THE PARK­ING FEE DE­BATE

While mall op­er­a­tors ar­gue that park­ing fa­cil­i­ties in­cur op­er­at­ing and main­te­nance ex­penses and they can­not pro­vide park­ing free-of-cost, this is not the Ćrst time that the is­sue Ćnds it­self un­der le­gal and civil scru­tiny in In­dia.

Shopping Center News - - CONTENTS - By Namita Bha­gat

Should malls and shop­ping cen­tres in In­dia im­pose park­ing fees at all? A high­light of the ma­jor as­pects of the de­bate

Are­cent Hy­der­abad High Court judg­ment, stat­ing that com­mer­cial es­tab­lish­ments can­not col­lect park­ing fees from vis­i­tors since they are con­sid­ered ‘pub­lic places’, has once again brought the mall park­ing charges de­bate into the lime­light. The gen­eral law gov­ern­ing the de­vel­op­ment of the malls does not pro­hibit malls from col­lect­ing a park­ing fee and hence, even as con­sumers re­joice, mall own­ers are not happy. While mall op­er­a­tors ar­gue that park­ing fa­cil­i­ties in­cur op­er­at­ing and main­te­nance ex­penses and they can­not pro­vide park­ing free-of-cost, this is not the first time that the is­sue finds it­self un­der le­gal and civil scru­tiny in In­dia.

Shop­ping cen­tres, es­pe­cially those which house mul­ti­plexes and dou­ble up as fam­ily en­ter­tain­ment cen­tres– are vis­ited by hordes of peo­ple ev­ery day. These com­plexes need to have plen­ti­ful park­ing space for ve­hic­u­lar traf­fic, and there­fore, an ef­fi­cient park­ing sys­tem is not only war­ranted but even de­sir­able. For malls, pro­vid­ing a load of fa­cil­i­ties even in the park­ing ar­eas, a nom­i­nal fee from car own­ers makes sense. How­ever, in In­dia park­ing charges are of­ten de­cided ar­bi­trar­ily by the mall man­age­ment.

Rates can be flat or on an hourly ba­sis and are usu­ally dif­fer­ent for two wheel­ers and four wheel­ers. While there are some malls which pro­vide park­ing free-of-cost, and others which waive off park­ing fees ac­cord­ing to the amount a con­sumer has spent in the mall, there are many which charge flat rates through­out the week. A lot of malls in­flate park­ing rates over the week­end, which sees more in­com­ing traf­fic.

Much Ado Over Park­ing

Amidst the in­con­sis­ten­cies of park­ing fee prac­tices, it has long been de­bated in In­dia whether com­mer­cial es­tab­lish­ments should levy park­ing charges at all. Is it jus­ti­fied or even le­gal? There are at times com­plaints of over­charg­ing.

There are mul­ti­ple sides to the park­ing de­bate be­sides le­gal and reg­u­la­tory as­pects– the mall man­age­ment side, the ten­ant stand­point, park­ing man­age­ment com­pa­nies’ view­points and fi­nally the con­sumer’s cry. CON­SUMER PER­CEP­TION: Mall-go­ers can in most cases, af­ford to shell out the ex­tra cash for park­ing fee. Also, know­ing that their ve­hi­cle is se­cure, they can shop in peace, and en­joy their visit, while not be­ing in a rush to get back to their car. The cus­tomer who is vis­it­ing a mall for a short time, say just to ex­change a prod­uct, will ap­pre­ci­ate at least a first-hour fee waiver.

MALL PER­SPEC­TIVE: Low mall traf­fic is ev­ery mall man­ager’s worst night­mare. Among var­i­ous strate­gies, free park­ing is one in­cen­tive that can help in­crease cus­tomer foot traf­fic. Then why would a mall opt for pay park­ing sys­tem? The ra­tio­nale be­hind the move could be: a) pay park­ing at malls is a

wide­spread prac­tice b) to re­cover the cost of

con­struc­tion c) to cover park­ing op­er­a­tion,

main­te­nance and se­cu­rity costs d) to gen­er­atea sup­ple­men­tary

rev­enue stream

TEN­ANT VIEW­POINT: More cus­tomers mean more busi­ness and higher prof­its for tenants (which in­clude stores, mul­ti­plexes, and restau­rants) housed within the mall com­plex. If free park­ing can woo more cus­tomers, tenants would only wel­come the idea. They, how­ever, may also ac­knowl­edge that paid park­ing serves as a gate­keeper to let in gen­uine vis­i­tors and se­ri­ous cus­tomers, which is in turn good for busi­ness. PARK­ING MAN­AGE­MENT COM­PA­NIES’ STAND­POINT:

Since, it is im­per­a­tive to lure con­sumers with the best of fa­cil­i­ties – in­clud­ing park­ing – malls need to hire ex­cep­tional com­pa­nies like Ski­data for park­ing man­age­ment so­lu­tions. Ski­data pro­vides malls with a high level of re­li­a­bil­ity, in­tel­li­gent re­mote man­age­ment, pro-ac­tive ser­vice man­age­ment and busi­ness in­tel­li­gence via cen­tralised data man­age­ment, but all these ser­vices cost­money, and hence malls feel jus­ti­fied in charg­ing a nom­i­nal park­ing fee from the con­sumer in re­turn.

REG­U­LA­TORY AS­PECT: In In­dia, pub­lic park­ing falls un­der the am­bit of the Mu­nic­i­pal Cor­po­ra­tion, which reg­u­lates the sys­tem within its ju­ris­dic­tion. The Mu­nic­i­pal Cor­po­ra­tion usu­ally li­censes pri­vate con­trac­tors to op­er­ate pay park­ing lots in lieu of pre­scribed amount to be de­posited with the civic author­ity. Mall and shop­ping cen­tre park­ing is a pri­vate space be­long­ing to its owner. There is no uni­form na­tional law to reg­u­late the ve­hi­cle park­ing fees im­posed in pri­vate build­ings as of now.

Mall Ra­tio­nale & Ex­po­si­tion

In ab­sence of any spe­cific law, most shop­ping malls and com­mer­cial es­tab­lish­ments in In­dia prac­tice ‘pay to park’ pol­icy. It’s mall man­age­ment dis­cre­tion whether the park­ing is free or not. While con­sumers some­times rue the fact that they have to pay ex­or­bi­tant park­ing fees when they visit a mall – even for a very short time – and root for free park­ing, malls ar­gue that park­ing fa­cil­i­ties in­cur op­er­at­ing and main­te­nance ex­penses and they can­not pro­vide park­ing fa­cil­i­ties free-of-cost.

Elu­ci­dat­ing the mall per­spec­tive, Pushpa Bec­tor, Ex­ec­u­tive Vice Pres­i­dent and Head – DLF Pre­mium Malls, states, “We un­der­stand the cus­tomer’s view­point on free park­ing, how­ever, from a busi­ness stand­point, we have a very strong ra­tio­nal stand to it. Main­te­nance of a park­ing lot is an ex­pen­sive af­fair due to the op­er­a­tional cost as­so­ci­ated with it. It in­volves en­gage­ment of con­sid­er­able man­power, tech­nol­ogy and clean­li­ness mea­sures, etc, to en­sure safety and seam­less func­tion­ing of the en­tire space. There­fore, there is a need of cer­tain mone­tary sup­port from the cus­tomers to en­sure a has­sle-free ex­pe­ri­ence.”

DLF Pre­mium Malls com­prises of five prop­er­ties across Delhi NCR and Chandigarh namely, DLF Mall

Main­te­nance of a park­ing lot is an ex­pen­sive af­fair due to the op­er­a­tional cost as­so­ci­ated with it. It in­volves en­gage­ment of con­sid­er­able man­power, tech­nol­ogy and clean­li­ness mea­sures, etc to en­sure safety and seam­less func­tion­ing of the en­tire space.

– Pushpa Bec­tor, Ex­ec­u­tive Vice Pres­i­dent and Head – DLF Pre­mium Malls

of In­dia, In­dia’s first and largest des­ti­na­tion mall, DLF Prom­e­nade, DLF Place, DLF Cy­ber­Hub, In­dia’s first in­te­grated F&B and En­ter­tain­ment des­ti­na­tion and DLF Ci­tyCen­tre, Chandigarh and new up­com­ing projects.

