2
Coromandel International
BSE SENSEX
26,305
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, (INR m)
Free float (%)
S&P CNX
8,108
CRIN IN
291.3
69.3/ 1.0
293 / 146
-5/3/24
81
38.0
15 November 2016
2QFY17 Results Update | Sector: Fertilizers
CMP: INR238
TP: INR284 (+19%)
Buy
Strong Performance; Outlook positive due to normal monsoon
Strong bottom-line performance:
Coromandel’s overall revenue was flattish at
INR35.75b (est. of INR35.29) in 2QFY17. EBITDA margins increased 230bp in
2QFY17 to 10.8% (est 7.5%). Consequently, EBITDA increased 25% to
INR3,846m (est. INR2,647m) mainly because of lower other expenses.
Nutrients to Crop Protection revenue mix stood at 88:12 for 2QFY17 while EBIT
mix was 76:24. Consequently Reported PAT grew 26% from INR1,695m in
2QFY16 to INR2,134m (est INR1,321m) in 2QFY17.
Gains market share due to higher than industry growth:
CRIN registered 8%
YoY volume growth (against industry de-growth of 3% YoY) on the back of low
channel inventory in primary markets of AP and Telangana. CRIN has increased
its market share in its primary markets to 61% during 2QFY17 while on the pan-
India level, market share increased to 17% as there was improved performance
in non-primary markets of Maharashtra and West Bengal. Company’s
production of complexes during 2QFY17 increased 17% YoY to 770,000 MT
with a high capacity utilization of 90%.
Strong margins in crop protection segment:
Management highlighted that
strong performance in crop protection segment was led by higher traction in
key products like Mancozeb in international markets despite exports of certain
insecticides being absent to certain regions like Latin America. Robust margin
expansion of 850bp YoY was mainly driven by lower input cost, lower gas prices
and favourable exchange rate on export realization. We believe increasing
contribution in this segment will aid in improving EBITDA margins.
Valuation and view:
We believe encouraging rabi season due to normal
monsoon, falling raw material prices and regular disbursement of subsidy will
remain potential triggers going ahead. Factoring in the quarterly performance
and price decline, we broadly keep our estimates unchanged for FY17 and
FY18, respectively. We expect 7% revenue CAGR and 150bp margin expansion
over FY16-18, translating to 31% PAT CAGR. We believe CRIN has significant
operating and financial levers ahead. Maintain Buy with a TP of INR284, 14x (
10% premium to 10 year median P/E led by improvement in return ratios)
FY18E EPS.
Financials & Valuations (INR b)
Y/E Mar
2016 2017E 2018E
Sales
115.2 117.8 131.3
EBITDA
7.7
9.0
10.8
NP
3.4
4.3
5.9
EPS (INR)
11.8
14.7
20.3
EPS Gr. (%)
-14.9
24.6
37.7
BV/Sh. (INR)
83.2
90.8 102.6
RoE (%)
14.9
16.9
21.0
RoCE (%)
10.8
12.7
15.9
P/E (x)
20.1
16.2
11.7
P/BV (x)
2.9
2.6
2.3
Estimate change
TP change
Rating change
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Niket Shah
(Niket.Shah@MotilalOswal.com); +91 22 3982 5426
Chintan Modi
(Chintan.Modi@MotilalOswal.com); +91 22 3982 5422
Chitvan Oza
(Chitvan.Oza@MotilalOswal.com); +91 22 3010 2415
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Coromandel International
Strong beat on bottom-line
Coromandel’s overall revenue was flattish at INR35.75b (est. of INR35.29) in
2QFY17.
EBITDA margins increased 230bp in 2QFY17 to 10.8% (est 7.5%). Consequently,
EBITDA increased 25% to INR3,846m (est. INR2,647m) mainly because of lower
other expenses.
Nutrients to Crop Protection revenue mix stood at 88:12 for 2QFY17 while EBIT
mix was 76:24.
