David Isaacs (CEO, Courts Mammouth): “BAI saga: I was not around between 2013 and 2015”

About a year after David Isaacs and his associates took over Courts, the Chief Executive Officer talks about the strategy they adopted to put it back on track. Among his priorities: the company’s profitability and its expansion beyond Mauritian shores.

BUSINESSMAG. The takeover of Courts was agreed upon in August 2015. Years back, in 1985, you were one of the founders of this popular department store, then known as Mammouth, and decided to give it a second chance. What were your motivations?

My colleagues and I came together last year soon after Iframac Retail was placed under administration. This was natural since Ehsan Fakim and I had managed Courts for 25 years. As for Bruce Cohen, he was the Chairman of the company at the beginning, in 1985, and remained in office for some years afterwards. We were the team that created and built the company successfully for 25 or almost 30 years. Now, when Courts was in a bad situation last year, somebody had to take the company over. Otherwise, it would have disappeared and nobody wants this to happen. The majority of the management and staff as well as most of the local furniture manufacturers were strongly in favour of the takeover by my colleagues and I.

BUSINESSMAG. The emotional ties you had forged with the company therefore played a decisive role…

Of course, Ehsan Fakim and I were responsible for recruiting all the existing management. So we knew the personnel very well. The other major reason behind our decision is that many local furniture manufacturers were facing a disaster because no orders had been placed with them for a very long time, close to six months. In such circumstances, it was very difficult for these entrepreneurs to survive. Therefore, I gave them the guarantee that we would provide them with sufficient orders so that they may preserve their livelihood.

BUSINESSMAG. Apart from giving local suppliers of Courts the opportunity to keep on making furniture, was there any additional help on your part, as the company’s CEO?

According to official statistics on small and medium enterprises (SMEs), about 4,000 people out of 12,000 involved in furniture manufacturing are suppliers of Courts. Some of these entrepreneurs were in an even worse situation than the company’s staff because they had given personal guarantees to banks and when the business stopped, they were unable to repay their creditors. For my part, when I came back, I spoke to the banks on their behalf. If the furniture manufacturers could have more time, I said, they would be able to pay back their loans.

Many of these entrepreneurs have been making furniture for the company since 1985. In the meantime, they increased the size of their business and their manpower. The priority was definitely to stabilize the situation at their level. After the takeover, the first thing we did was to place orders with the furniture manufacturers, all the more so as there were no stocks. I think the government also stepped in in July/August last year and they helped by paying out about Rs 27 million to SMEs which had suffered important losses.

BUSINESSMAG. What about the staff?

The business that we took over had been placed under administration and obviously, it was impossible for us to keep all the staff. But we agreed with the administrator and government upon retaining nearly 80 % of the total staff. We also had an agreement with Cim Finance to take on hire purchase customers or hire purchase accounts. So we transferred about 120 employees from Courts to Cim.

At management level, 95 % of the staff is still in office.

BUSINESSMAG. How far was this agreement with Cim Finance necessary?

As far as hire purchase is concerned, we would not have the financial capacity the old company used to have. This is why we chose to partner with Cim at that level. But since August 2016 Courts Mammouth has also star-ted to provide credit facilities. So, overall between Courts and Cim, we are gradually rebuilding the business as it existed before.

BUSINESSMAG. When you took over the company, what were your first observations?

The agreement to take over the company’s operations from the administrator was signed on the 28th of August, last year. At that time, there were two major concerns. Firstly, there were no stocks: the shops had nothing to sell. Secondly, management and staff were in very low spirits: during several months, they had been anxious about their future and that of their families.

So, our first preoccupation was to reconstitute our stock. At the same time, I said something very important to the management and staff: regardless of their age, this is where they are going to be for the rest of their working life, whether it be five or 20 years. “Let’s work together and rebuild the company.”

BUSINESSMAG. Considering the fact that Courts was under administration, how did you and your associates proceed to refloat it?

Definitely, it was a rebuilding program. We were able to take over the properties the previous company had owned and we obtained sufficient capital from the local financial industry – mainly banks –, resorting to overdraft facilities as well as medium-term loans. The sum that was paid over to the National Property Fund – the vehicle set up by the government – amounted to Rs 400 million. On top of the above-mentioned facilities, my associates and I put in the share capital of Rs 50 million.

