Divestment will open doors to better future for Air India

Aug 6, 2017 0

By Rohit Vaid

New Delhi–Air India’s global expansion plans, along with the induction of more aircraft and pilots, would not be hindered by the government’s recent decision to divest its stake in the national carrier, the airline’s top official has said.

The “painful decision” of divestment would “open doors to a better future for the airline and its employees”, Ashwani Lohani, Chairman and Managing Director of Air India, told IANS in an interview here.

Lohani said he had been in “constant touch” with employees to allay their apprehensions over the divestment process.

“I have been in touch with employees through WhatsApp, e-mail, and by having one-on-one interactions. I have asked them — why should we slacken from our end? We should continue to do our best,” he said.

“As and when a decision is taken on the divestment we will make sure that employees’ genuine interests are put forth to the government,” Lohani added.

Elaborating on the company’s international and national expansion plans at its New Delhi-based HQ — Airlines House — Lohani said: “Our expansion plans are on track. We will start a new destination each month till October. A new route to Stockholm will be started in August, followed, a month later, to Copenhagen. In October, we will start our New Delhi-Los Angeles flight operations.”

“We also plan to start operations to Tel Aviv in Israel and Dallas and Houston in the US. Last year, we started operations to four new destinations and this fiscal we plan to introduce seven new flights,” Lohani said.

On Friday, the airline commenced flight operations from pilgrimage destination Varanasi to Colombo, Sri Lanka. In July, it had started a direct connection between New Delhi and Washington.

Last year, the airline added four new international destinations, including New Delhi-San Francisco, Delhi-Vienna, Delhi-Madrid and Ahmedabad-London.

According to Lohani, the airline might consider starting a flight to Nairobi, Kenya. Also on the cards are commercial operations on the Guwahati-Bangkok and Guwahati-Kunming (China) routes.

At present, Air India has a network of more than 30 destinations across the US, Europe, Australia, Far-East and South-East Asia, and the Gulf regions. It gets over 65 per cent of its revenue from overseas operations and has deployed most of its assets on foreign routes.

In addition to its international expansion plans, the airline hopes to introduce what is being touted as the “Necklace” or “Garland” flight on the domestic network from September-October.

The flight will start from Kolkata in the morning to Raipur from where it will head out to Indore and then on to Ahmedabad and Jaipur. Its final port of call will be New Delhi in the evening.

When asked about the extra aircraft and crew required for the current expansion drive, Lohani said: “We have already hired around 250 pilots and more are being inducted. The same is the case with inducting cabin crew. Aircraft acquisition on lease basis is also going according to plan.”

The airline hopes to add around 15 more aircraft to its fleet via the lease model by this fiscal-end. Most of these aircraft will be turbo-prop planes which will be used to connect the hinterland with metropolitan cities.

Currently, the airline has more than 115 aircraft in its fleet — a mix of wide-body Boeing B777s, B747s, B787 Dreamliner aircraft, and the narrow body Airbus A321s, A320s and A319 planes, apart from turbo-props.

The AI chief said that cost-saving measures undertaken, along with aggressive focus on international markets and route rationalisation efforts, are expected to raise the operating profit of the airline to around Rs 150 crore from Rs 110 crore in 2015-16.

“These figures might be inconsequential, but the significance they hold is the fact that a turnaround is taking place,” the airline’s chief said.

The airline might be experiencing a “slow-but-sure” turnaround; however its massive debt of over Rs 50,000 crore accumulated over the years has been one of the biggest obstacles to its financial viability, besides an ill-planned merger.

Lohani said: “We would have been in a much, much better position, if the debt situation was not so. The situation would have been different.”

Lohani maintained that employees remain the most important element for success. Outside his office, which is studded with priceless pieces of art that have been collected by the airline over years, a slew of employees from cabin crew to pilots await their turn to meet him.

The airline has over 11,000 employees, whereas at the group level, including its subsidiaries, the number of staffers goes up to about 20,000. (IANS)

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Manufacturing slowdown not linked to GST: NITI Aayog’s Bibek Debroy

Aug 6, 2017 0

New Delhi– It’s not reasonable to link GST with the slowdown in the manufacturing output as the sector is facing problems which go beyond the tax reform, says NITI Aayog Member Bibek Debroy.

