KARANDAAZ PAKISTAN

Case Study on

Pie in the Sky:

Scaling with
Strategic Risk
Management
and Financial
Oversight
Case Study on

Pie in the Sky: Scaling with Strategic

Risk Management and Financial Oversight

Published in Pakistan in September 2024 by Karandaaz Pakistan with

financial support from the United Kingdom’s Foreign, Commonwealth

Foundation (BMGF).

Case Study Developed by:

EY Ford Rhodes

Technical Input Provided by:

Dr. Omair Haroon - (LUMS)
Dr. Aun Raza Rizvi - (LUMS)
Sharjeel Ahmad

Reviewed by:
Ali Akbar Ghanghro - Senior Manager, Research & Insights, Karandaaz
Nadira Saeed - Consultant Board Services, PICG

The views expressed in this document are those of the authors

and do not necessarily reflect the views and policies of
Karandaaz Pakistan or the donors who have funded the study.

© 2024 Karandaaz Pakistan

 Study on Corporate Governance in SMEs | Pie In the Sky (Pvt) Limited

1. COMPANY BACKGROUND AND HISTORY

1.1 Pie in the Sky – The start of a journey

In 1984, Naila Naqvi, after completing her A-levels, embarks on a life-changing internship at the renowned Avari
Hotel in Karachi. From an early age, Naila observed her mother's skilled baking and dedication to hospitality. They
never once considered buying birthday cakes from a bakery; instead, Naila's mother's extraordinary baking skills
ensured that every birthday was celebrated with a homemade cake, crafted with love and care. Growing up with
these experiences ignited a profound passion within her for baking.

The six-month sojourn at Avari, originally intended as a brief post-exam break, would kindle an unwavering passion
within her, forever shaping her career trajectory. The bustling kitchens, the meticulous housekeeping routines,
and the dynamic energy of the front office – Naila found herself captivated by the intricacies of hospitality
operations. This initial introduction to the industry sparked a lifelong commitment and fervour in Naila.

Even after the internship ended Naila, was still hungry for more knowledge and exposure – she had just got started.
Fortunately for her, Naila’s dedication and natural aptitude did not go unnoticed. She earned a coveted spot in the
pioneering management training program at the newly opened Avari Towers. This rigorous two-year program was
an immersive experience, offering her invaluable hands-on training in every department of the hotel. From the
precise art of preparing gourmet meals in the bustling kitchens to the meticulous attention to detail required in
housekeeping, Naila absorbed every lesson with a sponge-like enthusiasm.

Following this comprehensive training, Naila began her professional journey at the Avari Hotel. While working
there, she actively sought opportunities to grow her skillset. Her journey took a significant turn when she was
awarded a prestigious scholarship to pursue further studies in Singapore, where she enrolled in a renowned hotel
management program affiliated with the esteemed École Hôteliére de Lausanne. After her time in Singapore, she
also attained a Food and Management certification from Switzerland. This international exposure further
broadened her horizons and honed her skills in the hospitality industry.

Her international training completed, Naila came back to re-join Avari and worked there for 9 years. While working
at Avari Naila also took on some private catering gigs, and the aroma of freshly baked desserts wafting from her
home kitchen soon attracted the attention of local restaurants. As she began supplying them with her delectable
creations, her reputation for exquisite flavors and meticulous presentation grew steadily. However, the demanding
life of hotel management and the ever-present pull of family life began to create an internal conflict for Naila.
Balancing both became increasingly challenging. In the meanwhile, she also noticed a gap in the market for
artisanal bakeries, with only one competitor, "Kitchen Cuisine," in existence in Karachi at that time. Cognizant of the
opportunity, Naila decided to pursue her true passion for baking. It was in 2001, with the unwavering

support of her husband, that Naila decided to take a leap of faith and pursue her true culinary calling. To acquire
practical skills, she enrolled in a pivotal six-week program at the International School of Baking in the United States,
where she mastered the art of bakery management. It was during this period that Naila began to indulge her
newfound love for baking on a personal level. Pie in the Sky (PITS), a haven for artisanal delights, was born in 2001.