“Mall park­ing fee prac­tices dif­fer from state to state and from mall to mall. Some mall charge park­ing fee be­cause it was a part of their busi­ness plan. While some malls may need to re­duce it to make it vi­able, there are some who re­im­burse their cus­tomers. In our case, we were per­mit­ted by the DDA to charge park­ing – it was a part of the auc­tion terms that the park­ing has to be built and the de­vel­oper can charge park­ing,”says Yo­gesh­war Sharma, CEO & Ex­ec­u­tive Di­rec­tor, Se­lect Ci­tyWalk.

Lo­cated in the Saket Dis­trict Cen­tre, in Saket, New Delhi, Se­lect Ci­tyWalk is one of the coun­try’s lead­ing shop­ping cen­tres. It is a 1.3 mil­lion sq. ft vi­brant and up­scale des­ti­na­tion shop­ping cen­tre and is a part of an over­all com­plex of 54 acres that com­prises of three floors of of­fice space; In­dia’s first six screen two Gold Class and four Premier Class PVR Cine­mas, and nearly one lakh square feet of ser­viced apart­ments. Run­ning such a huge mall with mil­lions in foot­falls re­quires an in­tel­li­gent and so­phis­ti­cated park­ing sys­tem, which costs money to in­stall and op­er­ate.

Sharma re­counts an in­stance when the Mu­nic­i­pal Cor­po­ra­tion

Mall park­ing is cov­ered, weath­er­proof, and there are ex­penses of light­ing and se­cu­rity. Es­pe­cially, the costs in­volved to se­cure and en­sure the park­ing premises are huge. Plus, we also pro­vide free wash­room fa­cil­i­ties – Yo­gesh­war Sharma, CEO and Ex­ec­u­tive Di­rec­tor, Se­lect Ci­tyWalk

of Delhi (MCD) had stated that the malls should charge the same fee as levied by MCD park­ing lots. How­ever, he says par­al­lels can­not be drawn be­tween the two. “Mall park­ing is cov­ered, is weath­er­proof, and there are ex­penses of light­ing and se­cu­rity. Es­pe­cially, the costs in­volved to se­cure and en­sure the park­ing premises are huge. Plus, we also pro­vide free wash­room fa­cil­i­ties,” says Sharma.

The fact that there is con­sid­er­able cost in­volved in run­ning the en­tire gamut of mall park­ing, the “pay for park­ing” ra­tio­nale does not seem un­mer­ited af­ter all. Gain­ing in­sight into the park­ing op­er­a­tions and costs may also help shed more light on the mat­ter. Nitty-Grit­ties of Mall Park­ing Op­er­at­ing Costs More of­ten than not, malls en­ter into a con­tract with ex­ter­nal park­ing man­age­ment com­pa­nies to op­er­ate and ad­min­is­ter the park­ing lots at their premises. The likes of Se­cure Park­ing, Om­nitec Park­ing, CPS Park­ing, etc, are some of the lead­ing park­ing tech­nol­ogy and man­age­ment com­pa­nies present in In­dia and their clien­tele in­clude­sev­eral well­known malls across the coun­try.

Se­cure Park­ing is a 40 year old, Sydney-based multi­na­tional cor­po­ra­tion with op­er­a­tions in New Zealand, In­done­sia, Sin­ga­pore, Malaysia, China, Cam­bo­dia, UAE, Le­banon, USA and UK. It has been in In­dia for 10 years, with of­fices in Mum­bai, Delhi NCR and Ben­galuru.

Arvind Ma­yar, CEO of Se­cure Park­ing So­lu­tions (P) Ltd, says, “Se­cure Park­ing pro­vides com­plete park­ing so­lu­tions (a one-stop-shop) for traf­fic and park­ing man­age­ment. This cov­ers con­sult­ing ser­vices and traf­fic stud­ies in­clud­ing for Green­field projects; IT-based and soft­ware so­lu­tions with equip­ment for man­ag­ing car parks; and man­ag­ing car parks with our own trained man­power team that con­sists of man­agers, su­per­vi­sors, cashiers, war­dens and valet drivers.”

In ad­di­tion to malls, the com­pany also op­er­ates car parks at of­fices, com­mer­cial com­plexes, ho­tels, ex­hi­bi­tion cen­tres, hos­pi­tals, for mu­nic­i­pal cor­po­ra­tions, metro sta­tions etc. It man­ages the car park at most of the ma­jor malls across the coun­try. They in­clude the Phoenix group malls, DLF, Nexus (Black­stone), Inor­bit malls, Brigade, Vir­tu­ous Re­tail, Lulu, Mantri, In­finiti, Pa­cific, Tril­lium, Bharti, Lido, 1MG, Oberoi and many more. There are over 100 car parks un­der our op­er­a­tion, across 25 towns, Ma­yar shares.