“Why should GST have any impact on manufacturing? The only answer I can think of is that there were some things where there was a lack of clarity in rules and some instances where it was not clear what the GST rate was,” Debroy told IANS in an interview.

“These are very transitory things which we don’t need to worry about because it is a blip that will go away once the transition is complete,” he maintained.

“I don’t think the problem with manufacturing is these transitory things.”

The Nikkei India Manufacturing Purchasing Managers’ Index (PMI), which is a composite indicator of manufacturing performance, on Tuesday showed that India’s manufacturing sector’s output declined last month due to the launch of the Goods and Services Tax (GST) on July 1.

It stood at 47.9 in July — its lowest since February 2009 — compared to 50.9 in June 2017.

An index reading of above 50 indicates an overall increase in economic activity — and below 50, an overall decrease.

Asked whether some serious problems were ailing the manufacturing sector, Debroy said: “I agree. That, I am not disputing.”

“About manufacturing, there is a long list of problems that are ailing the sector like physical infrastructure, including power and transport, procedures, tax issues — direct as well indirect — and credit-related issues,” he aded.

The NITI Aayog Member said that these problems were not new and had been ailing the sector for a long time.

He said the current government had taken several significant measures to improve the sector’s performance but it would take some time for them to bear results.

“None of them will solve things in six months. Most of what this government has done on manufacturing is what economists would call supply side measures. So it takes time. There is no instant fix,” Debroy explained.

According to the Central Statistics Office (CSO), India’s growth saw a slowdown in 2016-17, especially in the last quarter when the GDP growth was estimated to be 6.1 per cent, a dip attributed to the demonetisation exercise and a manufacturing slowdown.

Debroy dismissed the link and said: “Just because three things happen at the same time doesn’t mean that they are linked with each other.”

“GDP is determined by so many different things. To ascribe it to GST or demonetisation is completely unrealistic,” he said, adding that now we don’t have GDP but GVA (Gross Value Added).

Indirect taxes are added while subsidies are subtracted from GVA to arrive at the GDP figure.

Debroy said the CSO estimation is essentially based on the organised sector on the basis of which it does an estimate — “which is more like guesswork” — for the unorganised sector.

“This is fine if whatever trend is happening in the organised sector is similar to the trend that is happening in the unorganised sector. But if the trends are different, then it is a terrible mistake.

Debroy said that historically, the unorganised sector has grown in tandem with the organised sector, particularly during the high-growth years.

“So the question to which I don’t think anyone has a satisfactory answer is — has that link has broken down?

“So if demonetisation has hurt the unorganised sector more, then I have a problem with the CSO numbers. And if it has hurt the organised sector more, then I have a problem with the GVA numbers,” he said.

The noted economist said the second “serious issue” which he feels uncomfortable about is the deflator — a measure of the level of prices of all new, domestically produced, final goods and services in an economy.

Debroy explained that what we have is a nominal GVA figure on which a deflator is used to arrive at the real figure, which takes inflation into account.

“What is continuously reported is the real figure, which is a derived figure,” Debroy said.

According to the government data, while the real growth figures have shown a declining trend, the nominal GVA growth rate has increased from 8.7 per cent in first quarter of 2016-17 to 11.3 per cent in the fourth quarter.

The reason has been the GVA deflator which increased to 5.4 per cent in the fourth quarter of 2016-17 compared to 1.6 per cent the previous year.

“Therefore, while I am confident about 11.5 (nominal figure), I am uncomfortable about the real one,” Debroy said. (IANS)

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Free wifi services launched at 74 UP bus stations

Aug 3, 2017 0

Lucknow– Uttar Pradesh Chief Minister Yogi Adityanath on Thursday launched free wi-fi services at 74 bus stations, spread across 66 district headquarters in the state.

He also laid the foundation stone for three new bus stations at Amroha, Meerut and Ghaziabad.

Besides, water ATMs to provide clean and cold drinking water to passengers at Agra, Mathura, Ghaziabad, Moradabad, Varanasi, Allahabad, Hardoi, Etawah, Rampur and Azamgarh bus stations were also launched.