1.2 PITS Growth Journey

Fuelled by an initial investment from close family and Naila's boundless enthusiasm, Pie in the Sky opened its doors
in the heart of Karachi's charming Zamzama neighbourhood. The bakery's initial offerings were a delightful
medley – an array of cakes, brownies, pastries, and even savory delights.

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 Study on Corporate Governance in SMEs | Pie In the Sky (Pvt) Limited

Naila herself became the heart and soul of the bakery, overseeing every aspect – from the meticulous process of
baking to managing daily operations. Embracing a customer-centric ethos, PITS personally engaged with patrons,
ensuring their experience was nothing short of exceptional. Feedback from customers was not just welcomed but
actively sought, driving a continuous cycle of improvement. Naila's dedication extended beyond the front lines; she
personally trained and mentored her staff, instilling the values of quality and service excellence that Pie in the Sky
became renowned for. Despite the lack of social media presence, Pie in the Sky flourished organically, solely
through word of mouth—a testament to the unparalleled quality of its food and service.

This dedication and commitment to quality soon bore fruit. Over the next two decades, Pie in the Sky embarked on
a remarkable journey, transforming from a local favourite into a national phenomenon. The bakery's vision
extends beyond provincial borders. After opening 23 branches in Karachi, 2 in Hyderabad from 2001 to 2021, and
diversifying into the restaurant business - Cafe Chatterbox - in 2014, a flagship branch was inaugurated in Lahore
in December 2022, marking a bold stride towards national expansion. Today, the bakery boasts a flourishing
presence with 32 branches spread across Karachi, Hyderabad, and Lahore. Each branch stands as a testament to
Pie in the Sky's unwavering commitment to quality ingredients, innovative recipes, and exceptional customer
service. In addition, Pie in the Sky also invests in product innovation, on an on-going basis (as mentioned in more
detail in the next sections).

Embracing a forward-thinking strategy, Pie in the Sky was poised for a new chapter of growth and collaboration
as it transitioned towards a franchise model. The granting of the first franchise agreement in 2023 signified the
start of an exciting new era for this beloved Pakistani bakery. The growth in retail outlets since 2001 can be seen
in the graph below:

Increase in Number of Outlets

35 32
30
26
25
19
No. of Outlets

20

15
11
15 8
6
5

0
2001-10 2011-13 2014-16 2017-19 2020-22 2023-24

Years

After consolidating the business in the first 5 to 6 years, the notable acceleration in outlet growth from 2017
onwards demonstrates the strength of the brand that Naila built up from scratch and the sustained consumer
demand for products.

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 Study on Corporate Governance in SMEs | Pie In the Sky (Pvt) Limited

Naila, as the owner and CEO of Pie in the Sky, has crafted a holistic strategy to align with her vision. This approach
covers various facets, embracing creativity, quality, and customer satisfaction at its core:

To provide the best possible

product at the best possible price.

The diagram below summarises some of the key growth and corporate governance milestones in the PITS journey:

2006-10 2016-20 2016-20

Micros ERP system was introduced, External consultants were hired to develop PITS expanded its
laying the foundation for standardized asset management SOPs product portfolio by
processes and enhanced operational adding frozen items
Chocolate Brand (Aztec Chocolate and
control such as parathas
Cake Boutique) was added
Most selling cake Chocolate Malt Cake ChocolateLava Crust
Chatterbox Deli (CB Deli), another cafe was
was launched launched which has
launched
As the business expanded broader positively affected the
Frozen savories for Iftar were added to the sales and forecasts for
management team was taken on board
portfolio near future
Production facility shifted from Gizri to a
First branch in Hyderabad was launched
centralized kitchen Korangi Industrial
Area Addition of Marketing department

