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Thursday, Mar 28, 2024

VENTURE—Flush Celetron Gets $48 Mil., Plans to Double Sales

Venture capitalists have given Simi Valley-based Celetron International Ltd. $48 million to expand its business and increase production of computer chips and memory modules, power conversion equipment and circuit boards. Prescott Ashe, managing director and co-founder of San Francisco-based Golden Gate Capital, one of the investors, said the company’s low-cost computer chips and other equipment have helped increase its stable of customers, giving it sizable growth potential. “The company has such broad service offerings that it has numerous avenues to have strong growth,” Ashe said, noting the company could double or triple its revenue in the next few years. The $48 million in funding comes from a group of investors that include Golden Gate Capital, New Enterprise Associates, Baring Asia Private Equity Fund II and Alta Partners. C. Richard Kramlich, general managing partner with the investment firm New Enterprise Associates, said Celetron’s low overhead gives it the potential to rapidly increase revenue and profits. The company’s CEO, Jugi Tandon, and his four brothers founded Celetron in 1981 in India. Later that year, they moved its headquarters to the U.S. while keeping the manufacturing component in India. The company, Tandon said, is India’s largest exporter of electronics. The company has manufacturing plants in India where it employs the bulk of its 5,000 employees, 500 of which are engineers who develop its products. “The engineers we have in India, we pay $500 a month, but the engineers here we have to pay thousands of dollars a month, so we have that advantage,” Tandon said. “The business coming at us is very substantial and we needed working capital to expand. We definitely cannot meet all the demands customers are putting on us,” Tandon said, adding that customers from the broadband industry, in particular, have been increasing. With an initial infusion of “several million dollars” from investment firms in Asia, Tandon said, the company grew as it supplied low-cost circuit boards and computer components to the booming electronics and computer industry of the 1980s. Its rapid revenue growth helped it expand in recent years, but not enough to accommodate the company’s ambitious expansion plans. Tandon said the capital infusion could allow the company to increase production and double revenue from $250 million last year to $500 million next year. The company would not release its net income figures. Tandon said Celetron’s low labor costs have helped make it competitive with bigger rivals like Motorola. The influx of capital will push the company’s growth as never before, Tandon said. “We feel that we can’t meet our customers’ demand unless we expand significantly.” Tandon said the company is poised to further develop its U.S. and European markets. Already, the company plans to close a deal this month to acquire Golden Systems Inc. of Simi Valley, which manufactures and markets switching power supplies for electronics. Ashe said the potential for growth from the Internet and broadband industries will push Celetron’s growth. He also said the fact the company’s Indian engineers speak English and can interact with customers in the U.S. is an advantage over companies based in China and elsewhere. “There are very few companies that have that with a low cost structure,” he said. The company has a total of 500,000 square feet of assembly space and an additional 300,000 square feet of so-called clean rooms for assembling and developing its high end electronic chips and components, mostly in India and Sri Lanka. It also has a 7,000-square-foot facility in Simi Valley where some manufacturing is done. Dirk McCoy, co-founder of Hytel Group, an electronics manufacturer in Chicago which is also one of Celetron’s competitors, said the electronic and optical manufacturing field is growing at about 20 percent each year, giving small and large companies room to expand. Tandon said he anticipates the demand for equipment for Internet infrastructure to increase.

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