Interestingly, of the water ATMs inaugurated by the Bharatiya Janata Party (BJP) government in the state, four are in Rampur, Etawah, Hardoi and Azamgarh — the pocketboroughs of the Samajwadi Party (SP).

The wi-fi services with unlimited surfing would be available for passengers through an app — TG Connect, officials said.

The Chief Minister also inaugurated automatic driving test tracks at Varanasi, Allahabad, Meerut and Ghaziabad.

Adityanath patted the back of the transport department and lauded them for fast-tracking development work in the past four months. (IANS)

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Subdued inflation prompts RBI to reduce key lending rates

Aug 2, 2017 0

Mumbai–Subdued inflation and demand prompted India’s central bank, the RBI, on Wednesday to reduce its key lending rate by 25 basis points (bps).

According to the Reserve Bank of India’s third bi-monthly monetary policy review of 2017-18, the repurchase rate, or the short-term lending rate for commercial banks on loans taken from it, stands lowered to 6 per cent from 6.25 per cent.

Subsequently, the reverse repurchase rate, or the short-term borrowing rate, has been adjusted to 5.75 per cent from 6 per cent.

The decision to maintain the repo rate was taken by the six-member Monetary Policy Committee (MPC) headed by Patel. Four members of the panel voted in favour of reducing the key lending rate.

The six members of MPC are equally divided amongst government nominees and the RBI.

At its last policy review in June, the RBI had kept the key lending rates unchanged but induced liquidity by reducing Statutory Liquidity Ratio (SLR).

The reduction in key lending rates comes after four consecutive policy reviews in which the apex bank had maintained status quo on its repo, or short-term lending rate, since RBI reduced it by 25 basis points to 6.25 per cent in October 2016.

“The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of plus, minus 2 per cent, while supporting growth,” the third bi-monthly monetary policy statement said.

“The MPC noted that some of the upside risks to inflation have either reduced or not
materialised… Consequently, some space has opened up for monetary policy accommodation, given the dynamics of the output gap. Accordingly, the MPC decided to reduce the policy repo rate by 25 basis points,” the statement said.

“Noting, however, that the trajectory of inflation in the baseline projection is expected to rise from current lows, the MPC decided to keep the policy stance neutral and to watch incoming data. The MPC remains focused on its commitment to keeping headline inflation close to four per cent on a durable basis.”

Other factors that led to the MPC in reducing the key lending rates were the “smooth implementation of the GST” and a healthy monsoon.

However, the equity markets which had already discounted a 25 bps cut were lacklustre just after the MPC’s decision was announced.

Around 2.30 p.m., the wider Nifty50 of the National Stock Exchange (NSE) fell by 21.90 points, or 0.22 per cent, to trade at 10,092.75 points.

The 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 32,641.58 points, traded at 32,515.81 points — down 59.36 points, or 0.18 per cent, from its previous close at 32,575.17 points. (IANS)

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India’s life insurance sector to grow 15-18 percent

Aug 1, 2017 0

Chennai–The Indian life insurance industry is expected to log a growth of 15 to 18 per cent this fiscal on an annual premium equivalent (APE), said a senior official at credit rating agency ICRA.

Presenting the performance of the life insurance sector at a webinar on Tuesday, Karthik Srinivasan, Senior Vice-President, ICRA, said that, on APE basis, the industry’s new business growth stood at 19 per cent last fiscal over the previous fiscal.

APE is the total premium after normalising the policy premiums into equivalent of regular annual premium. Life insurers also sell single premium policy and normally 10 per cent of that is taken to compute the APE.

Srinivasan said the industry is expected to log an APE growth of 15-18 per cent this fiscal.

Queried about the negative APE growth percentage, Srinivasan told IANS: “The 19 per cent APE growth last fiscal was sort of an aberration. In FY16, the APE growth was only 11 per cent. Hence on a conservative side, I have put the APE growth between 15-18 per cent.”

The paper analysed the performance of 11 life insurers (comprising LIC and ten companies from the private sector) collectively representing around 95 per cent of the industry-wide new business premium in FY2017.