2001-05 2011-15 2024

Established first Pie in the Sky bakery in Internal audit unit was established Mystery shopping was conducted as
Zamzama, Karachi, Pakistan, marking Technosys (a domestic developed and a testing phase for front-line retail
the beginning of the brand’s journey used ERP) was implemented sales team performance
Production facility established in Gizri Another independent Chatterbox Flow-HCM, an enhanced HR system,
Launched Chatterbox - Cafe segment at Cafe launched at Bukhari was deployed
Zamzama outlet Commercial, Karachi First branch in Lahore was launched
POS management system micros 2000 External consultants were hired to In-house laboratory was established
was implemented develop HR and Operational SOPs

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 Study on Corporate Governance in SMEs | Pie In the Sky (Pvt) Limited

2. ADOPTION OF CORPORATE GOVERNANCE

PRACTICES TO OVERCOME BUSINESS
CHALLENGES
Evolving in the Face of Challenges
While in a singular location and managing the whole supply chain, from baking to sales under a single roof, Pie in The
Sky operated initially using excel sheets with the total manpower of 7 people, including Naila. As Pie in the Sky
expanded beyond Karachi, first in 2017 to Hyderabad and in 2022 transcending provincial limits, to Lahore, the
challenges were numerous. This expansion happened at a time when the retail artisan bakery industry in Pakistan
was still in its infancy, without any established guidelines or playbook for best practices:

• Manual Operations and Inventory Records

In the initial stages, PITS faced challenges with inventory errors primarily due to the absence of an ERP
system to record purchases and consumption quantities. Moreover, salespersons at the stores manually
took orders from customers (in the case of advance bookings) and relayed them to the production facility in
an informal manner. However, this occasionally led to orders being missed due to communication lapses.

• Risk Management

As the business expanded, it experienced some incidents of sales fraud, including manipulation of sales
returns and mishandling of cash. This was due to a lack of proper internal controls and monitoring /
reconciliation mechanisms over cash sales at the time, as well as the maintenance of manual inventory
records.

• People Management

Finding the right talent proved challenging for the company, as individuals were increasingly offered other
opportunities (locally and abroad, once they received the training that experience at PITS brought with it.
Despite efforts to attract and retain skilled professionals, securing the ideal candidates remains an
ever-present hindrance.

• Quality Assurance

In the earlier years, maintaining quality standards posed a challenge for the business due to inconsistent
raw material quality from vendors. Vendors who were initially reliable, reduced the quality of supplied
materials over time, or were inconsistent with their quality, causing difficulties in uniformity of quality
standards and meeting customer expectations.

• Establishing a loyal customer base in new markets

PITS encountered hurdles when expanding to Hyderabad. Establishing a customer base proved challenging
due to the simultaneous entrance of multiple competitors into a smaller market and the unique market
dynamics of the area.

Management had focused on evolving Pie in the Sky through a hands-on approach in tackling challenges. With her
active role in day-to-day operations, and oversight, in early days of the business it was much easier to manage the
360 degree of business affairs. As Pie in the Sky opened new branches across Karachi, and expanded its
production capacity, a renewed focus was required on establishing leading practices and the evolution of
governance mechanisms. To overcome these challenges, management implemented strategic initiatives aimed at
enhancing operational efficiency and bringing stabilising and sustainability to the growing business:

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 Study on Corporate Governance in SMEs | Pie In the Sky (Pvt) Limited

2.1 Board Composition

While Naila headed Pie in the Sky from the beginning, an early governance decision was made to create a Board of
Directors of primarily composed of capital investors. The Board plays a crucial role in providing strategic
oversight, is mostly made up of family members, including Naila herself and her two brothers-in-law who are also
businessmen. One of the board members, Abid Naqvi, has been particularly active in overseeing financial matters,
instilling a prudent financial stewardship ethos within the organization. Naila found Abid Naqvi's expertise in this
area invaluable for steering the company's growth. The board is kept informed of the company's financial
performance and future plans through quarterly financial reporting. The CFO and General Manager report the
financial performance to the board in these meetings, providing insight where required and seeking their
guidance and input in the decision-making process for critical matters. E.g. one of the key recommendations of the
BOD was the acquisition of a larger production facility in Korangi - as the network of branches expanded, capacity
constraints were encountered at the production facility in Gizri. Anticipating this challenge, the board decided to
establish a centralized kitchen at Korangi Industrial Area in 2010.