Margins in crop protection segment improved sharply by 850bp YoY mainly
driven by lower input cost, lower gas prices and favorable exchange rate on
export realization
Consequently, Reported PAT grew 26% from INR1,695m in 2QFY16 to
INR2,134m (est INR1,321m) in 2QFY17.
Exhibit 1: Revenue trend
Revenue (INRm)
32,154
18,977
20%
2%
14%
5%
-1%
34,660
27,562
21,840
18,807
8%
7%
29,976
17%
1%
-7%
-7%
-1%
37%
29,621
Growth YoY (%)
36,003
27,555
30,209
20,595
35,752
22,041 4%
Source: MOSL, Company
Exhibit 2: EBITDA trend
EBITDA (INRm)
EBITDA Margins (%)
10.8%
10.0%
8.9%
8.5%
8.0%8.2%
7.6%
6.5%
6.0%6.6%
5.8%
5.3%
4.3%
4.2%
Exhibit 3: PAT trend
PAT (INRm)
5.0%
3.4%3.7%
1.1%
5.2%
4.1%
2.3%
0.7%
PAT Margin (%)
4.7%
2.9%3.1%
0.4%
6.0%
1.7%
Source: MOSL, Company
Source: MOSL, Company
Gains market share due to higher than industry growth
CRIN registered 8% YoY volume growth (against industry de-growth of 3% YoY)
on the back of low channel inventory in primary markets of AP and Telangana.
CRIN has increased its market share in its primary markets to 61% during
2QFY17 while on the pan-India level, market share increased to 17% as there
was improved performance in non-primary markets of Maharashtra and West
Bengal.
15 November 2016
2

Coromandel International
Company’s production of complexes during 2QFY17 increased 17% YoY to
770,000 MT with a high capacity utilization of 90%. During 1HFY17, company
produced 1,330,000 MT of complexes , up 18% YoY.
Strong margins in crop protection segment:
Management highlighted that strong performance in crop protection segment
was led by higher traction in key products like Mancozeb in international
markets despite exports of certain insecticides being absent to certain regions
like Latin America.
Robust margin expansion of 850bp YoY was mainly driven by lower input cost,
lower gas prices and favourable exchange rate on export realization.
The debottlenecking at Sarigam facility and the on-going capacity augmentation
at Dahej for Mancozeb will aid the company in meeting higher demand for this
product in the domestic as well as export markets.
CRIN has also introduced new products in the insecticides portfolio during the
quarter and will launch one new product in the fungicide portfolio in January for
addressing specific crop segments of paddy and fruits and vegetable.
We believe increasing contribution in this segment will aid in improving EBITDA
margins.
Exhibit 4: Capacity utilization to improve
76%
58%
Capacity (m MT)
65%
68%
Capacity Utilization (%)
62%
68%
76%
3.3
2012
3.2
2013
3.6
2014
4.4
2015
4.7
2016
4.7
2017E
4.7
2018E
Source: Company, MOSL
Conference call Takeaways
Rainfall details:
Southwest monsoon has been normal, up 13% over last year
which bodes well for Indian agriculture and rural economy, considering two
consecutive drought seasons experienced. Major operating markets have
received good rains during the season with an exception of South Karnataka and
Tamil Nadu. In main markets of AP and Telangana, 22 of the 23 districts received
normal to excess rains with a similar pattern being seen across parched
Maharashtra and West Bengal. Overall, the reservoirs levels are up across all
zones over last year levels and has led to positive sentiments of improved Rabi
prospects in key markets, leading to higher crop acreage by 3% with pulses up
29%.
Acreage area:
Area under BT Cotton has gone down by 21% to 85 lakh hectares
while sowing under ingenious variety has doubled to 17 lakhs hectares. This has
resulted in firming up of cotton prices. However, overall sowing has improved in
Andhra by 10%, Telangana 4%, Maharashtra 8%, Karnataka 10% and West
3
15 November 2016

Coromandel International
Bengal 5%. The lower monsoon rains in Punjab has resulted in reduced cotton
sowing and overall acreage is down by 4%.