Ben­galuru-based Cen­tral Park­ing Ser­vices (CPS) is touted as the largest park­ing man­age­ment com­pany in In­dia.

R&D is work­ing to in­tro­duce it in In­dia where the main chal­lenge is non­uni­form li­cense num­ber plates. There are also many changes in the ofĆng to shift to dig­i­tal pay­ments. Cur­rently, cash is 95 per­cent of the col­lec­tion. – Arvind Ma­yar, CEO, Se­cure Park­ing So­lu­tions (P) Ltd

“We are present in 34 cities across the coun­try with the team of over 3000 em­ploy­ees. We work with some of the best malls in the coun­try, in­clud­ing Se­lect Ci­tyWalk, Quest Mall, South City Mall, GVK One, Ampa, Sobha city, Garuda Mall to name a few. We of­fer com­plete end-to-end ser­vices in­clud­ing de­sign, tech­nol­ogy, and man­age­ment of the park­ing lot. The em­ploy­ees are on our rolls,” says N Sathya­narayanan, Man­ag­ing Di­rec­tor, Cen­tral Park­ing Ser­vices.

CPS also caters to air­ports, hos­pi­tals, metro sta­tions, ho­tels, mixed-use de­vel­op­ments, etc. It cus­tom­izes ser­vice de­liv­ery to meet the spe­cific needs of each park­ing fa­cil­ity – it may be white-glove valet ser­vices, park­ing at­ten­dants, pro­fes­sional cashiers or even equip­ment main­te­nance per­son­nel, park­ing en­force­ment of­fi­cer. It strives to en­sure and de­light all pa­trons with suit­able cus­tomer ser­vice and train­ing pro­gram. A park­ing man­age­ment com­pany’s work is not lim­ited to op­er­a­tions and fee col­lec­tion only; it is also tasked with reg­u­lat­ing the mall traf­fic, en­sur­ing the safety and other main­te­nance.

Sathya­narayanan says, “We de­sign the traf­fic flow for the en­tire mall us­ing our pro­pri­etary soft­ware which can sim­u­late the ac­tual con­di­tions of the mall. We pro­vide the park­ing man­age­ment and guid­ance sys­tems for the malls. Safety of the cus­tomers is a key as­pect which is kept in mind in train­ing as well de­sign of the park­ing.”

The car park is the first and last point of cus­tomer con­tact. So a pos­i­tive cus­tomer ex­pe­ri­ence is very es­sen­tial, un­der­lines Ma­yar. “To achieve this traf­fic flows (en­try and exit) are de­signed in a way to min­i­mize wait­ing. The cir­cu­la­tion is de­signed to be con­flict free with safety mea­sures like mir­rors, speed break­ers, bol­lards, pedes­trian ways, suf­fi­cient light­ing and se­cu­rity, es­pe­cially for ladies and fam­i­lies. There are spe­cial re­served park­ing ar­eas for dif­fer­ently-abled per­sons,

We de­sign the trafĆc ćow for the en­tire mall us­ing our pro­pri­etary soft­ware which can sim­u­late the ac­tual con­di­tions of the mall. We pro­vide the park­ing man­age­ment and guid­ance sys­tems for the malls. – N Sathya­narayanan, Man­ag­ing Di­rec­tor, Cen­tral Park­ing Ser­vices.

ladies and the el­derly. All our car park staff is equipped with all ma­jor per­sonal pro­tec­tive equip­ment (PPE) like re­flec­tive jack­ets and ba­tons,” he ex­pli­cates. The pay­ment ex­pe­ri­ence should also be fast with var­i­ous op­tions like credit/debit cards, e-wal­lets, pre­paid cards and NFC. Se­cure park­ing pro­vides and main­tains the man­age­ment sys­tems and de­ploys its own trained man­power to en­sure a pleas­ant park­ing ex­pe­ri­ence, he af­firms.

