iifl holdings limited · iifl holdings limited bloomberg: ... (nbfc, hfc and mfi) 7 . ... card...

www.iifl.com

October 2017

IIFL Holdings Limited

Bloomberg: IIFL IN

I: IIFL Group Business Overview

(i) Loans and Mortgages

(ii) Wealth and Asset Management

(iii) Capital Markets

II: Ownership, Management and Governance

IIFL - India’s leading integrated financial services group

Loan AUM

`260.3 bn retail focused

diversified loan assets

Products

Home, LAP, Gold,

Commercial Vehicle, SME

and Micro Finance loans

Financials Q2FY18

Income `4.7 bn

Profit after tax `1.3 bn

Minority Shareholders*

CDC Group plc - 15.4%

Loans and Mortgages Wealth and Asset

Management

IIFL Holdings Ltd

(Listed co. | Bloomberg Code: IIFL IN)

Notes – (i) Income is net of interest expense (ii) Profit is pre-minority (iii) Loan/Wealth assets as at September 30, 2017.

*Fully diluted basis.

Capital Market/

Others

Three key operating businesses - Multiple subsidiaries to comply with all applicable regulators

Wealth Assets

`1,332.2 bn from 10,000+

high networth families

Products

Family office, AIFs, advisory

and distribution services

Financials Q2FY18

Income `2.6 bn

Profit after tax `955 mn

Minority Shareholders

General Atlantic - 23.0%

Employees – 19.8%

Customers and network

40 lakh customers serviced

from 1,200+ locations

Products

Retail and institutional

broking, investment

banking

Financials Q2FY18

Income `2.2 bn

Profit after tax `632 mn

Minority Shareholders

Nil

3

` Mn Q2FY18 Q2FY17 Y-o-Y Q1FY18 Q-o-Q H1FY18 H1FY17 Y-o-Y

Revenue from Operations 15,896 12,138 31% 14,073 13% 29,969 22,404 34%

Other income 65 19 242% 53 23% 118 58 103%

Total Income 15,961 12,157 31% 14,126 13% 30,087 22,462 34%

Operating cost 741 356 108% 526 41% 1,267 729 74%

Employee cost 2,483 1,810 37% 2,246 11% 4,729 3,600 31%

Administration and other expenses 1,917 1,393 38% 1,737 10% 3,654 2,513 45%

Total expenses 5,141 3,559 44% 4,509 14% 9,650 6,842 41%

EBITDA 10,820 8,598 26% 9,617 13% 20,437 15,620 31%

Interest costs 6,517 5,493 19% 5,715 14% 12,232 10,033 22%

Depreciation and amortization 163 131 24% 149 9% 312 267 17%

Profit before tax 4,140 2,974 39% 3,753 10% 7,893 5,320 48%

Provision for taxation 1,231 902 36% 1,234 0% 2,465 1,666 48%

Profit after tax (pre-minority) 2,909 2,072 40% 2,519 15% 5,428 3,654 49%

Minority Interest 618 241 156% 538 15% 1,156 448 158%

Profit after tax (post-minority) 2,291 1,831 25% 1,981 16% 4,272 3,206 33%

IIFL Group – Consolidated results Quarter ended September 2017

Note - Previous periods figures have been regrouped / rearranged wherever necessary

4

2.8

4.5 5.1

6.9

1.8 2.3

FY14 FY15 FY16 FY17 Q2FY17 Q2FY18

9.4

14.8 16.3

21.6 23.1

28.8


73 82 106

138 132 149


13.5%

19.0% 17.3% 17.7% 19.1% 19.7%


2.0%

2.6% 2.4% 2.4%

2.7% 2.5%


21.5 25.6

33.5

43.8 41.7 47.4


Notes : Profit is post-minority, Income is net of interest expense & Quarterly ROE, ROA and EPS are annualized

Return on Assets (%)

Annual

Annual

Profit after tax (` bn)

Net-worth (` bn)

Annual Quarter Annual

Return on Equity (%)

Annual

Book Value Per Share (`)

Earnings Per Share (`)

