HSBC for its operations.
“This was soon followed by Marigold, a residential retreat,” he said.
Kalyani Nagar is a well developed multi-user locality. Viman Nagar will catch up in the next couple of years and is following the development pattern of Kalyani Nagar.
The development is happening both in the commercial and residential space and a few malls are also coming up.
“Kharadi will take another five years to develop like its other counterparts,” he noted. Kharadi was a small town with 50-60 houses.
First expansion plan on this side of town started with Chandan Nagar.
Upcoming area
Key developments in Kharadi started about five years ago. Basic developments such as roads, electricity and water supply is happening, though more needs to be done. Most of the land in Kharadi has been purchased by builders and hardly 20 per cent is currently available with local farmers.
According to the industry, Kharadi is an upcoming and promising area in Pune as it is the access to Hadapsar, Koregaon Park and Mundhwa. In short, Kharadi is becoming a central location of the east zone. IT companies, special economic zones and availability of plots are some of the factors that are attracting builders towards Kharadi.
Most of the builders have already built up their land banks and as soon as the demand for buildings arises, the builders will begin construction, they said.
Mixed development
Mr Atul Goel, Managing Director, Goel Ganga Group, pointed out that the development in the eastern belt of Pune is a mix of commercial and residential complexes.
Looking at the current rates in these locations, Mr Ravi noted that in Kalyani Nagar, the rates range from Rs 4,000 to Rs 9,000 per sq.ft for residential, and from Rs 10,000 to Rs 15,000 for commercial.
In Viman Nagar, it is Rs 2,200-3,300 per sq.ft for residential and Rs 6,000-12,000 for commercial.
In Kharadi, the residential rates are Rs 2,200-3,000, but one could also buy a bungalow for Rs 1 crore.
The Mula Mutha river cuts Pune into two equal halves, with the western part comprising Aundh, Baner, Pashan, Balewadi and Bhavdhan, and the eastern belt, Kalyani Nagar, Vimana Nagar, Nagar Road and Kharadi.
Residential demand
With the creation of IT corridors, the western quadrant has emerged as an IT hub. This, in turn, has been driving the residential demand in the past few years, and the trend is expected to continue.
With the development of the World Bank-funded Nagar Road, residential demand is expected to grow further.
However, the eastern section too is making its mark. According to Mr Ravi Varma, President, National Association of Realtors, India, the eastern corridor of Pune has been witnessing gradual development over the years.
The locations such as Kalyani Nagar, Viman Nagar, Kharadi have been attracting investors, both in the commercial and residential segments, over the past few years. “The fast-paced development in Kalyani Nagar began in 2001 when about 1.2 million sq.ft was taken up by HSBC for its operations.
“This was soon followed by Marigold, a residential retreat,” he said.
Kalyani Nagar is a well developed multi-user locality. Viman Nagar will catch up in the next couple of years and is following the development pattern of Kalyani Nagar.
The development is happening both in the commercial and residential space and a few malls are also coming up.
“Kharadi will take another five years to develop like its other counterparts,” he noted. Kharadi was a small town with 50-60 houses.
First expansion plan on this side of town started with Chandan Nagar.
Upcoming area
Key developments in Kharadi started about five years ago. Basic developments such as roads, electricity and water supply is happening, though more needs to be done. Most of the land in Kharadi has been purchased by builders and hardly 20 per cent is currently available with local farmers.
According to the industry, Kharadi is an upcoming and promising area in Pune as it is the access to Hadapsar, Koregaon Park and Mundhwa. In short, Kharadi is becoming a central location of the east zone. IT companies, special economic zones and availability of plots are some of the factors that are attracting builders towards Kharadi.
Most of the builders have already built up their land banks and as soon as the demand for buildings arises, the builders will begin construction, they said.
Mixed development
Mr Atul Goel, Managing Director, Goel Ganga Group, pointed out that the development in the eastern belt of Pune is a mix of commercial and residential complexes.
Looking at the current rates in these locations, Mr Ravi noted that in Kalyani Nagar, the rates range from Rs 4,000 to Rs 9,000 per sq.ft for residential, and from Rs 10,000 to Rs 15,000 for commercial.
In Viman Nagar, it is Rs 2,200-3,300 per sq.ft for residential and Rs 6,000-12,000 for commercial.