He said despite the adoption of technology for various parts of policy issuance and servicing, the cost structure of life insurers has increased during the nine month period of last fiscal.

“This increase in expenses is partly on account of higher administration and employee related expenses, as the industry looks to build for a scale-up,” Srinivasan said.

He said the solvency levels for the life insurance companies look adequate with the median solvency levels for the ten private layers analysed at 2.3 times as on December 2016 as against a regulatory minimum of 1.5 times.

Srinivasan said the solvency levels would decline over a period of time as life insurers scale up the mix of traditional products.

He said the companies can grow their business without raising external equity capital over the near to medium term.

“They also have the flexibility to raise Tier II bonds to bolster the regulatory solvency levels. However, higher capital raise at the industry levels would help the industry raise more risk capital and aid in greater insurance penetration,” he said. (IANS)

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Price reduction, good monsoon drives auto sales up in July

Aug 1, 2017 0

New Delhi/Chennai–The price reduction in automobiles following the successful roll out of Goods and Services Tax (GST) and the good monsoon spurred vehicle sales last month, said industry officials on Tuesday.

“The benefit of a good monsoon, the successful rollout of GST and a good run up to the festive season, starting from August, give us confidence of continuing a robust growth in Q2,” said Rajan Wadhera, President, Automotive Sector, Mahindra & Mahindra (M&M).

Passenger car major Maruti Suzuki India reported a rise of 20.6 per cent in its monthly sales for July 2017, selling 165,346 units in July from 137,116 units sold during the corresponding month of 2016.

Maruti’s domestic sales edged higher by 22.4 per cent to 154,001 units from 125,778 units.

However, exports inched-up by 0.1 per cent with only 11,345 units shipped out during July 2017, down from 11,338 units sold abroad in the like period of 2016.

The second largest car maker in the country Hyundai Motor India said its domestic sales in the month increased to 43,007 units from 41,201 units in July 2016.

Further, the company reported a month-on-month sales growth of 14.5 per cent due to healthy demand for its automobile models like Grand i10, Elite i20 and Creta.

Rakesh Srivastava, Director – Sales and Marketing, Hyundai Motor India, said: “Hyundai with a growth of 14.5 per cent month on month and 4.4 per cent year on year continued its growth momentum…”

Similarly Tata Motors Ltd reported seven per cent rise in its total sales.

According to the company, the total sales of its passenger and commercial vehicle increased to 46,216 units from 43,160 vehicles sold in July 2016.

Tata Motors’ domestic sales of Tata commercial and passenger vehicles for July 2017 were higher by 13 per cent at 42,775 units from 37,789 units sold during the corresponding month of last year.

“The overall commercial vehicles sales in July 2017, in the domestic market were at 27,842 numbers, higher by 15 per cent over July 2016, due to ramp-up of BS4 production, across segments,” the company said in a statement.

“The company also passed on the benefits of GST to consumers by reducing the prices of its vehicles across all commercial vehicle segments.”

The company exported 3,441 units in July 2017, “a decline of 6 per cent, compared to 5,371 vehicles sold in July 2016, due to drop in volumes in Sri Lanka and Nepal,” the statement added.

The other commercial vehicles major Ashok Leyland Ltd sold 11,981 units last month — up from 10,492 units sold in July 2016.

On its part, SUV major M&M logged six per cent sales growth last month at 41,747 units up from 39,458 units sold during July 2016.

The company’s domestic sales were higher by 13 per cent to 39,762 vehicles during last month from 35,305 units sold during July 2016.

“We have registered a growth of 21 per cent in the passenger vehicle segment and a growth of 13 per cent in overall domestic vehicle sales,” Wadhera said.

Similarly Ford India sold 26,075 vehicles up from 17,742 units sold in the corresponding month last year.

“Despite the administrative challenges associated with the introduction of GST, Ford has continued to grow faster than the industry,” Anurag Mehrotra, President and Managing Director, Ford India, was quoted as saying in a statement.

Two and three wheeler makers too logged good growth last month with Honda Motorcycle & Scooter India growing its sales by 20 per cent to 544,508 units.