Annual Quarter Quarter Quarter

Quarter Quarter

5

IIFL Group – Consolidated financial trends Quarter ended September 2017


(i) Loans and Mortgages




` Mn Q2FY18 Q2FY17 Y-o-Y Q1FY18 Q-o-Q

H1FY18 H1FY17 Y-oY

Loan book 2,30,205 1,84,589 25% 2,03,812 13% 2,30,205 1,84,589 25%

Securitised assets 30,125 20,148 50% 29,492 2% 30,125 20,148 50%

Assets under management 2,60,330 2,04,737 27% 2,33,304 12% 2,60,330 2,04,737 27%

Interest income 8,861 7,608 16% 8,003 11% 16,864 14,559 16%

Less: Interest expense 4,848 4,657 4% 4,544 7% 9,392 8,952 5%

Net Interest income 4,013 2,951 36% 3,459 16% 7,472 5,607 33%

Other income 653 382 71% 608 7% 1,261 627 101%

Total income 4,666 3,333 40% 4,067 15% 8,733 6,234 40%

Less: Operating expense 1,671 1,355 23% 1,588 5% 3,259 2,597 26%

Less: Loan losses & provision 958 416 130% 709 35% 1,667 708 135%

Profit before tax 2,037 1,562 30% 1,770 15% 3,807 2,929 30%

Profit after tax 1,322 1,020 30% 1,163 14% 2,485 1,910 30%

Loans and Mortgages – Consolidated results Quarter ended September 2017 (NBFC, HFC and MFI)

7

The core strategy is Retail lending, Digital delivery Quarter ended September 2017

1 Retail lending

● Retail loans, including consumer loans and small

business finance, constitute nearly 85% of loan book

● Nearly 35% of loans are compliant with RBI’s priority

sector lending norms

● Micro finance company now well placed to scale-up

● Out of nearly 0.42 mn loans on-boarded in Q2FY18

95% digitally on-boarded, 92% acquired with Aadhar

based e-KYC authentication, 37% through eSign

● Leveraging and expanding a wide network of 1,152

dedicated branches, IIFL Finance is well placed to

cater to the retail loan demand across India

2 Digital delivery

● Technology is a strategic enabler for the business

Mobile App

150,000+ downloads

in 1 year

Self Service

Portal

Sourcing, collection,

audit on a Tablet

E-sign/e-KYC

East 12%

North 18%

South 35%

West 35%

1,152

branches

8

Card based loan

disbursement

Instant

disbursement via

IMPS

Regional branch distribution

116 162

195 223 205

260


1.8%

2.0%

1.9%

2.0%

1.9%

2.1%


2,104

3,012 3,387

4,233

1,020 1,325


Achieving volume & profit growth with superior asset mix Quarter ended September 2017

Note – MSME & Others include Healthcare equipment, SME and Digital finance

Net Profit (` mn)

Annual

Return on Assets (%)

Annual

Loan AUM (`bn)

● Key growth drivers are small-

ticket home loans and SME

loans

● In Construction & Real Estate

loans, the mix is changing

towards construction finance for

small-ticket housing projects

● Moderate or negative growth for

Gold, LAP and CV

Home Loans, 26%

Loans Against

Property, 21%

Construction & Real

Estate , 14%

Gold , 12%

Commercial

Vehicle , 12%

Capital Market ,

8%

Micro-finance,

2%

MSME & Others,

6%

Annual Quarter Quarter Quarter

9

AUM break-up (%) Loan AUM

(`bn) Q2FY18 Y-o-Y Q-o-Q

Home Loan 66.9 64% 12%

LAP 55.2 4% 0%

Construction &

Real Estate 35.3 30% 0%

Commercial

Vehicle 31.5 18% 6%

Gold 30.6 (2%) 9%

Capital Market 22.0 31% 85%

MSME & Others 14.8 65% 34%

MFI 4.0 - 42%

Total 260.3 27% 12%

38%

35%

28%

Term Loan NCD Commercial Papers

7.0% 7.1%

6.2% 6.4%

6.3%

7.2%


53.8%

44.5% 44.0% 40.1% 40.7%

35.8%


● Average cost of borrowing

declined 12bps q-o-q and

110bps y-o-y to 8.5%.