Mod­ern park­ing lots use a va­ri­ety of so­phis­ti­cated equip­ment and tech­nolo­gies that need to be up­dated with the lat­est. Sathya­narayanan notes that tech­nol­ogy has evolved by leaps and bounds and the sim­ple sys­tem in­stalled ear­lier is no longer rel­e­vant. Most exit cashiers are now get­ting re­placed with cen­tral cashiers or auto pay sta­tions that make the exit su­per quick for mall vis­i­tors and re­duce op­er­a­tional costs dras­ti­cally. Also, a mall­spe­cific app can be in­te­grated to make the en­try and exit seam­less for the reg­u­lar cus­tomers.

Ac­cord­ing to Ma­yar, tech­nol­ogy is de­vel­op­ing rapidly in par­al­lel across two streams: Cus­tomer ex­pe­ri­ence at en­try, exit, pay­ment and guid­ance Fi­nan­cial fidelity by en­sur­ing that all trans­ac­tions are recorded in an au­dit trail and any pil­fer­age at­tempts are im­me­di­ately high­lighted

A ma­jor cost here is the cost of real es­tates. And this is not uni­form across the coun­try. The tar­iff should be high enough to en­sure that the park­ing rev­enue, so gen­er­ated, pro­vides an ad­e­quate re­turn on the cap­i­tal em­ployed.

“This is ex­tremely im­por­tant to the de­vel­oper as car park rev­enues are in­creas­ing sig­nif­i­cantly and is an im­por­tant part of the rev­enue. He also points out to the in­creas­ing pop­u­lar­ity of au­to­matic num­ber plate recog­ni­tion (APNR) sys­tems in China and South East Asia.

“R&D is work­ing to in­tro­duce it in In­dia where the main chal­lenge is non­uni­form li­cense num­ber plates. There are also many changes in the off­ing to shift to dig­i­tal pay­ments. Cur­rently, cash is 95 per­cent of the col­lec­tion,” he says.

The Ra­tio­nal­ity of ‘Free’

As far as cus­tomer psy­chol­ogy is con­cerned, one can­not over­look the “power of free­bies” and “feel good fac­tor”. Dis­counts, free/ com­pli­men­tary gifts en­hance cus­tomer de­light and in­crease loy­alty. Free park­ing too is an added in­cen­tive for the shop­pers. Nev­er­the­less, the idea­may fall short on sev­eral counts.

“A good park­ing space is a must for ev­ery mall shop­per, as it gives them a com­fort that they are park­ing in a rel­a­tively safe and se­cure place as com­pared to an open car park. We are not in favour of ex­or­bi­tant charges, but at the same time, the mall park­ing can­not be made free be­cause in that case peo­ple will park there for­ever and there is no in­cen­tive for the shop­pers,” opines Se­lect Ci­tyWalk’s Yo­gesh­war Sharma. He, how­ever, also sug­gests that the malls may choose a mid­dle path where park­ing cost can be re­im­bursed to fa­cil­i­tate shop­pers.

DLF Pre­mium Malls’ Pushpa Bec­tor main­tains, “All our ini­tia­tives are cus­tomer-cen­tric

and aimed to­wards en­hanc­ing their en­tire mall ex­pe­ri­ence and has­sle-free park­ing is one of them. From our past ex­pe­ri­ence, we have wit­nessed that cus­tomers don’t mind pay­ing a lit­tle ex­tra if that guar­an­tees them the con­ve­nience of a se­cure and safe park­ing. We feel that con­ve­nience is a big­ger fac­tor driv­ing foot­falls as against an un­kempt free park­ing space.”

Build­ing a car park is an ex­pen­sive propo­si­tion. There is the cost of real es­tate, con­struc­tion, IT sys­tems, light­ing, ven­ti­la­tion, se­cu­rity, traf­fic guid­ance and house­keep­ing. There is a lot of ef­fort in en­sur­ing that a cus­tomer has a pleas­ant ex­pe­ri­ence. This is done by con­tin­u­ously train­ing the staff in cus­tomer eti­quette cus­tomer han­dling. So, they should not mind pay­ing, feels Ma­yar of Se­cure Park­ing. “Any­thing free is mis­used”. There are malls near metro sta­tions whose car park fill up be­fore 10 am by rail trav­el­ers as it is free, leav­ing no place for re­tail cus­tomers. No­body minds pay­ing for con­ve­nience and ser­vice. Malls may pro­vide free park­ing for the first two-three months or ar­range for re­demp­tions on a pur­chase. Any­thing more would be leav­ing money on the ta­ble, he says.