Government initiatives:
Government has initiated work under 99 irrigation
projects to bring additional 7.6m land under irrigation. 55 of the 99 projects are
in drought prone area especially in Telangana, Marathwada and Bundelkhand.
And 23 of these projects are expected to be completed by 2016-2017 and the
others in the following two years. The government is spending INR770b in the
next four years on these projects.
Crop insurance scheme:
Sum insured has gone up by 70% to INR1.18 lakh
crores and the numbers of farmers covered are 31.5m current year versus
30.8m last year. The higher number is in spite of being a normal monsoon year
and early deadline closure of the scheme. On the subsidy front, government has
rolled over the same NBS rates for the second-half of 2016-2017. Coromandel
has upgraded its 200 Mana Gromor centers to Kisan Suvidha Kendra as part of
government’s modern retail center initiative. On the subsidy front, government
has rolled over the same NBS rates for the second-half of 2016-2017.
Market share gain:
The industry volumes have dropped by 3% yoy during
2QFY17, while the company achieved 8% yoy volume growth on the back of low
channel inventory in primary markets of AP and Telangana. Consequently, the
company has increased its market share in its primary markets to 61% during
the quarter while on the pan-India level, market share increased to 17% as
performance in non-primary markets of Maharashtra and West Bengal also
improved.
Crop protection segment:
The debottlenecking at Sarigam facility and the on-
going capacity augmentation at Dahej for Mancozeb will aid CRIN in meeting
higher demand for this product in the domestic as well as export markets. CRIN
has also introduced new products in the insecticides portfolio during the quarter
and will launch one new product in the fungicide portfolio in January for
addressing specific crop segments of paddy and fruits and vegetable.
Non-fertiliser & non-pesticide segments:
CRIN have reported a robust growth
of ~20%-25% YoY in other segments like Water soluble fertilisers and organic
manure. Operational performance at retail centers improved as fertiliser as well
as non-fertiliser sales remained healthy.
Subsidy:
CRIN has received subsidy until June and outstanding subsidy as of Sept
16 stood at INR18.9b which includes INR9b towards 10% subsidy which has been
accumulating since November 2012.
15 November 2016
4

Coromandel International
Valuation and view
We value CRIN at 14x FY18E EPS, which we believe is justified considering:
Significant operating and financial levers over next two years
CRIN has significant operating and financial levers ahead over the next two years.
Fertilizer capacity utilization currently stands at just 62% which we expect to be
ramped up to 76% by FY18. Further, CRIN is largely focused on organic growth thus
envisaging limited capex over the next two years (largely maintenance capex
amounting to INR1b annually). Improving asset utilization, stable fertilizer and non-
fertilizer margins, and improving working capital situation will generate significant
free cash over the next two years. This will result in net debt to equity declining
from 0.9x in FY16 to 0.4x in FY18. Similarly, we expect RoCEs/ RoEs for the company
expanding from 11% / 15% to 16% / 21% respectively over FY16-18.
Profitability mix to improve in favor of non-subsidy business
The subsidy business accounted for ~64% of CRIN’s EBITDA in FY16. EBITDA margin
is ~6% in the subsidy business as against ~15% in the non-subsidy business. By FY18,
we expect the EBITDA contribution of non-subsidy business increase from 36% to
38%. The shift in EBITDA mix in favor of the more lucrative non-subsidy business
would enhance the return on capital for the company.
Exhibit 5: Price to earnings (one year forward)
30
25
20
15
10
5
0
17.3
12.0
2.0
9.7
1.0
0.0
2.0
15.3
P/E (x)
5 Yrs Avg(x)
15 Yrs Avg(x)
10 Yrs Avg(x)
Exhibit 6: Price to book (one year forward)
5.0
4.0
3.0
3.0
2.5
2.9
P/B (x)
5 Yrs Avg(x)
15 Yrs Avg(x)
10 Yrs Avg(x)
Source: MOSL, Company
Source: MOSL, Company
We value the stock at 14x FY18E EPS and arrive at a target price of INR284 –
19%
upside. Maintain
Buy
rating.