● NIMs have expanded by

56bps q-o-q due to falling

borrowing costs and rising

share of high yielding

SME and MFI loans,

partly offset by rising

share of lower yielding

home loans

● Cost/Income ratio has

declined

● IIFL Finance has long-

term credit rating by

CRISIL AA/Stable, [ICRA]

AA (Stable), CARE AA

(Positive), Brickworks

AA+/Stable and short-

term rating by [ICRA] A1+

Funding, operating costs decline, NIMs expand Quarter ended September 2017

Annual Quarter

12.0% 11.1%

10.2% 9.4% 9.6%

8.5%


Annual Quarter

Annual Quarter

Cost of Funds (%) Cost to Income (%)

NIM (%) Borrowing Mix (%)

10

0.86%

1.27% 1.44%

1.82% 1.87% 1.95%


0.33%

0.54% 0.54% 0.58%

0.83%

1.09%


Through cycles, maintaining superior quality of assets Quarter ended September 2017

Gross NPA (%) ● Asset quality remains

sound with GNPA of

1.95% and NNPA of

1.09%

● Sequential increase in

NNPAs largely in LAP

and RE Finance; NPA

ratio in all other

segments were flat or

declined q-o-q

● Securitized loan book

currently stands at 12%

of AUM, up from 10% a

year back.

● Tier-I CAR stands at

17.0% and total CAR at

18.4%.

150

DPD

180

DPD

120

DPD 150

DPD

180

DPD

120

DPD

120

DPD

90

DPD 120

DPD

90

DPD

11

Net NPA (%)

% Portfolio

Share NNPA% Yield %

Average

Ticket Size LTV %

(`mn)

Home Loan 26% 0.3% 9.6% 2.2 67%

Loan Against Property 21% 1.9% 13.1% 7.9 52%

Construction & Real Estate 14% 1.4% 15.9% 99.8 40%

Commercial Vehicle 12% 3.2% 16.2% 1.2 75%

Gold 12% 0.2% 22.0% 0.05 64%

Capital Market 8% 0.0% 11.4% 5.8 45%

MSME & Others 6% 1.2% 14.5% 3.0 58%

Micro-finance 2% 0.5% 22.4% 0.02 -

Total 100% 1.1% 14.2% -


(i) Non-banking and Housing Finance




Wealth and Asset Management – Consolidated results Quarter ended September 2017

13

`Mn Q2FY18 Q2FY17 Y-o-Y Q1FY18 Q-o-Q H1FY18 H1FY17 Y-o-Y

Assets under advice,

management and distribution 13,32,170 9,06,170 47% 12,69,080 5% 13,32,170 9,06,170 47%

Fee based income 2,370 1,400 69% 1,923 23% 4,293 2,730 57%

Less: Direct Cost 265 108 145% 142 87% 407 171 138%

Net Commission / Fee income 2,105 1,292 63% 1,781 18% 3,886 2,559 52%

Fund based income 1,929 1,143 69% 1,667 16% 3,596 1,599 125%

Less: Interest expense 1,422 649 119% 1,007 41% 2,429 764 218%

Net fund based income 507 494 3% 660 (23%) 1,167 835 40%

Total income 2,612 1,786 46% 2,441 7% 5,053 3,394 49%

Employee cost 968 645 50% 808 20% 1,776 1,187 50%

Other operating expense 441 284 55% 345 28% 786 552 42%

Provision charges 23 25 (8%) 47 (51%) 70 78 (10%)

Total expenses 1,432 954 50% 1,200 19% 2,632 1,817 45%

Profit before tax 1,180 832 42% 1,241 (5%) 2,421 1,577 54%

Provision for taxation 225 260 (13%) 376 (40%) 601 477 26%

Profit after tax 955 572 67% 865 10% 1,820 1,100 65%

512

1115

1693

2505

572

955


73

104 85

225

113

39


562 680 740

1,081 906

1,332


Leading Wealth manager in India Quarter ended September 2017

● IIFL Wealth Management

offers a broad range of

products and services to

participate in a larger share

of the client wallet

including family office,

trusts, AIFs, estate

planning, offshore advisory

services, brokerage,

research, asset

management and credit

solutions

● AuM growth momentum

continues to be strong

● First and largest fund

manager of AIFs

● 22 Offices - Presence

across 7 countries and

major Indian cities.