In Kharadi, the residential rates are Rs 2,200-3,000, but one could also buy a bungalow for Rs 1 crore.
Money market funds for better returns
Investors typically use money market funds as a substitute for bond funds. This article explains the characteristics of money market funds and shows why such funds are sub-optimal as part of the core portfolio. It then discusses the optimal uses of money market funds and also suggests how to choose such funds
Investors typically make sub-optimal use of money market funds. A case in point is a portfolio that we recently restructured, which had 25 per cent exposure to such funds. The investor claimed that he preferred such funds because it provided a relatively safe exposure to the bond markets.
This article explains money market funds and shows why they are sub-optimal substitute for bond funds. It then discusses optimal uses for such funds and also provides guidelines for choosing them.
Substitute for bond funds?
Money market funds such as Templeton Money Market Account invest in fixed-income securities with maturity of less than one year. Such securities include treasury bills, commercial papers, certificate of deposits and short-term fixed deposits; and call money market.
Most asset management firms offer “liquid funds” – Tata Liquid Fund, for instance – that invest in such money market instruments and bonds. SEBI in a recent circular has directed that such liquid funds should not make investments in money market instruments with maturity of more than 182 days. Further, from May 2009, such funds cannot make investments in instruments that have maturity of more than 91 days.
Now, money market funds are different from bond funds. A bond fund can invest in securities across the yield curve. This exposes the fund to high interest rate risk – the risk of bond prices declining in value due to increase in interest rates.
Money market funds are primarily exposed to reinvestment risk – the risk that moneys have to be reinvested at a lower rate due to decline in interest rate. On the positive side, bond funds generate interest income and capital appreciation.
Money market funds, however, generate only interest income. As capital appreciation is likely to be higher than interest income, substituting money market funds for bonds funds can drag down core portfolio’s risk-adjusted returns.
The net asset value of money market funds (with exposure in securities of not more than 182 days) is calculated on an accrual basis. That is, such funds essentially earn daily interest with no capital loss due to market risk. Such funds can, however, lose capital due to credit risk – for instance, defaults on commercial papers.
Enhanced cash returns
Money market funds are comparable with short-term fixed deposits with commercial banks. The former is more liquid, as unit-holders can withdraw at any time. In some cases, the initial lock-in period is 15 days.
Besides, an increase in interest rate is beneficial for money market funds as they can earn higher return on reinvestments. This and the exposure to higher interest-bearing instruments helps investors enhance their cash returns – returns that a portfolio earns on its cash and cash equivalents such as moneys in savings accounts.
The objective then should be to use money market funds for emergency cash requirement. A medical emergency is an example, as is the requirement for cash due to sudden loss of income.
An emergency fund should carry low capital risk and high liquidity. Money market funds can serve the purpose with enhanced cash returns.
These funds are also suitable for rebalancing satellite portfolio. This is a portfolio that is set up to generate excess returns over some benchmark index. An investor taking profit in her satellite portfolio can temporarily park the amount in a money market fund to enhance cash returns till she finds a suitable investment avenue.
Conclusion
Investors can use money market funds as a substitute for holding excess cash in the savings bank account.
But how should investors choose among peer funds? The recent credit crisis has dented the appetite for credit-risk instruments including commercial papers and structured obligations.
Treasury bills (issued by the government) and call market (mutual funds lending to commercial banks) carry low risk. It may be, hence, optimal to choose a fund that typically carries more exposure to T-bills and call market.
And importantly, have a relatively low management expense ratio.
Investors typically make sub-optimal use of money market funds. A case in point is a portfolio that we recently restructured, which had 25 per cent exposure to such funds. The investor claimed that he preferred such funds because it provided a relatively safe exposure to the bond markets.
This article explains money market funds and shows why they are sub-optimal substitute for bond funds. It then discusses optimal uses for such funds and also provides guidelines for choosing them.
Substitute for bond funds?
Money market funds such as Templeton Money Market Account invest in fixed-income securities with maturity of less than one year. Such securities include treasury bills, commercial papers, certificate of deposits and short-term fixed deposits; and call money market.
Most asset management firms offer “liquid funds” – Tata Liquid Fund, for instance – that invest in such money market instruments and bonds. SEBI in a recent circular has directed that such liquid funds should not make investments in money market instruments with maturity of more than 182 days. Further, from May 2009, such funds cannot make investments in instruments that have maturity of more than 91 days.
