december 19, 1955 titanium dioxide industry t€¦ · december 19, 1955 titanium dioxide industry...

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December 19, 1955 Titanium Dioxide Industry T ITANIUM Dioxide is a chemical which has a wide variety of uses. Besides being the strongest white pigment, it is used as an opacifying agent in the plastic industry, as a catalyst in the prepa- ration of a good many types of organic compounds and cracking of petroleum, as a delustring agent in the rayon industry and as a consti- tuent in the manufacture of welding rods and electric insulators. In India its uses are restricted to abso- lutely essential purposes. It has not yet started replacing substitutes, how- ever desirable, it might be from a technical point of view. The de- mand for titanium dioxide in the country is therefore too limited to warrant the setting up of a factory for the economic manufacture of this important chemical. This consideration did not, how- ever, prevail with the Travancore Government when it decided that titanium dioxide should be manu- factured in Travancore. On the other hand, the Travancore Government was obsessed with the idea that it could undertake the economic manu- facture of titanium dioxide, as the State possessed high grade ilmenite —the essential raw material in the manufacture of titanium dioxide- in abundance which was being ex- ploited by foreign interests. The Travancore Government, however lacked the confidence to start the venture on its own, independently of the leading manufacturers either in the USA or UK. The Government, therefore, brought pressure on the four mining companies which at that time operated in the State, to get one of their foreign clients interested in the manufacture of titanium dioxide in Travancore. Alter pro- tracted negotiations, the British Titans Products Ltd agreed to parti- cipate in the Travancore Govern- ment's Project. Accordingly, a com- pany known as Travancore Titanium Products Ltd, was formed in 1947 with the Indian Titan Products Ltd, a newly formed subsidiary of the British Titan Products, as the Managing Agents. Technical colla- boration with British Titans was agreed to through the managing agency firm. The Managing Agents were appointed for a period of twenty years with remuneration at the rate of 10 per cent on the net profits, irrespective of dividends. The company started with a capital of Rs 36 lakhs which was subsequ- ently increased to Rs 75 lakhs. Fifty- one per cent of the share capital is held by the Travancore Govern- ment, 22 per cent including Rs 2.7 lakhs issued gratis for services ren- dered and agreed upon, is held by the. British Titans and the. balance is held by the mining companies now in operation, A & F Harvey Ltd, the Madura Mills Ltd, and a nominal amount by the public. Of the two types of titanium dioxide, anatese and rutile, the com- pany produced 387 tons of anatese in 1952. In the meantime, foreign prices came down appreciably below the domestic cost and the company's financial resources also got exhaust- ed. It, therefore, applied for pro- tection to the Government and also approached the Industrial Finance Corporation for a loan. The Gov- ernment referred the case lot pro- tection to the 'Tariff Commission for examination and report. The Commission, after a thorough inquiry into the various aspects of the industry, has come to the con- elusion that the current annual de- mand for titanium dioxide in India is about 400 to 500 tons as against the capacity of the Travancore plant assessed at 1800 tons. It believes, however, that if certain steps are taken, the demand could be stepped up to 650 to 900 tons per annum in the near future, still leaving a large gap between the domestic demand and installed capacity. And to sti- mulate demand, one of the impor- tant recommendations made by the 'Tariff Commission was that the Tra- vancore Titanium Products Ltd should maintain their selling price of titanium pigments at or below Rs 140 per cwt for anatese and Rs 154 per ewt for rutile. In order to enable the company to reduce the price to the above level a subsidy of Rs 300 per ton on actual sales of titanium dioxide of both types should be paid to the company, subject to a maxi- mum of Rs 2,70.000 per annum and this scheme should remain in force until December 31, 1954. A review of the case should be undertaken by the Commission before the end of 1954. A surcharge of Rs 2 per ton should be levied on export of ilme- nite and the subsidy referred to above should be paid from the amount so realised. The Government of India did not accept this particular recom- mendation of the Commission, the reason given being that the company has received a large export order which is expected to enable it to maintain economic production even without, a subsidy. The Govern- ment has not mentioned in its reso- lution neither the quantity nor the price at which the company is going to export its product. However large the older and economic the price, it is going to be only a temporary phase and for stabilising the industry the internal demand will have to be developed and maintained. The Tariff Commission's recommenda- tions had been made with this end in view, but unfortunately, the Gov- ernment does not seem to have realised the full implications of these recommendations. It is not clear from the resolution at what price the company is going to market its pro- ducts in the country. If the demand for titanium dioxide has to be de- veloped, the product has to be sold at a price that will encourage con- sumers to go in for it in preference to cheaper substitutes like litho- phone. Further to encourage the use of titanium dioxide, adequate supplies of blanc-fixe or similar ex- tenders should also be assured. 'The company should also maintain a proper selling organisation at the major consuming centres and pro- vide facilities for technical advice. But the Government resolution on the subject, as it stands now, gives the impression that the company will be more interested in executing its present export order rather than in giving proper attention to the development of the internal market. This is not a healthy sign. From the above, it should not be concluded that a subsidy is advocat- ed, even if the company can make adequate profits from exports. What is sought to be emphasised, instead, is that a temporary gain should not he allowed to detract attention from the long term requirements of the industry for its healthy development. There is no reason why the surcharge of Rs 2 on export of ilmenite recom- mended by the Commission should not be levied even if a subsidy may not be warranted at the moment, in view of firm export orders. The fund created from the surcharge should have been utilised for the development of the industry. The problem with titanium dioxide is not how to produce but how to sell. As has been pointed out earlier, it has to replace established cheap sub- 1415

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December 19, 1955

Titanium Dioxide Industry

T I T A N I U M Dioxide i s a chemical which has a wide

variety of uses. Besides being the strongest white pigment, it is used as an opacifying agent in the plastic industry, as a catalyst in the prepa­ration of a good many types of organic compounds and cracking of petroleum, as a delustring agent in the rayon industry and as a consti­tuent in the manufacture of welding rods and electric insulators. In India its uses are restricted to abso­lutely essential purposes. It has not yet started replacing substitutes, how­ever desirable, it might be from a technical point of view. The de­mand for ti tanium dioxide in the country is therefore too limited to warrant the setting up of a factory for the economic manufacture of this important chemical.