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 Study on Corporate Governance in SMEs | Pie In the Sky (Pvt) Limited

This strategic decision significantly boosted the production capacity of the business and facilitated seamless
operations across multiple bakery branches, highlighting the board's proactive approach to scalability and
operational excellence. The production facility was much larger than was required by PITS at the time, given the
number of existing outlets. But the bold and far-sighted decision taken by the Board members to invest in it,
anyway, was timely and was aligned with the company’s log-term vision to achieve market growth.

Beyond financial oversight, the board has enhanced the overall corporate structure of the business by providing
guidance on financial, HR, and administrative controls. Leveraging their collective expertise and strategic vision,
the board has guided Pie in the Sky towards operational efficiency and best practices, ensuring a solid foundation
for sustainable growth.

Additionally, the CEO’s vision has played a key role in operational and business development matters, offering
strategic insights and direction to capitalize on emerging opportunities and navigate potential challenges. The
franchising model was one such opportunity, which once it is fully implemented, can now provide PITS with the
platform to expand on a much larger scale altogether.

2.2 Customer Centricity Approach prioritising Customer

Satisfaction
From its inception, Pie in the Sky had prioritized a customer-centric ethos, with the owner personally focusing on
the needs of consumers and ensuring customer satisfaction in a convenient way. Founding it as a key governance
strategy from day 1, as the business grew across the city, the commitment to customer centricity was cascaded
across by focusing on:

• delivery of best value product to the customer through unwavering focus on quality,

• constant evolution of product line in line with changing customer needs

• diversifying their product range; and

• superior customer service

Pie in the Sky focused on an agile approach to product development involving regular analysis of customer needs
to update its product portfolio. The team prioritizes continuous improvement to meet customer demand. New
products are launched not just based on ideas and experimentation, but also based on ongoing market research,
not only in the local market but also internationally. They conduct a thorough evaluation of the product range
regularly to gauge demand and adjust offerings to effectively meet customer preferences. In addition to their
commitment to continuous improvement, the owner's personal background as a baker fuels the constant
generation of new ideas to tempt the customers’ palette.

As Pie in the Sky expanded its presence across Karachi in 2007, the bakery responded to customer demand and
feedback by incorporating traditional cakes like Black Forest and Pineapple into its menu. Similarly, as Pie in the
Sky expanded out of Karachi to Hyderabad, they faced stiff competition from the domestic Hyderabad market with
its homegrown Black and Brown bakers. Initially, the management perceived market penetration as challenging.
However, the superior quality of products, packaging, and overall brand positioning enabled them to establish a
customer base within a year.

Further, to align with the evolving dynamics of the consumer market, the company relaunched its official website
in 2021 with online ordering facility for customers. This digital platform empowers customers to effortlessly place
orders from the comfort of their homes. They are also present on social media platforms like Instagram and
Facebook to keep their customers posted about the latest offerings and discounts, reflecting the company's
dedication to accommodating the changing needs and preferences of today’s consumer. With the addition of
marketing department, company enhanced its digital presence and increased brand positioning through better
usage of social media platforms.

