Sandeep Lal, former President of Metro Labels, on sale of his company to Tapp Label Company USA

In the early 1970s Narinder Mohan Lal, his son Sandeep Lal and rest of the family left their home town Allahbad a city in the North Indian state of Uttar Pradesh to migrate to Toronto in Canada. Narinder Lal initially started trading in Labels and in 1974 setup a small label production facility in the basement of his home. Sandeep joined his father in business and by start of the new millennium he was put in the driving seat to lead Metro Labels to blossom into one of North America’s top players. In addition to the main 132,000 square foot Progress Ave.-Hwy 401 facility at Scarborough, Ontario, Canada, the 180-employee firm also has locations in Vancouver and Napa Valley. I had written about Sandeep in 2009 and later wrote again last year when they celebrated their 40^th Anniversary http://harveersahni.blogspot.in/2014/08/this-is-very-interesting-story-of.html. Having reached a pinnacle, Sandeep Lal decided to sell his profitable and well managed company to Tapp Label Company USA. Recently Sandeep wrote to me explaining the reasons to sell and also sent the transfer of ownership speech that he had made to the employees of Metro Labels.

Indian label industry has in recent times witnessed some sell-offs and acquisitions. I am sure it will be interesting reading for the label industry about the journey of this company that was started from scratch to reach the top and then sold while it was very profitable. I reproduce both the documents mentioned above, unedited.

Sandeep's email:

August 30, 2015

Harveerji,

I promised to tell you more about the transaction and my reasons for the sale. I have attached a copy of the speech I made to the employees at the Toronto Plant one week before the sale was to transpire.

Starting in 1974 I spent two years working part time, in a sales role while I was studying at the University of Toronto, and then another 39 years at Metro Label, providing leadership for the last 14 years. After assuming the leadership I grew the business 14 fold and our profit increased over 40 fold. We chose not to share our numbers with TLMI and intentionally kept a low profile. Our business generated EBITDA of over 22% on sales for most of the last 15 years. Focus on Innovation, a determination to lead technically, appropriate environmental initiatives, a motivated and well trained team was the reason for our success.

The goal was always make a large range of products, to outperform our competitors on quality initiatives, on time delivery and overall performance matrixes while seeking markets outside the typical geographical areas that we were supposed to sell in.

I have listed below some of the things we did for over 20 years to differentiate and grow our business.

1     We led the marketplace by being one of the first, back in 1976, to have our own in-house rubber plate-making. This was followed by an art department and then typesetting equipment when most of this work was done at third parties. When the Mac’s first came out we were an early implementer and did our own films and photopolymer plates in house almost as soon as the technology was available. We were also an early implementer of in-house ink mixing technology in the late 1990’s.

2      Installed the first Customized Unix driven software solution in 1985. This fully integrated package enabled us to capture data off the shop floor and provide instantaneous updates on job status to clients. Order entry, inventory management,  Procurement, Job costing,  data collection, invoicing, Accounts receivables, accounts payable, GL were all fully integrated. This software was comparable to software that became available in the early to mid 1990’s. The efficiencies realized were unimaginable. We were able to outperform the competitors to service their business as a result. Just one of the efficiencies achieved was a large reduction in inventory. We turned our complete inventory 37 times per year. Average competitor gets 12-15 turns a year.

3      We were the third North American installation for Indigo’s very first digital platform back in 1995.

4      We achieved ISO 9001 certification in 1995.

5      We custom designed and installed equipment to integrate Radio Frequency and Electro Magnetic type EAS tags from Checkpoint & Sensormatic, on the adhesive side of our labels to assist retailers to receive products fro their suppliers with the tag buried under their Product identification labels. This was done at 175 feet at minute as many as 4 rows across on one of our presses in 1997

6      All water base and Solvent base presses were converted to UV by 1998, increasing quality, run speeds and reducing run waste and quality defects.

7      All presses had Video web inspection and UPC code verifications systems installed by 1998 to ensure that bar codes printed by us would exceed the UPC scan rate requirement of all major retailers. A statistical record was kept of the scans on press. At least one out of 6 printed labels was read/scanned.

8     We built the first LEED certified building in 2005 to house a Label company globally and won the Global environmental award for it from the Label industry along with awards from the FTA, TLMI, PAC and the city of Toronto.

9      We installed Solar Panels on the roof of Metro Label’s Toronto Plant in 2015.

There were many other innovations that would be tedious to list here.