Sathya­narayanan of CPS agrees. “Over 80 per­cent of the park­ing col­lec­tions are a cost that en­sures the park­ing area is man­aged well, feels safe, light well and is well ventilated. This num­ber is in­creas­ing with changes in power and man­power costs,” he says.

Free Park­ing is ir­ra­tional, ac­cord­ing to him, and not some­thing that a cus­tomer own­ing a `10 lakh+ car de­sires. Today, cus­tomers ex­pect a well­man­aged park­ing lot and are will­ing to pay a nom­i­nal sum for the safety of the car. In­dia has some of the low­est park­ing tar­iffs in the world, even lower than de­vel­op­ing coun­tries like Brazil which is at least three times more ex­pen­sive, he points out.

The Way For­ward

Although a spe­cific park­ing fee reg­u­la­tion pol­icy for malls, shop­ping cen­tres, mul­ti­plexes, etc. is yet to see the light of day, at­tempts have been made to re­move am­bi­gu­ity and bring clar­ity. The is­sue time and again has come un­der var­i­ous author­i­ties’ (Courts and Mu­nic­i­pal Cor­po­ra­tions) scan­ner across In­dia. But, is it fea­si­ble to de­vise a park­ing fee struc­ture based on some com­mon de­nom­i­na­tor(s) for malls across the coun­try or at least within the states?

Malls and civic bod­ies like Mu­nic­i­pal Cor­po­ra­tions can work to­wards this propo­si­tion – this might help re­move in­con­sis­ten­cies and per­haps will also have wider ac­cept­abil­ity among the pub­lic.

Ma­yar as­serts that the cost of a prod­uct (park­ing tar­iff in this case) has to be based on the cost of in­puts. A ma­jor cost here is the cost of real es­tates. And this is not uni­form across the coun­try or the city. The tar­iff should be high enough to en­sure that the park­ing rev­enue, so gen­er­ated, pro­vides an ad­e­quate re­turn on the cap­i­tal em­ployed. Un­less this hap­pens the pri­vate sec­tor will not build stand­alone multi-level, car parks and it will con­tinue to be sub­sidised by the gov­ern­ment. He as­serts that pri­vate par­tic­i­pa­tion is nec­es­sary to solve the park­ing prob­lems faced in the coun­try, adding, “A lot of con­sumers com­plain about pay­ing `50 for park­ing in In­dia, whereas the same comes to $30-$50 in most west­ern coun­tries”.

N Sathya­narayanan (CPS) says mu­nic­i­pal­i­ties nowa­days are dis­cov­er­ing the need for pay and park and the tar­iff sug­gested by the mu­nic­i­pal­i­ties are closer to mar­ket pric­ing. “Mu­nic­i­pal­i­ties re­alise that right pric­ing and not sub­sided pric­ing en­sures op­ti­mum use of the park­ing as­set for the city and en­sures a much better traf­fic in the down­town ar­eas. Park­ing tar­iff will be mar­ket driven based on the lo­ca­tion, util­ity and the fa­cil­i­ties thereof and I don’t see a sub­sidised tar­iff in the mak­ing.”

On the other hand, Bec­tor is of the view that the op­er­at­ing cost across malls varies, but it is still fea­si­ble to ar­rive at a state­wise fee across mall prop­er­ties in con­junc­tion with mu­nic­i­pal bod­ies. “Mall op­er­a­tors and Mu­nic­i­pal Cor­po­ra­tions can look at work­ing to­gether on this. How­ever, the idea of a na­tional mall park­ing fee pol­icy does not look prac­ti­cal na­tion­ally, as it is highly com­plex but each state can have one pol­icy for ex­ter­nal and mall park­ing.”

To con­clude, it goes with­out say­ing that an ef­fi­cient, se­cure park­ing sys­tem and a nom­i­nal charge is what peo­ple want and ap­pre­ci­ate. Safe park­ing at a rea­son­able charge is cit­i­zen’s right; how­ever, no one can ‘ex­pect’ free ser­vices from mall op­er­a­tors. Malls can charge rea­son­able park­ing fees if not dis­al­lowed by some ex­press law or its ar­range­ment with civic author­i­ties..

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