Now, money market funds are different from bond funds. A bond fund can invest in securities across the yield curve. This exposes the fund to high interest rate risk – the risk of bond prices declining in value due to increase in interest rates.
Money market funds are primarily exposed to reinvestment risk – the risk that moneys have to be reinvested at a lower rate due to decline in interest rate. On the positive side, bond funds generate interest income and capital appreciation.
Money market funds, however, generate only interest income. As capital appreciation is likely to be higher than interest income, substituting money market funds for bonds funds can drag down core portfolio’s risk-adjusted returns.
The net asset value of money market funds (with exposure in securities of not more than 182 days) is calculated on an accrual basis. That is, such funds essentially earn daily interest with no capital loss due to market risk. Such funds can, however, lose capital due to credit risk – for instance, defaults on commercial papers.
Enhanced cash returns
Money market funds are comparable with short-term fixed deposits with commercial banks. The former is more liquid, as unit-holders can withdraw at any time. In some cases, the initial lock-in period is 15 days.
Besides, an increase in interest rate is beneficial for money market funds as they can earn higher return on reinvestments. This and the exposure to higher interest-bearing instruments helps investors enhance their cash returns – returns that a portfolio earns on its cash and cash equivalents such as moneys in savings accounts.
The objective then should be to use money market funds for emergency cash requirement. A medical emergency is an example, as is the requirement for cash due to sudden loss of income.
An emergency fund should carry low capital risk and high liquidity. Money market funds can serve the purpose with enhanced cash returns.
These funds are also suitable for rebalancing satellite portfolio. This is a portfolio that is set up to generate excess returns over some benchmark index. An investor taking profit in her satellite portfolio can temporarily park the amount in a money market fund to enhance cash returns till she finds a suitable investment avenue.
Conclusion
Investors can use money market funds as a substitute for holding excess cash in the savings bank account.
But how should investors choose among peer funds? The recent credit crisis has dented the appetite for credit-risk instruments including commercial papers and structured obligations.
Treasury bills (issued by the government) and call market (mutual funds lending to commercial banks) carry low risk. It may be, hence, optimal to choose a fund that typically carries more exposure to T-bills and call market.
And importantly, have a relatively low management expense ratio.
Gold ETF's in the current scenario
Gold ETFs averaged a return of 12.7 per cent when the equity market was plunging over much of the past year. The bellwether indices BSE Sensex and CNX Nifty lost close to 32 per cent over a one-year period.
Gold as an asset class acts as a hedge in a highly inflationary period and turns in superior returns when other assets are in distress.
The correlation between the gold and equity markets tends to be historically negative. In India, over 74 per cent of gold investments are held in the form of jewellery, according to the World Gold Council.
But gold in jewellery form tends to yield a lower return on liquidation.
Physical Gold vs Gold ETF’s
High net worth individuals tend to prefer gold bars and coins. However, the risk of holding physical gold is high.
Banks, which are the best source of hallmarked gold, do charge a premium over the market and seldom buy back the gold from individual.
Selling back to the jeweller involves a discount that may erode your profits.
Gold ETFs, in contrast, offer investors the ability to buy gold in small lots, with each unit representing just one gram of the gold. Many Gold ETFs are currently traded on the National Stock Exchange.
When an investor wants to sell units, he has to bear only the brokerage cost; resulting in an effective return that is higher than that on physical gold. Since these units are held in dematerialised form, the holding risk is minimised to a great extent.
Tax Advantage
GETFs also have tax advantages over gold in metal form. Capital gains on physical gold are recognised as long-term gains only if the asset is held for more than 36 months.
Whereas GETF units are treated as debt instruments and taxed accordingly. If the holding period is more than 12 months, you can claim long-term capital gains on these units.
With the benefit of indexation, one can also reduce the taxable capital gains further.
For instance, take the case of an investor who bought GETFs last April for a sum of Rs 1 lakh and disposed of them at a pre-tax return of 17 per cent now.
Even if the investor is not availing of indexation benefits, from the profit of Rs 17,000 he needs to pay long-term capital gains at 11.33 per cent.
That works out to an effective return of 15 per cent (ignoring brokerage cost).