Exhibit 7: Key assumptions
FY12
Revenue mix
Phosphatic Fertilizers
Non-subsidy business
Revenues (INR m)
Phosphatic Fertilizers
Non-subsidy business
Total
90%
10%
89,114
9,902
99,016
FY13
90%
10%
81,303
9,034
90,337
FY14
80%
20%
80,426
20,106
100,532
FY15
82%
18%
92,713
20,352
113,064
FY16
83%
17%
95,784
19,435
115,219
FY17E
80%
20%
FY18E
79%
21%
94,302
103,786
23,471
27,554
117,773
131,340
Source: MOSL, Company
15 November 2016
5

Coromandel International
Story in charts: Best play in fertilizers
Exhibit 8: India has lowest fertilizer penetration
Country-wise Fertiliser Consumption (Kgs/ha)
333
275
166
2.4
1.0
India
Brazil
Pakistan
Japan
China
2007
2.1
1.0
2008
5.9
5.5
Exhibit 9: NPK ratio skewed at 7.7:3:1 v/s ideal of 4.2:2:1
N
P
K
6.9
4.6
1.6
1.0
2009
4.3
2.0
1.0
2010
4.3
3.1
2.0
1.0
2011
1.0
2012
3.0
7.7
128
133
1.0
2013
Source: MOSL, Company
Source: MOSL, Company
Exhibit 10: Revenue growth set to accelerate
Capacity (m MT)
76%
58%
65%
68%
Capacity Utilization (%)
76%
68%
62%
Exhibit 11: Dependence on subsidy is declining every year
Farmgate price as a percentage of total realization
Subsidy as a percentage of total realization
37%
40%
48%
63%
65%
3.3
2012
3.2
2013
3.6
2014
4.4
2015
4.7
2016
4.7
2017E
4.7
2018E
63%
60%
52%
FY12
37%
FY13
35%
FY14
Pre NBS
FY11
Source: MOSL, Company
Source: MOSL, Company
Exhibit 12: Non-subsidy business contribution to rise to 21%
Phosphatic Fertilisers
10%
10%
Non-subsidy business
Exhibit 13: RoE set to improve to 21% in FY18E
RoE (%)
18.8
16.3
18.0
14.9
16.9
21.0
20%
18%
17%
20%
21%
90%
90%
80%
82%
83%
80%
79%
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
FY13
FY14
FY15
FY16
FY17E
FY18E
Source: MOSL, Company
Source: MOSL, Company
15 November 2016
6

Coromandel International
Financials and Valuations
Consolidated - Income Statement
Y/E Mar (INR m)
Total Income from Operations
Change (%)
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Expense/(Income)
PBT after EO Exp.