Total assets (` bn)

Annual Quarter

Profit after tax (` mn)

Annual

Net new money raised (` bn)

Quarter

Annual Quarter

AUM movement (` bn)

14

1,269 1,332 39 26

-2

Jun

-17

Ne

t N

ew

Mo

ne

y

Inorg

anic

Gro

wth

Ma

rket

Pe

rform

an

ce

Fo

rex

Flu

ctu

atio

n

Se

p-1

7

42% 53% 56% 59% 54% 59%

6% 7% 10%

9% 9%

9% 1% 2%

10% 7%

12% 37%

17% 16% 12%

16% 12%

15% 22% 16% 10% 13% 9%


Distribution AMC/DiscretionaryAdvisory FPI (Offshore)Discretionary (Offshore)

78 72 69 73

8 26 25 18

FY16 FY17 Q1FY18 Q2FY18

Net commission/fee income Fund Based activities

86 98 91

Annual

94

Broadening advisory and asset management services Quarter ended September 2017

● Wealth NBFC, which

offers loans against

securities and margin

funding to HNI clientele,

grew its loan book 13%

q-o-q

● For the quarter ended

September 30, 2017,

the retention yield

excluding custody

assets stands at 91bps

● AIF assets grew 53%

y-o-y to ~`90bn

● Hired 30 bankers during

Q2FY18 taking the total

number to 283, to

further drive the growth

momentum

23 29

36 43

49

Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18

Retention yield ex-FPI assets (bps)

Wealth NBFC assets (` bn)

Quarter

Quarter

123 139

195 226

176

283


No. of bankers

Annual Quarter

15

Annual Quarter

Break-up of Wealth assets (%)

● Wide network – retail branches,

franchisees, sub-brokers and online

● Coverage of 500+ stocks

● Mobile brokerage >25% of total

● Pedigreed institutional equities

team comprising 25 analysts and

200+ stocks under coverage

● Stellar track record in block

placements with institutional

investors

● Known for market leading

distribution franchise across

investor segments

Digitization and Research backed institutional and retail

equity businesses Quarter ended September 2017

29% 31%

34% 36% 37%


India Chartbook –

State of the States

presents a

compilation of charts

on the Indian states

India Media–

A detailed analysis

on the Media

industry in India

Mobile trading clients (% of total)

IIFL Markets – Top rated App

11,00,000+

downloads

Available on

● Rated 4.4 by 22,000 + users,

● 86% of ratings are 4 stars &

above

● 500+ stock ideas shared by IIFL

experts

● 1000+ market and stock related

news notifications

● Mpin based login in the App, first

in the industry

● Insta-account opening using

Aadhaar and e-KYC

Highest rated (4.4) and

Most downloaded stock trading app amongst peers

Internationally acclaimed research

702 700 704 697 699


In ‘000

Number of retail customers

17

18

Investment Banking has made significant strides Quarter ended September 2017

18

Marquee Issues

IIFL is ranked #3 Investment Banker for CY2016 and CY2017 YTD*

Investment Banking business continues to witness strong momentum

We have a substantial pipeline of transactions which are at various stages of execution

*Source – Prime Database. Issue type : – IPOs, FPOs, InvIT and QIPs. Rankings are from Jan 1, 2016 to September 30, 2017

IPP

`4.0 bn

(September 2017)

Capacite’ Infraprojects

IPO

SIS (India) IPO

` 57.0 bn

(September 2017)

`6.0 bn

(September 2017)

Dixon Technologies

IPO

`8.7 bn

(August 2017)

Quess Corp

IPO

`8.0 bn

(August 2017)

`150.0 bn

(June 2017)

State Bank of India

QIP IPO

` 50.3 bn

(May 2017)

IRB InvIT Fund

`25.0 bn

(June 2017)

Federal Bank

QIP






19

Doubling Revenue 2x

Net profit 2.5x

over FY16-FY20

Durability Reducing volatility and

cyclicality of earnings in all

businesses

De-risking

Diversifying revenue

sources with focus on

financial services

● Integrity and honesty of the

utmost nature, in letter, in

spirit, and in all our dealings

with people, internal or

external

● Fairness in our transactions

with all stakeholders

including employees,

customers, and vendors,

bereft of fear or favour

● Transparency in all our

dealings with stakeholders,

media, investors, and

the public at large

Values

Consistent Vision and Values since inception for the

foundation of corporate culture

Vision

Fairness Integrity Transparency

“To become the Most Respected Company in the financial services space”