We developed a reputation of being fearless and ruthless competitors who outperformed our competitors. Client loyalty was a by-product of our performance. Our margins were the result of our strong performance which enabled us to charge a small premium for our products and services.

I look forward to sharing the experience acquired through my successful business journey with my peers in the future.

Sandeep Lal

David Bowyer CEO Tapp Label Co.

 

                            

Transfer of ownership speech by Sandeep Lal the former Owner/President of Metro Labels Toronto Canada.

It is my privilege to speak to you as a group one last time, as the principal shareholder of Metro Label.

When Narinder Mohan Lal my father started this business, our company was definitely an underdog in the label business. There were times when our competitors, suppliers, and sometimes even I, doubted our ability to get through some of the difficult times. Our business survived and prospered because Narinder Lal, my father, believed that our business would survive no matter what, and it did. Not only did it survive it grew and grew. Just like my parents my siblings Nandini & Raideep, my son Vikram, & I were motivated, to work hard and make Metro Label a success so that we may provide for our families.

My parents, Nandini, Raideep, Vikram & I were all fortunate that your personal journey included a career at Metro Label. Your personal motivation, support, work ethic and loyalty inspired us. It made us believe that anything was possible and it was. In the past at the pinnacle of our company’s success Metro Label was ranked the 14^th largest company in North America and one of the most profitable. If the Tag and Label Manufacturers Institute had an award for inspiration and effort you all would have won that award many times.

I know that my assertive style and relentless push for excellence created much adversity within our organization. However by working together we set the benchmark for successful label companies in North America. I always did my best to ensure that we looked out for each of your needs. I know that we didn’t succeed at everything we attempted to achieve but it wasn’t for lack of trying.  I always pushed for each of you to reach down deep inside yourself and excel at whatever you were doing.  And you did.

To succeed you need motivated and inspired management with a vision, management which leads by example, and has the Zen like focus to keep all aspects of the business on a sound footing. Over the last few years I came to the conclusion that I was no longer motivated and driven as I had been in the past.

Like most entrepreneurs I had hoped that the next generation of our family would have an interest in taking over the business and provide the leadership. Quite possibly I did not allow that to happen in a way that was acceptable to them.

You have given this company your loyalty and unwavering support. I knew that you all deserved the same. After my much reflection, many sleepless nights, and the support of all members of my family it was determined that Metro Label, which is highly profitable, has an excellent reputation, motivated and loyal team members and a great client list, deserved new owners that would provide renewed leadership and focus.

We expect to conclude a transaction on June 30. What is important for all of you to know is that when you arrive at work on July 1/2015, all of our employees, including my nephew Curran, will continue in their jobs as usual and maintain their employment with the new owners, at this location, a place they have come to know. All employees will earn the same pay, maintain their benefits and seniority and continue to work in this location. Nothing will change.

The new owner has signed a long term lease to stay in this building.

Once the transaction is completed, Nandini and I will work with the new owners to transition the business over to them during the month of July.

I want to thank my father Narinder Lal for founding this business and for giving me the opportunity to run it. I want to thank my parents for their unwavering support and beliefs in my skill and judgement. Vikram and Jayanti for loving me inspite of the adversity and stress I brought home because of my work ethic, and desire to succeed. My deceased brother Raideep, my sister Nandini, and my son Vikram deserve a medal for doing what needed to be done and doing it regardless of what I said and how I said it.  Of all team members they suffered my wrath the most often, and were as responsible for providing the leadership to grow our business. I also want to thank my brother Jaideep for always providing his silent and financial support when needed. I would be remiss if I didn’t thank Meredith my spouse for all of her wonderful support and guidance.

Most of all I want to thank all of you. The company would never be what it is if you hadn’t treated it like it was your own. Last year at our 40^th anniversary party I promised the Deferred Profit Sharing Plan(DPSP) payment would be made this year. We will fulfill my commitment to you by making discretionary contributions totalling $400,000 to your payroll accounts as our personal recognition of your support.  This will be our largest contribution in Bonus or DPSP ever. Many of the contributions have been supplemented by an additional discretionary contribution as my personal recognition of your support.

After the deal is completed, on July 1 I will personally introduce you to the new owners. 

Sandeep Lal

Reproduced and compiled by Harveer Sahni, Managing Director, Weldon Celloplast Limited New Delhi-India September 2015