Current Tax
Deferred Tax
Tax Rate (%)
Less: Mionrity Interest
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
2012
99,016
29.6
10,544
10.6
597
9,947
1,261
780
9,467
-355
9,111
2,906
-140
30.4
-43
6,388
6,635
-4.3
6.7
2013
90,337
-8.8
7,679
8.5
711
6,968
2,102
701
5,567
0
5,567
106
1,125
22.1
17
4,320
4,320
-34.9
4.8
2014
100,532
11.3
8,052
8.0
961
7,092
2,403
608
5,297
-126
5,171
1,545
-24
29.4
84
3,565
3,654
-15.4
3.6
2015
113,064
12.5
8,535
7.5
1,046
7,489
2,096
566
5,959
-39
5,920
1,879
23
32.1
0
4,018
4,045
10.7
3.6
2016
115,219
1.9
7,717
6.7
1,065
6,652
2,204
656
5,104
250
5,354
1,744
0
32.6
0
3,610
3,441
-14.9
3.0
2017E
117,773
2.2
8,951
7.6
1,064
7,887
2,178
688
6,398
0
6,398
2,111
0
33.0
0
4,287
4,287
24.6
3.6
(INR Million)
2018E
131,340
11.5
10,770
8.2
1,107
9,663
1,579
723
8,807
0
8,807
2,906
0
33.0
0
5,901
5,901
37.7
4.5
Consolidated - Balance Sheet
Y/E Mar (INR m)
Equity Share Capital
Preference Capital
Total Reserves
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Deferred Tax assets
Misc Expenditure
Appl. of Funds
2012
283
0
23,721
24,003
158
1,104
29,434
54,699
16,193
6,704
9,489
3,470
5,267
1,495
59,930
19,218
9,579
9,847
21,286
25,381
21,163
2,716
1,502
34,549
429
0
54,699
2013
283
0
21,683
21,966
1,063
2,326
29,458
54,812
21,269
7,397
13,872
4,691
4,201
1,599
59,758
14,775
18,201
5,346
21,436
29,757
24,014
3,751
1,992
30,001
449
0
54,812
2014
283
0
22,526
22,810
254
2,358
18,429
43,850
22,070
8,212
13,858
3,483
744
3,416
54,544
17,529
14,835
4,722
17,459
32,663
27,081
3,655
1,927
21,881
468
0
43,850
2015
291
0
21,729
22,020
0
2,204
22,878
47,102
22,981
9,189
13,793
3
465
3,522
65,834
22,592
14,464
3,176
25,602
36,843
30,880
4,736
1,228
28,991
328
0
47,102
2016
291
0
23,958
24,249
0
1,711
22,228
48,188
24,233
10,254
13,980
3
0
3,890
71,055
23,521
18,093
2,030
27,411
40,739
34,691
4,001
2,047
30,316
0
0
48,188
(INR Million)
2017E
291
0
26,147
26,438
0
1,711
17,728
45,877
25,233
11,317
13,916
3
0
3,890
66,979
22,922
17,379
4,736
21,941
38,910
32,267
4,282
2,361
28,069
0
0
45,877
2018E
291
0
29,601
29,892
0
1,711
13,228
44,831
26,233
12,424
13,809
3
0
3,890
70,048
24,832
19,380
4,245
21,590
42,919
35,380
4,775
2,764
27,129
0
0
44,831
15 November 2016
7

Coromandel International
Financials and Valuations
Ratios
Y/E Mar
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Working Capital Turnover (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Debt/Equity
2012
23.5
25.6
84.9
7.0
36.0
2013
15.3
17.8
77.6
4.5
34.7
2014
12.9
16.3
80.6
4.5
42.0
18.4
14.6
3.0
0.8
10.3
1.9
47.7
30.5
16.9
23.1
1.8
70.8
35
78
91
2.4
8
1.2
2012
9,111
597
728
-2,760
-7,370
306
648
954
-2,361
-1,407
-3,668
-1,731
-7,760
37
10,618
-1,310
-2,296
0
7,048
242
9,605
9,847
18.8
11.4
13.3
1.6
59.7
72
97
100
2.0
3
1.3
2013
5,567
711
1,521
-1,207
2,546
9,139
702
9,841
-2,585
7,255
-2,282
-187
-5,054
26
-5,626
-2,014
-1,674
0
-9,288
-4,501
9,847
5,346
16.3
11.7
12.7
2.3
63.6
53
98
62
1.7
3
0.8
2014
5,171
961
1,858
-1,112
6,683
13,560
1,051
14,611
-1,114
13,497
-962
282
-1,794
-44
-9,238
-2,649
-1,511
0
-13,442
-624
5,346
4,722
2015
13.9
17.5