Vision 2020*

*The information is based on management’s internal goals and is subject to change without notice. The actual

performance can be materially different. 20

Nirmal Jain, Executive Chairman

● MBA from IIM Ahmedabad, rank-holder CA and Cost

Accountant

● Founded and led IIFL since 1995

C Ratnaswami, Non-Executive Director

● MD of Hamblin Watsa, subsidiary of Fairfax

Kranti Sinha, Independent Director

● Former CEO of LIC Housing Finance

A K Purwar, Independent Director

● Former Chairman, State Bank of India

Nilesh Vikamsey, Independent Director

● Senior Partner at Khimji Kunverji & Co

● President of The Institute of Chartered Accountants of India

R Venkataraman, Managing Director

● MBA from IIM Bangalore, B-Tech from IIT Kharagpur

● Co-promoted IIFL in 1999

S Narayan, Independent Director

● Former finance secretary, former economic advisor to Prime

Minister

Geeta Mathur, Independent Director

● CFO of Helpage India

IIFL Holdings – Board of Directors IIFL Group’s Advisory Board

Ashok Jha

● Former Finance Secretary, Government of India

Keki Dadiseth

● Former Director, Unilever Plc.

Keki Mistry

● Vice Chairman and Chief Executive Officer of HDFC

S Sundaresan

● An eminent Corporate Lawyer

Sat Pal Khattar

● Singapore based eminent Lawyer and Investor

S Venkatachalam

● Non Executive Chairman, Oracle Financial Services

Distinguished Board of Directors and Advisory Board

NBFC

V. K. Chopra

● Chairman, India Infoline Finance Ltd

● Former Whole-Time Member, SEBI

S. Sridhar

● Chairman, India Infoline Housing Finance Ltd

● Former Chairman, NHB 21

22

Chairman Nirmal Jain

Managing Director R. Venkataraman

Institutional Equities

Wealth Management

Offshore Asset Management

Investment Banking

Loans & Mortgages

Karan Bhagat

Amit Shah

Nipun Goel

Rajashree Nambiar

Housing Finance Monu Ratra

PMS & Retail Broking Arindam Chanda

H. Nemkumar

Realty Services Balaji Raghavan

Compliance

Finance

Company Secretary

Prabodh Agrawal

Technology

Strategy

Subhash Kelkar

Aniruddha Dange

R. Mohan

Gajendra Thakur

Marquee Investors

Management team with rich domain

experience and ownership

Notes : Shareholding pattern as at September 30, 2017.

#Upon conversion of CDC’s investment in India Infoline Finance Ltd on

a fully diluted basis

Promoters, 29.0%

Fairfax Group, 35.5%

Foreign Investors,

13.2%

Domestic Institution,

2.3%

NRI, 7.3%

Public & Others, 12.7%

IIFL Holdings Ltd

CDC, 15.4%

IIFL

Holdings

84.6%

IIFL Finance#

General

Atlantic,

23.0%

IIFL

Holdings

57.2%

Employees

19.8%

IIFL Wealth

23

IIFL’s brand and credibility are substantiated by

widespread recognition and multiple awards

IIFL featured in Forbes’

‘India's Super 50 Companies’

As per Forbes and PwC’s analysis, IIFL found place in the

Super 50 list, owing to its record of providing one of the highest

Shareholders Return of 442%, consistent sales growth of 20%

CAGR and average return on equity of 18% over three years.

IIFL is among the

‘Outlook Business Outperformers’ list –

titled ‘Prudent Financier’ by Outlook Magazine

IIFL stock delivered a 43%

CAGR over a five year

period (FY13-17), besides

registering one of the best

top line and bottomline

CAGRs.

IIFL has earned the name

'Prudent Financier' from

Outlook Business magazine

for its outperformance &

stability

NSE Market Achievers

Awards

Best IPO Bidding Member -

Retail

The Asset’s Triple A

Awards

Asset Management

Company of the Year (2017)

-Rising Star, India

World Quality Congress

Best Customer Centric

Company of the Year 2017

– Financial Sector

Golden Peacock Award 2016

- Corporate Social

Responsibility

Brand Trust Report 2016

-No. 1 in Financial

Services

ET Now

Dealing Room Heroes,

2017

This document is strictly confidential and is for general information purposes only. It does not construe to be any investment, legal or

taxation advice or recommendation in relation to holding, purchasing or selling securities or other financial products or instruments in any

jurisdiction. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or securities. Any action taken

by you on the basis of the information contained herein is your responsibility alone and IIFL Holdings Limited and its subsidiaries and

affiliates or their respective employees or directors will not be responsible or liable in any manner for the consequences of such action

taken by you. While reasonable care has been taken in preparing this document, we do not represent that it is accurate or complete. IIFL

Holdings Limited or any of its subsidiaries or associates or their respective directors or employees shall not be in any way responsible for

any loss or damage that may arise to any person from any inadvertent error or omission in the information contained in this document.

