Pisani, the major stone importer and supplier, has had a difficult time during the economic downturn but is now back on track to resume its position as a beacon of the stone industry. Costas Sakellarios, Pisani’s Managing Director and owner, talks candidly to NSS about the difficulties his company has faced and how it has emerged from them with an improved proposition for its customers.

Pisani has changed a lot since the recession started to bite in 2008. And it believes it has emerged from those changes a better, more customer-focused company that is easier to deal with because there is more information and decision making on the front line where the company meets you… the customer.

Not all customers will have liked all the changes the company has made because the specialist stone supplier has tightened up in areas such as its previously fairly uncritical returns policy. Nevertheless, the intention of Managing Director Costas Sakallerios has been to be more transparent and perfectly clear about what Pisani can and cannot do.

Most customers will have noticed the departure of some of the people they used to know at Pisani, although they might not realise that the number of people employed by the company has fallen from 160 to 60. Pisani certainly hopes it is not apparent in terms of the attention customers are receiving. In fact, the company believes that has improved, thanks to a change in attitude and improvements to the computer system.

Not all the 60 people now employed by Pisani are survivors from before the economic downturn. Coming through the recession has required a change of mindset and not everyone who worked there previously could or would make that change, says Costas.

For a long time Pisani gave a lot of people a standard of living that was better than most in the stone industry. A graphic illustration of the change that has taken place is the reduction in the number of company cars. There were 54 in 2011, all with company fuel cards. There are now 12, and two of those are pool cars. Early on Costas swapped his Bentley for an Astra.

Some of the personnel changes have been at board level, leaving Costas Sakellarios firmly in charge as sole operational director. Nick Telfer has left the company. David Kilpatrick, who ran the Frank England memorial masonry side of the business, has retired and the business has been sold off to the management. Allan Bruce still manages Pisani’s Scottish operation, Fyfe Glenrock and Fyfe Memorials, but has resigned as a Director of Pisani.

An early casualty of the economic downturn was Pisani’s Stone Processing Supplies division, which sold stone processing machinery including GMM saws and MarmoMeccanica edge polishers. Also gone are Pisani’s Vratsa quarries in Bulgaria and its joint venture business in India, which supplied Frank England with its memorials.

Not all the 100 lost jobs have been redundancies. Some people decided to leave of their own volition. Nevertheless, the cost of so many job losses has been expensive.

Neither was it the only expense Pisani faced. Its previous accounts, for the 12 months ending with December 2011, showed exceptional banking and legal costs of £996,000 for refinancing and restructuring, leaving the company with pre-tax losses of £1.1million on turnover, down 24% on the previous year at £16.7million.

Rearranging the accounting period meant no accounts were submitted to Companies House last year. When they were published in March this year for a period from January 2012 to June 2013, they showed a profit of £2.3million on turnover above £19million.

Inevitably, the financial difficulties and redundancies led to speculation that Pisani was on the brink of collapse – speculation that some of its competitors were only too happy to encourage while Costas Sakellarios worked long and arduous days firefighting to keep the company alive and pay off its creditors. He was left with little time to deal with the smaller fires around the company.

There were almost weekly rumours about Pisani’s demise, which is why when it exhibited at the Natural Stone Show last year its literature carried the slogan ‘Behind closed doors’. Its doors were never closed, but if you had listened to all the rumours you might have believed they had been.

During this time, Costas received increasing support from one of Pisani’s customers, Sebastian Harris, an entrepreneur whose various interests include Medusa Stone in Basildon, Essex. As a customer, Sebastian had a view of Pisani that was not available to Costas.

Pisani’s problems were epitomised for Sebastian by something that happened when Medusa bought some slabs of granite from Pisani’s warehouse and headquarters at Feltham, near Heathrow airport.

The slabs had been chosen, a price and delivery charge agreed and details printed out at the sales counter. When the invoice arrived it was for a lower price than had been agreed and did not include a delivery charge. By the time this happened Sebastian and Costas had become friendly, and although the error was clearly in Medusa’s favour, Sebastian pointed out the discrepancy to Costas as an indication of Pisani’s problems.

Sebastian is now Pisani’s Chief Operating Officer and has played an important role in changing the culture of the company over the past 18 months or so.

Costas is content that Pisani survived without having to go into Administration. He is pleased that his reputation is intact with Pisani’s suppliers and that creditors are being paid in an orderly fashion – the company’s debts have been reduced from £28million to £12million.

In hindsight, the investment of £10million in the new prestigious headquarters at Feltham just before the economy crashed was bad timing, but the high quality displays of stone and the warehouse with its stocks of 450 different kinds of stone all under cover for easy viewing hits the spot with clients, developers and architects, who Pisani had realised had to be a major focus of marketing for the stone industry in general.

“We’ve had some very, very wealthy people here,” says Costas.

Of course, when they visit they are interested in the prices of the stone and Pisani does not keep prices a secret. It always tries to be as transparent as each individual business transaction allows. Clients and architects understand that the company shaping and installing the stone will need to make a profit and do not seem to have a problem with that. “There are a lot of open book negotiations,” says Costas.

Pisani knows that if a client or specifier visits the premises they might spend a day or more finding out about stone and making and changing decisions. But at the end of that process, the stone they use is likely to come from Pisani. A stone processor looking for Moleanos (say) might simply go round the suppliers looking for the lowest price.