This consideration did not, how­ever, prevail wi th the Travancore Government when it decided that titanium dioxide should be manu­factured in Travancore. On the other hand, the Travancore Government was obsessed wi th the idea that it could undertake the economic manu­facture of t i tanium dioxide, as the State possessed high grade ilmenite —the essential raw material in the manufacture of t i tanium dioxide- in abundance which was being ex­ploited by foreign interests. The Travancore Government, however lacked the confidence to start the venture on its own, independently of the leading manufacturers either in the USA or U K . The Government, therefore, brought pressure on the four mining companies which at that time operated in the State, to get one of their foreign clients interested in the manufacture of titanium dioxide in Travancore. Alter pro­tracted negotiations, the British Titans Products L t d agreed to parti­cipate in the Travancore Govern­ment's Project. Accordingly, a com­pany known as Travancore Ti tanium Products L t d , was formed in 1947 w i t h the Indian T i t an Products L td , a newly formed subsidiary of the British Titan Products, as the Managing Agents. Technical colla­boration wi th British Titans was agreed to through the managing agency firm. The Managing Agents were appointed for a period of twenty years wi th remuneration at the rate of 10 per cent on the net profits, irrespective of dividends. The company started wi th a capital of Rs 36 lakhs which was subsequ­

ently increased to Rs 75 lakhs. Fifty-one per cent of the share capital is held by the Travancore Govern­ment, 22 per cent including Rs 2.7 lakhs issued gratis for services ren­dered and agreed upon, is held by the. British Titans and the. balance is held by the mining companies now in operation, A & F Harvey L t d , the Madura Mil ls L t d , and a nominal amount by the public.

Of the two types of titanium dioxide, anatese and rutile, the com­pany produced 387 tons of anatese in 1952. In the meantime, foreign prices came down appreciably below the domestic cost and the company's financial resources also got exhaust­ed. I t , therefore, applied for pro­tection to the Government and also approached the Industrial Finance Corporation for a loan. The Gov­ernment referred the case lot pro­tection to the 'Tariff Commission for examination and report.

The Commission, after a thorough inquiry into the various aspects of the industry, has come to the con-elusion that the current annual de­mand for t i tanium dioxide in India is about 400 to 500 tons as against the capacity of the Travancore plant assessed at 1800 tons. It believes, however, that if certain steps are taken, the demand could be stepped up to 650 to 900 tons per annum in the near future, still leaving a large gap between the domestic demand and installed capacity. And to sti­mulate demand, one of the impor­tant recommendations made by the 'Tariff Commission was that the Tra­vancore Ti tanium Products L td should maintain their selling price of titanium pigments at or below Rs 140 per cwt for anatese and Rs 154 per ewt for rutile. In order to enable the company to reduce the price to the above level a subsidy of Rs 300 per ton on actual sales of titanium dioxide of both types should be paid to the company, subject to a maxi­mum of Rs 2,70.000 per annum and this scheme should remain in force until December 31, 1954. A review of the case should be undertaken by the Commission before the end of 1954. A surcharge of Rs 2 per ton should be levied on export of ilme­nite and the subsidy referred to above should be paid from the amount so realised.

The Government of India did not accept this particular recom­mendation of the Commission, the

reason given being that the company has received a large export order which is expected to enable it to maintain economic production even without, a subsidy. The Govern­ment has not mentioned in its reso­lution neither the quantity nor the price at which the company is going to export its product. However large the older and economic the price, it is going to be only a temporary phase and for stabilising the industry the internal demand wi l l have to be developed and maintained. The Tariff Commission's recommenda­tions had been made wi th this end in view, but unfortunately, the Gov­ernment does not seem to have realised the full implications of these recommendations. It is not clear from the resolution at what price the company is going to market its pro­ducts in the country. If the demand for t i tanium dioxide has to be de-veloped, the product has to be sold at a price that will encourage con­sumers to go in for it in preference to cheaper substitutes like li tho-phone. Further to encourage the use of titanium dioxide, adequate supplies of blanc-fixe or similar ex-tenders should also be assured. 'The company should also maintain a proper selling organisation at the major consuming centres and pro­vide facilities for technical advice. But the Government resolution on the subject, as it stands now, gives the impression that the company wi l l be more interested in executing its present export order rather than in giving proper attention to the development of the internal market. This is not a healthy sign.

From the above, it should not be concluded that a subsidy is advocat­ed, even if the company can make adequate profits from exports. What is sought to be emphasised, instead, is that a temporary gain should not he allowed to detract attention from the long term requirements of the industry for its healthy development. There is no reason why the surcharge of Rs 2 on export of ilmenite recom­mended by the Commission should not be levied even if a subsidy may not be warranted at the moment, in view of firm export orders. The fund created from the surcharge should have been utilised for the development of the industry. The problem with ti tanium dioxide is not how to produce but how to sell. As has been pointed out earlier, it has to replace established cheap sub-

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