The recipients of this document should rely on their own investigations or advisors. IIFL Holdings Limited and/or its subsidiaries and/or its

affiliates and their respective directors or employees may have interests or positions, financial or otherwise, in the securities mentioned in

this document.

The contents of this document are being supplied solely for general informational purposes by IIFL Holdings Limited to a limited number

of sophisticated investors and should not be reproduced, copied, transmitted, published or further distributed, in part or full, to any other

person for any purposes. The information contained herein has been prepared to assist interested parties in making their own evaluation

of IIFL Holdings Limited and does not purport to be complete or to contain all information that a prospective investor may desire or that

may be required in order to properly evaluate the business, prospects or value of IIFL Holdings Limited. In all cases, interested parties

should conduct their own investigation and analysis of IIFL Holdings Limited and the data set forth in this document. The information and

opinions contained in this document are provided as at the date of this document and are subject to change without notice. We do not

undertake responsibility to update any information contained herein. In considering the prior performance information contained in this

document, prospective investors are reminded that past performance is not necessarily indicative of future results, and there can be no

assurance that IIFL Holdings Limited and its subsidiaries will achieve comparable results. Therefore, prospective investors should not

place undue reliance on such prior performance information. By receiving a copy of this document, you agree to be bound by the

provisions contained herein. Any industry data and statistics have been obtained or derived from IIFL Holdings Limited and published

industry sources or publicly available information. Any forward looking statement or information given is based on management’s current

estimates and internal goals and is subject to change. The actual performance can be materially different. Therefore, the accuracy or

completeness of these expectations cannot be guaranteed.

Disclaimer

Published in November 2017 © IIFL Holdings Ltd. 2017-18.

IIFL Holdings Ltd. All rights reserved. Regd. Off: IIFL House, Sun Infotech Park, Road No. 16V, Plot No.B-23, Thane Industrial Area, Wagle Estate,

Thane – 400604.

Tel.: +(91 22)4007 7000 Fax: 2685 0451.

IIFL - India

IIFL Holdings Ltd

IIFL Centre,

Kamala City, Senapati Bapat Marg,

Lower Parel (W)

Mumbai - 400-013 INDIA

Tel +91-22-4646-4600

IIFL - Singapore

IIFL Securities Pte Ltd

6 Shenton Way,

#18-08B,

OUE Downtown 2,

Singapore - 068809

Tel +65-6511-6160

IIFL - USA

IIFL Inc.

1120 Avenue of the Americas

Suite 1502,

New York,

NY 10036

Tel +1-212-221-6800

IIFL - UK

IIFL Wealth (UK) Ltd

45, King William Street,

London - EC4R 9AN,

United Kingdom

Tel +44-207-078-7208

IIFL - Geneva

IIFL Private Wealth (Suisse) SA

3 rue de la Croix d’Or

1204 Geneva

Tel: +41-22-310-99-90

IIFL – Hong Kong

IIFL Private Wealth Hong Kong Ltd

Suite 2105, Level 21,

The Centre,

99 Queen’s Road Central,

Central, Hong Kong

Tel: +852-3975-2622

IIFL - Dubai

IIFL Private Wealth Management

(Dubai) Ltd.

DIFC, 808, Liberty House,

P.O. Box 115064,

Dubai, UAE – 241 294

Tel: +9714-386-3661

IIFL - Mauritius

IIFL Private Wealth (Mauritius) Ltd

5th Floor, Barkly Wharf,

Le Caudan Waterfront,

Port Louis, Mauritius

www.iifl.com

iifl holdings limited · iifl holdings limited bloomberg: ... (nbfc, hfc and mfi) 7 . ... card...

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