Costas: “Pisani is still the company people come to when they want to ask the most difficult questions. In the past, once we have answered those questions people have sometimes chosen elsewhere to buy the stone. We still want to be the supplier people come to with difficult questions but we would hope to be their first choice of supplier when we give them the answers.”

Pisani is currently working closely with 20 developers that have asked it to co-ordinate the tendering. The stone wholesaler has orders for £4million worth of stone to supply on major projects like this. However, it is adamant the stone will be supplied through the stone specialists that it considers its customer and (apart from some hard landscaping projects) that payment will come to Pisani from the stone specialist.

Costas: “For some of these projects the decision to purchase is based on the comfort of seeing the material here in the UK. We can be less expensive, or at least no more expensive, than going to Italy. We have even sold certain materials to Italy.”

“We are a mini Antolini in the UK,” adds Sebastian Harris, referring to Antolini Luigi, one of Italy’s and the world’s largest and most successful stone suppliers.

The final part of the restructuring of Pisani has just been completed, with completely refreshed stock (since October 150 container-loads of stone have been imported) and a rationalisation of the sales team to change the culture from order-taking to customer care. Senior people are now in the front line, headed up by Sean Jenkins, UK Sales Manager, rather than having the most junior people answering phones and greeting visitors, which is how it used to be.

Previously, if a customer had asked for something Pisani did not have that might have been the end of it. But with 450 varieties of stone and quartz in stock, even if Pisani does not have a particular stone it has a lot of alternatives that customers can choose from. If a stone has been specified, a stone specialist might have to use that, but if Pisani is talking to the specifier there is an opportunity to have the specification changed to a material Pisani does stock.

The structure of Pisani is now established and there are no major changes planned in the next five-year plan. Costas has decided to make that plain now in the hope of bringing to an end the persistent rumours, not just of closure but also of takeovers by Indians, Spaniards, Chinese and others.

It was an actual offer of a takeover of Pisani that led to some of the difficulties the company has faced.

In 2000, Costas had returned to Greece, his homeland, on the death of his father. He then became involved in the construction work for the Olympics in Athens in 2004. He opened a branch of Pisani in Greece and had started to think about opening other branches in other parts of Europe.

Then, in 2007, a Spanish competitor wanted to buy Pisani for £20million, although only £5million would be in cash and the rest would be paid over time. Costas did not consider it enough but, in respect of his fellow directors, proposed to give them a cash bonus as compensation. Alan Bruce and David Kilpatrick said it was not necessary but Nick Telfer accepted the offer.

This led to a court case heard last year when Nick Telfer sued Costas for an outstanding sum of £930,000 of £2,820,000 Costas had agreed to pay to Nick under a deed dated 4 January 2007. It was a complicated case but the court found in favour of Costas (see bit.ly/Pisani-court-case).

The court case arose because after Costas had paid Nick Telfer nearly £2million, the credit crunch hit the banks and the world went into recession. Pisani banked with RBS and although the company was performing well at that time, it had borrowed £8.5million from RBS to buy the Feltham premises as well as taking out a loan from Lombard to refurbish it.

Pisani was put into the RBS Global Restructuring Group (GRG) that Lawrence Tomlinson, Entrepreneur in Residence at the government’s Department for Business, Innovation & Skills, last year told a Treasury Select Committee was basically an asset stripping operation.

Costas successfully moved banks, going to the Belgian KBC. “It was the worst decision of my life,” he now admits. KBC had financed Pisani’s debts but after two months demanded its money back. “They took £5million away from us in 90 days.”

Costas refinanced with the independent English bank BLME in March 2011, averting disaster almost at the last second. During this process his fellow Directors resigned from the Greek business, causing problems there. Costas says he had to bring £3million from the Greek business into the UK business in order to finance the headquarters and continue paying the staff. There was wealth in Pisani in the UK, so the £3million has been repaid to the Greek business, which was also suffering from the effects of the global financial crisis.

To cap it all, it became apparent that Pisani had less stone held in stock than it had believed – a shortfall of some £2million worth – while some of what it did have was of poor quality and worth perhaps another £1million less than its book value.

That was on top of £1.5million in accountants’ fees and legal costs to change banks and defend the court case brought by Nick Telfer.

But Pisani has survived, albeit in a slimmed down version. The Feltham and Matlock depots are now more integrated, both in management and computer systems. The stock has been bar-coded and computer controlled for many years, but the system had room for improvement. Now that those improvements have been made, staff can confidently expect to find in stock what appears on the computer. There is even an App for use on smartphones and tablets that contains pictures of about 600 slabs of stone. The plan is to make the website more like the App.

Costas: “Where we are now is that we have a lean team with the older generation there to provide the experience but with the energy of younger people alongside them.

“The core business is down 50% – but it’s building up.

“We have focused on some large projects that have helped us maintain some normality and we have focused on giving customers product, as before. We have kept the overall look of Pisani, protecting its integrity and its name.

“The priority for me has always been to make a living selling stone. I’m not an entrepreneur. We can survive now even if the market does not improve. The deals we give our customers are competitive but are good for both parties. We’re not chasing turnover, we’re chasing good projects.”

Costas has not been left unscarred by the difficulties of the past four years. “It hurt. If it didn’t you wouldn’t be human. What hurt most was that the people who slagged us forgot that Pisani still employs a lot of people, giving them a living. And not just people in the company but with its suppliers and customers as well. It’s like slagging your own family.”