75.6
4.5
39.2
17.1
13.6
3.1
0.8
10.4
1.9
-0.2
18.0
12.7
13.6
2.4
72.9
46
100
83
1.8
4
1.0
2015
5,920
1,046
1,605
-1,425
-7,456
-310
1,173
863
-921
-59
-19
-827
-1,767
33
3,693
-2,159
-2,208
0
-642
-1,546
4,722
3,176
2016
11.8
15.5
83.2
4.0
38.7
20.1
15.4
2.9
0.8
11.6
1.7
10.2
14.9
10.8
10.9
2.4
74.5
56
110
90
1.7
3
0.9
2016
5,104
1,065
1,548
-1,744
-2,471
3,502
250
3,752
-787
2,965
368
656
237
0
-650
-2,204
-1,398
-883
-5,135
-1,146
3,176
2,030
2017E
14.7
18.4
90.8
6.0
48.9
16.2
13.0
2.6
0.7
9.2
2.5
37.1
16.9
12.7
13.3
2.6
71.0
53
100
72
1.7
4
0.7
2017E
6,398
1,064
1,489
-2,111
4,954
11,793
0
11,793
-1,000
10,793
0
688
-312
0
-4,500
-2,178
-2,097
0
-8,775
2,707
2,030
4,736
2018E
20.3
24.1
102.6
7.0
41.5
11.7
9.9
2.3
0.6
7.3
2.9
25.1
21.0
15.9
17.5
2.9
69.0
53
98
64
1.6
6
0.4
2018E
8,807
1,107
856
-2,906
448
8,311
0
8,311
-1,000
7,311
0
723
-277
0
-4,500
-1,579
-2,447
0
-8,526
-491
4,736
4,245
Consolidated - Cash Flow Statement
Y/E Mar (INR m)
NP/(Loss) Before Tax and EO Items
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(inc)/dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
(INR Million)
15 November 2016
8

Coromandel International
Corporate profile
Company description
Exhibit 1: Sensex rebased
Coromandel International (CRIN) is the flagship
company of the Murugappa Group and is a
subsidiary of EID Parry (India) Limited (EIDP), which
holds 62.56% of its equity. CRIN has multi-locational
production facilities, and manufactures and markets
a wide range of phosphatic fertilizers, crop
protection products, specialty nutrients like sulphur
pastelles, water-soluble fertilizers, micronutrients,
and organic fertilizers. It exports its crop protection
products to countries across the globe. CRIN also
provides agricultural inputs/solutions and offers
lifestyle products through its rural retail centers,
branded
Mana Gromor Centers.
Fertilizer business
contributed 80% of revenue and 64% of EBITDA in
FY14, while the plant protection business
contributed 20% of revenue and 36% of EBITDA.
Exhibit 2: Shareholding pattern (%)
Sep-16
Promoter
DII
FII
Others
62.0
5.6
4.5
27.9
Jun-16
62.1
6.9
4.8
26.2
Sep-15
62.1
7.7
5.5
24.8
Source: Capitaline
Source: MOSL/Bloomberg
Exhibit 3: Top holders
Holder Name
ICICI Prudential Life Insurance Company Ltd
Groupe Chimique Tunisien
Franklin Templeton Mutual
Franklin Indiaprima Fund
Fund
A/C
% Holding
5.0
1.7
1.1
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
A Vellayan
V Ravichandran
Sameer Goel
P Varadarajan
Designation
Chairman
Vice Chairman
Managing Director
Company Secretary
Exhibit 5: Directors
Name
A Vellayan
V Ravichandran
Sameer Goel
M M Venkatachalam
Name
B V R Mohan Reddy*
Prasad Chandran*
Ranjana Kumar*
Sumit Bose*
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Deloitte Haskins & Sells
V Kalyanaraman
Jyothi Satish
Type
Statutory
Cost Auditor
Cost Auditor
Source: Capitaline
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
14.7
20.3
Consensus
forecast
15.4
19.1
Variation (%)
-4.6
6.1
Source: Bloomberg
15 November 2016
9

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