Tax laws allow investors the flexibility to use indexation while calculating capital gains and apply whichever is beneficial to him.
For a HNI, Gold ETFs are not considered as an asset for wealth tax computation, unlike physical gold. Investing through the ETF route, therefore, not only fetches you better returns than physical gold but is also a tax-efficient option.
Gold as an asset class acts as a hedge in a highly inflationary period and turns in superior returns when other assets are in distress.
The correlation between the gold and equity markets tends to be historically negative. In India, over 74 per cent of gold investments are held in the form of jewellery, according to the World Gold Council.
But gold in jewellery form tends to yield a lower return on liquidation.
Physical Gold vs Gold ETF’s
High net worth individuals tend to prefer gold bars and coins. However, the risk of holding physical gold is high.
Banks, which are the best source of hallmarked gold, do charge a premium over the market and seldom buy back the gold from individual.
Selling back to the jeweller involves a discount that may erode your profits.
Gold ETFs, in contrast, offer investors the ability to buy gold in small lots, with each unit representing just one gram of the gold. Many Gold ETFs are currently traded on the National Stock Exchange.
When an investor wants to sell units, he has to bear only the brokerage cost; resulting in an effective return that is higher than that on physical gold. Since these units are held in dematerialised form, the holding risk is minimised to a great extent.
Tax Advantage
GETFs also have tax advantages over gold in metal form. Capital gains on physical gold are recognised as long-term gains only if the asset is held for more than 36 months.
Whereas GETF units are treated as debt instruments and taxed accordingly. If the holding period is more than 12 months, you can claim long-term capital gains on these units.
With the benefit of indexation, one can also reduce the taxable capital gains further.
For instance, take the case of an investor who bought GETFs last April for a sum of Rs 1 lakh and disposed of them at a pre-tax return of 17 per cent now.
Even if the investor is not availing of indexation benefits, from the profit of Rs 17,000 he needs to pay long-term capital gains at 11.33 per cent.
That works out to an effective return of 15 per cent (ignoring brokerage cost).
Tax laws allow investors the flexibility to use indexation while calculating capital gains and apply whichever is beneficial to him.
For a HNI, Gold ETFs are not considered as an asset for wealth tax computation, unlike physical gold. Investing through the ETF route, therefore, not only fetches you better returns than physical gold but is also a tax-efficient option.
5 Macro trends should know before investing
Equity investment is not just about balance-sheets or analysis of a company’s financial performance. It is also crucial to look at the broader picture- the macro-economic factors that may directly or indirectly affect the company whose stock you wish to buy.
Just a few months ago, stocks were quoting at rock bottom prices. Yet not many chased them as the overall macroeconomic picture was still grim. An economic slowdown, if it has implications for you as a salary earner, also has implications for the earnings and margins of companies. Although there are many macroeconomic indicators that are relevant to markets, here are five must-track indicators:
GDP Growth: The GDP growth rate is the most important indicator of a nation’s economic health. If the GDP is growing, so will businesses, jobs and personal income.
If GDP is slowing down, then businesses will hold off investing in new investments and hiring new employees, waiting to see if the economy will improve. If the GDP growth rate actually turns negative, then it means the economy is in a recession.
Inflation: Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole.
Inflation is an upward movement in the average level of prices. Its opposite is deflation, a downward movement in the average level of prices. Because inflation is a rise in the general level of prices, it is intrinsically linked to money. It denotes too much money chasing too few goods.
Index of Industrial Production: Index of Industrial Production (IIP) is an index that details the growth in output of various industrial sectors in an economy, for instance, the Indian IIP focuses on sectors such as mining, electricity, Manufacturing & General. Higher IIP indicates that the economy is growing, in case IIP is low or negative, it means the economy is not doing well.
Production of capital goods: It is an important indicator of how industry is faring. Capital goods refer to those items that are used for production of other goods.
An increase in production of capital goods means the industry is in expansion mode as it is adding to its existing capacity.
A decrease in capital goods means that existing capacity itself is under-utilised and indicates slowdown in demand.
Foreign exchange reserves: Foreign exchange reserves are the foreign currency deposits and bonds held by central banks and monetary authorities.
Foreign exchange reserves are important indicators of a country’s ability to repay foreign debt and meet its import requirements. The foreign reserves require proper management as too much or too little reserves can affect the health of the economy.