BUSINESSMAG. Could you give us more details about the rebuilding program?

The recovery strategy was built on the selection and choice of products: furniture, electrical appliances, mobile phones, laptops and cameras. Not only do our products have to be interesting but their prices also have to be competitive, attractive. That is why we have made this promise that we will never be beaten on price. We have also encouraged our staff to provide a good service because for a company to survive and prosper, its customers must feel they are welcome. While providing quality customer service is essential in our showrooms, after-sales service is equally important. We are trying to bring back all the past strengths of the company.

The public is our “raison d’être”. It provides the food we eat. Because of what happened over those two years (2014-2015), I think the staff has been receptive. They have been very dedicated to help rebuild the company.

BUSINESSMAG. To what extent has the image of Courts been affected by last year’s problems?

The image of Courts has undeniably suffered last year. From January to August 2015, the company was out of the local market. Showrooms were empty and competitors took all the business. It is only in December last that we really began to revitalize the company and get our stock levels back to what was considered to be normal. That is how we started to rebuild our market share. What is encouraging is that we have found that the public is still very loyal to the company. I think this is because Courts was the pioneer in terms of hire purchase in Mauritius. Before I came here in 1985, such facilities did not exist. People had to save their money and pay cash. And those who were able to do that were not numerous. Thence, our chain of stores had a place in the social fabric of the country for those 30 years.

BUSINESSMAG. What is your current vision for Courts Mammouth?

Our strategy for the next three years is to increase our sales and profits as well as to provide the best brands to our customers. As Mauritius is an island, people like to shop around. So, we have a nice “mélange” of shops. We have three showrooms in big commercial centres: Riche Terre Mall, Bagatelle Mall of Mauritius and Centre Commercial Phoenix. Added to these, are our traditional shops in Bell Village, Rose Hill and Curepipe. And of course, there are Courts Mammouth branches in rural areas such as Flacq, Chemin Grenier, Mahébourg and Goodlands. We are even present in Rodrigues and it is indeed very important to us.

Therefore, our vision is to build the business in Mauritius and Rodrigues during the next two to three years before prospecting the African continent. At present, we have 22 showrooms that we are going to keep. And we just want to build the platform. It is like building a house again.

BUSINESSMAG. Does the present financial situation of the company augur well for the future?

The financial situation of the company is fine. Our first full financial year will be completed in March 2017. According to me, by then, the company will almost certainly be in profit. I think it is the first step on our road to recovery.

BUSINESSMAG. A year after the events of the British American Investment (BAI) saga, do you think the government and administrators have demonstrated transparency as regards the taking over of Courts?

Firstly, BDO was appointed administrator after the Financial Services Commission (FSC) had taken the decision to give the business to my colleagues and I instead of Courts Asia. So, when BDO took over, it was already empowered to proceed with the sale to us. From the standpoint of the administrator and the government, through the FSC, I think it was quite clear that the business would be given to us.

I gave the guarantee that the management of Courts would remain in office while under Courts Asia, part of the management would have been removed. Furthermore, if the business had gone to Courts Asia, the company would have imported all its furniture from Malaysia, China and Singapore. It would have been a major disadvantage for local entrepreneurs.

According to me, the decision was taken in transparency. Courts Asia was unhappy because the previous administrator had said it was the preferred bidder. One point has to be very clear: at no time was Courts Asia told that it was having the business because that was not the decision of the administrator but the decision of the government. Frankly, everybody – the government, the first and second administrators – have shown transparency. The government has the freedom to choose whom it wishes to take over the business.

BUSINESSMAG. You personally knew Dawood Rawat, former Chairman Emeritus of the BAI group. A few words on the fall of his “empire”?

I was a senior executive in charge of what was Iframac Retail and Iframac Transportation but don’t forget that I retired some years ago. So, I was not at all involved in what was happening in the group between 2013 and 2015. I was not around. All I can say is that what happened happened. And obviously, it will take some time to resolve itself. We can only wait and see. Actually, Mr Rawat is somebody, you knew him only in business meetings but you would not necessarily know Mr Rawat outside. Therefore, we had strictly business relationships or even strictly employer-employee relationships.