On its part, Hero MotoCorp reported a sales of 623,269 units last month up from 532,113 units sold in July 2016.

Two- and three-wheeler maker TVS Motor Company said it sold 271,171 units (two-wheelers 263,336 units, three-wheelers 7,835 units) last month — up from 248,002 units (two-wheelers 240,042, three-wheelers 7,960 units) sold in July 2016. (IANS)

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Artha Tatwa Group chief, two others get jail in Odisha scam

Jul 31, 2017 0

Bhubaneswar–A court here on Monday sentenced Artha Tatwa Group chief Pradip Sethy and two company directors to seven-year imprisonment for their involvement in the chit fund scam in Odisha.

The Bhubaneswar Chief Judicial Magistrate convicted Sethy, Srikrushna Padhee, and Manoj Patanik in a case registered at the Kharvel Nagar police station here.

Informed sources said the company had duped thousands of depositors of over Rs 500 crore.

Earlier, a Special CBI court had sentenced Sethy to seven years of imprisonment.

The group, registered under the Companies Act and Multi-State Cooperative Societies Act, collected money from small investors in Odisha with a promise of high returns ranging from 15 to 20 per cent.

Along with Sethy, 20 company employees were also arrested for their involvement in the chit fund scam.

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Snapdeal terminates discussions to sell out to Flipkart

Jul 31, 2017 0

Bengaluru– Leading e-tailer Snapdeal on Monday said it was terminating strategic discussions to sell its stake, ostensibly to rival Flipkart, as it had decided to pursue an independent path.

“As we have been exploring strategic options over the months, we have decided to pursue an independent path and terminate all strategic discussions, said a Snapdeal spokesperson in a statement, without referring to Flipkart.

A company official, who did not want to be identified, however told IANS that the formal negotiations scheduled here between the two e-tailers on Monday here were called off at a short notice.

Though Flipkart declined to confirm that its meeting with Snapdeal was cancelled, the latter’s official admitted that their representatives could not meet to take the abandoned ‘deal’ forward.

“We have a compelling direction (Snapdeal 2.0) to create life-changing experiences for millions of buyers and sellers across the country,” said the statement.

After Flipkart offered to buy out the Gurgaon-based Snapdeal at its revised $900-950 million price, the latter’s board decided to seek the consent of its investors, including Ratan Tata and Premjiinvst of Wipro czar Azim Premji for exiting the e-tail business.

Other strategic and institutional investors in Snapdeal are Ontario Teachers’ Pension Plan, Foxconn, Temasek and BlackRock.

“With the sale of certain non-core assets, we expect to be financially self-sustainable. We look forward to the support of our community, including employees, sellers, buyers and other stakeholders in helping us create a designed-for-India commerce platform,” added the spokesperson.

Snapdeal has seen its fortunes dwindling in the face of stiff competition from Amazon and Flipkart.

Later, in an e-mail to his 1,200 odd employees, Snapdeal co-founder and Chief Executive Kunal Bahl said a lot of time and effort went into the process, leading to speculation and uncertainty for the team, partners and investors.

“We will continue the journey as an independent company. The opportunity of e-commerce in India is immense and the surface of the $200-billion market has barely been scratched yet,” he said.

Affirming that the company had all the ingredients of success, the CEO said it was time for all to focus on the business and leverage its strength to build the best marketplace to connect buyers to sellers across the country.

On calling off talks with Flipkart, Bahl said the deal was complex to execute as reported by the media.

“First of all, there isn’t going to be one successful model for e-commerce in India. In every market, there are multiple successful e-commerce businesses, and as long as one’s strategy is differentia ted and has a clear path to success, there is a great company that can be built,” he noted.

Elaborating on Snapdeal 2.0 (version), he said the new direction would enable anyone to setup a store online and focus on providing a wide range of products at great prices to consumers.

“We made progress on this new path over the months and are profitab le to make upwards of Rs 150 crore in gross profit in the next 12 months,” he claimed.

Following streamlining of costs and sale of some assets like FreeCharge, Bahl said the company was financially self-sufficient and did not need to raise additional capital to reach profitability.