After understanding the above, let’s look at some practical scenarios wherein the above indicators have been applied. Take, for example, a sector like Steel; demand for steel is closely linked to overall infrastructure building in an economy. If GDP growth does moderate, steelmakers will face a moderation in demand too.
On similar lines, FMCG companies tend to perform well when the agriculture sector shows good growth as a good portion of the demand is from the rural sector. Two-wheeler and tractor sales too are dependent on the same. The banking industry is affected by inflation changes.
In inflationary conditions, interest rates tend to be in an upward trend, resulting in lower credit demand, higher interest costs and possibly lower interest margins for banks. In a scenario of declining inflation, banking stocks are benefited by way of appreciation in treasury investments due to lower yields.
Stocks such as Engineering, Cement are dependent on infrastructure spending. This sector sees good times when there is heavy public expenditure by Government. But where do we get the macro economic data? Not too difficult. Macro economic and industry level data is available from a number of sources such as Government publications, RBI reports, SEBI Bulletin, Research publications of CMIE, newspaper reports, Industry publications, etc.
Hence, it is imperative for investors who directly invest their money in equities to be aware of the macroeconomic picture.
Although it may require a bit of number crunching, it will help you in your goal of wealth creation
Just a few months ago, stocks were quoting at rock bottom prices. Yet not many chased them as the overall macroeconomic picture was still grim. An economic slowdown, if it has implications for you as a salary earner, also has implications for the earnings and margins of companies. Although there are many macroeconomic indicators that are relevant to markets, here are five must-track indicators:
GDP Growth: The GDP growth rate is the most important indicator of a nation’s economic health. If the GDP is growing, so will businesses, jobs and personal income.
If GDP is slowing down, then businesses will hold off investing in new investments and hiring new employees, waiting to see if the economy will improve. If the GDP growth rate actually turns negative, then it means the economy is in a recession.
Inflation: Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole.
Inflation is an upward movement in the average level of prices. Its opposite is deflation, a downward movement in the average level of prices. Because inflation is a rise in the general level of prices, it is intrinsically linked to money. It denotes too much money chasing too few goods.
Index of Industrial Production: Index of Industrial Production (IIP) is an index that details the growth in output of various industrial sectors in an economy, for instance, the Indian IIP focuses on sectors such as mining, electricity, Manufacturing & General. Higher IIP indicates that the economy is growing, in case IIP is low or negative, it means the economy is not doing well.
Production of capital goods: It is an important indicator of how industry is faring. Capital goods refer to those items that are used for production of other goods.
An increase in production of capital goods means the industry is in expansion mode as it is adding to its existing capacity.
A decrease in capital goods means that existing capacity itself is under-utilised and indicates slowdown in demand.
Foreign exchange reserves: Foreign exchange reserves are the foreign currency deposits and bonds held by central banks and monetary authorities.
Foreign exchange reserves are important indicators of a country’s ability to repay foreign debt and meet its import requirements. The foreign reserves require proper management as too much or too little reserves can affect the health of the economy.
After understanding the above, let’s look at some practical scenarios wherein the above indicators have been applied. Take, for example, a sector like Steel; demand for steel is closely linked to overall infrastructure building in an economy. If GDP growth does moderate, steelmakers will face a moderation in demand too.
On similar lines, FMCG companies tend to perform well when the agriculture sector shows good growth as a good portion of the demand is from the rural sector. Two-wheeler and tractor sales too are dependent on the same. The banking industry is affected by inflation changes.
In inflationary conditions, interest rates tend to be in an upward trend, resulting in lower credit demand, higher interest costs and possibly lower interest margins for banks. In a scenario of declining inflation, banking stocks are benefited by way of appreciation in treasury investments due to lower yields.
Stocks such as Engineering, Cement are dependent on infrastructure spending. This sector sees good times when there is heavy public expenditure by Government. But where do we get the macro economic data? Not too difficult. Macro economic and industry level data is available from a number of sources such as Government publications, RBI reports, SEBI Bulletin, Research publications of CMIE, newspaper reports, Industry publications, etc.
Hence, it is imperative for investors who directly invest their money in equities to be aware of the macroeconomic picture.
Although it may require a bit of number crunching, it will help you in your goal of wealth creation
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