“Needless to say, we need to keep a tight control on our costs and work towards becoming an efficient culture, delivering profitable growth, month on month,” averred Bahl.

Snapdeal on July 27 sold its mobile wallet FreeCharge subsidiary to the Mumbai-based Axis Bank for Rs 385 crore.

With many team members reiterating that the company should continue in its independent capacity, Bahl said the decision was made and there was no ambiguity about it. (IANS)

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India’s industrial output slows down in June

Jul 31, 2017 0

New Delhi– Production in India’s eight major industries slowed down during June, as the total output rose only by 0.4 per cent as against an increase of 4.1 per cent in May 2017, official data showed on Monday.

The Eight Core Industries (ECI) data, which represents the output of major industrial sectors like coal, steel, cement and electricity, grew by seven per cent in the corresponding month of 2016.

“The combined index of ECI stands at 121 in June 2017, which was 0.4 per cent higher compared to the index of June 2016,” the Ministry of Commerce and Industry said in the summary report for the index of ECI.

“Its cumulative growth during April to June, 2017-18, was 2.4 per cent.”

The ECI index comprises 40.27 per cent weightage of the Index of Industrial Production (IIP).

On a sector-specific basis, refinery production, which has the highest weightage of 28.03 per cent, slipped by 0.2 per cent in June 2017 as compared with the corresponding month of last year.

However, electricity generation, which has the second highest weightage of 19.85 per, rose by 0.7 per cent last month.

Steel production, the third most important component with weightage of 17.92 per cent, increased by 5.8 per cent during the month under review. Conversely, coal mining, with a 10.33 per cent weightage, decreased by 6.7 per cent in June 2017.

Extraction of crude oil, which has an 8.98 per cent weightage, inched up by 0.6 per cent during the month under consideration.

On the other hand, the sub-index for natural gas output, with a weightage of 6.88 per cent stood higher by 6.4 per cent.

Besides, cement production, which has the weightage of 5.37 per cent, decreased by 5.8 per cent in June 2017.

In contrast, fertiliser manufacturing, which has the least weightage of only 2.63 per cent, decreased by 3.6 per cent. (IANS)

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SBI cuts savings deposit rate by 50 basis points to 3.5 percent

Jul 31, 2017 0

Mumbai– The State Bank of India (SBI) on Monday announced a 50 basis points (bps) cut in the interest rates for savings accounts having deposits below Rs 1 crore, effective immediately.

The revised interest rate for savings accounts having up to Rs 1 crore deposit now stands at 3.5 per cent while those having above Rs 1 crore balance in their savings accounts will continue to enjoy the 4 per cent interest rate.

“The bank is introducing a two-tier saving bank interest rate with effect from July 31, 2017. While balance above Rs 1 crore will continue to earn interest at 4 per cent per annum, interest at 3.5 per cent per annum shall be offered on balances of Rs 1 crore and below,” the largest public lender said in a BSE filing.

“The decline in the rate of inflation and high real interest rates are the primary considerations warranting a revision in the rate of interest on savings bank deposits,” SBI said.

SBI Managing Director Rajnish Kumar said that 90 per cent of the total savings accounts held by the bank have balance below Rs 1 crore.

He said the cut in interest rates was not likely to affect the number of savings accounts with the bank or its current and savings account (CASA) ratio.

“It is the convenience, safety, trust which is still in the bank’s favour. We are not anticipating any major impact on the CASA ratio or saving accounts,” he said.

SBI had maintained the 3.5 per cent interest rates for its savings accounts from 2003-11. In 2011, it was increased to 4 per cent for all saving deposit accounts.

Kumar said the rate cut had nothing to do with the impending Reserve Bank of India (RBI) monetary policy on August 2.

Further, the bank had cut the marginal cost based lending rates (MCLR) by 90 bps effective from January 1, on the strength of large inflows in savings and current accounts during the demonetisation period in the month of November and December 2016.

“There has been a significant outflow of CASA deposits since then. The revision in saving bank rate would enable the bank to maintain the MCLR at the existing rates, benefiting a large segment of retail borrowers in Small and Medium enterprise (SME), agriculture and affordable housing segments,” it said. (IANS)

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