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 Study on Corporate Governance in SMEs | Pie In the Sky (Pvt) Limited

2.3 Quality Assurance

The customer centric approach relies heavily on ensuring that the quality of the product is as per the expectation
of the customer every single time. Realizing the importance of this, as Pie in the Sky expanded beyond the
Zamazama branch and opened the new central production facility in Korangi industrial areas, Naila and team
established a dedicated team and defined processes for quality assurance through a comprehensive strategy:

• In-House Laboratory Testing

PITS's in-house laboratory was established in 2022 which serves as a hub for meticulous product testing,
enabling the management to enforce stringent controls by conducting random assessments of various
products. Factors such as sugar levels, moisture content, surface testing, materials testing, finished goods
testing, are scrutinized to ensure the quality and safety of all offerings.

• Dedicated Quality Control Departments

Pie in the Sky established a dedicated department for their Karachi facility to conduct quality assurance
procedures. This department played a pivotal role in not only monitoring production quality but also
rigorously evaluating vendor supplies. By meticulously vetting materials and ingredients, these quality
control teams ensure that only bakery approved quality inputs are used in the production process. Different
regulations from food safety departments and certification bodies are assured through QA department.
This stringent oversight guarantees a consistent standard of excellence across all products, reinforcing
PITS's reputation for quality and reliability in the market. To ensure quality, stringent quality checks are
conducted:

1 Raw material QA on receipt: Raw materials undergo meticulous inspection; those that do not meet the
bakery's standards are promptly returned to the supplier.

2. Raw material QA on issuance for production: Before production, a thorough quality check is
conducted; items not meeting standards may be further processed to meet criteria or discarded.

3. Finished goods QA at production: Finished goods are rigorously assessed; those not meeting
standards may undergo reworking to rectify defects. Each cake is stamped with the manufacturing
date underneath, enabling traceability, and ensuring freshness and quality for customers. Finished
goods are checked before being dispatched to outlets. Further, there is also an online complaint
submission and response system is in place between outlets and QA team to ensure the best quality
products are displayed.

4. Finished goods QA at the bakery: Before packaging and handed over to the customer, finished goods
are inspected; items not meeting the quality standard are discarded.

PITS' commitment to rigorous quality assurance, from raw material sourcing to finished product delivery,
cultivates a reputation for reliability and excellence in the market. This comprehensive approach ensures
consistent product quality, fostering trust and loyalty among customers. Additionally, the implementation of
traceability measures and swift complaint resolution mechanisms further enhances customer satisfaction,
driving business growth through positive word-of-mouth and repeat business.

As Pie in the Sky expanded into Lahore, they fortified their commitment to quality by establishing a separate
production facility equipped with necessary machinery. This initiative, built upon the success of their existing
facility in Karachi, ensured that stringent quality standards were met consistently. Over the years PITS has
prioritized quality assurance as a cornerstone of its operational ethos, implementing robust measures to uphold
the highest standards of product quality, safety, and consistency.

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2.4 New Product Development

Naila consistently reinvents herself, placing great emphasis on continuous innovation in her products. New
products and recipes developed in response to evolving tastes of customers, undergo rigorous testing by the CEO
herself before being introduced to customers, ensuring no compromise is made on product quality or flavour. E.g.,
In 2004 healthier options in breads such as four grain and country style breads were introduced followed by
Multigrain Bread in 2006. Their current highest-selling product Chocolate Malt Cake was launched during 2008.
Notably, they also introduced innovative offerings like banana chips in various flavors, decadent truffles, biscuit
jars, and the indulgent Lava cake, catering to diverse preferences.

In 2024, despite its impressive 32-branch network, Pie in the Sky remains focused on continual improvement and
expansion in response to customer needs, with a regular review of customer responses to products. The
management recognized that while operational matters are important, building sustainable success requires a
long-term perspective and continuous improvement. To further fuel innovation, the company recently onboarded
a dedicated R&D specialist. This strategic move aims to evaluate and execute new ideas generated not only by
Naila herself, drawing from her expertise as a baker, but also from the management and CEO's keen awareness of
ongoing trends in the local and international market.

Businesses should not consider themselves successful - because when you consider your
business a success, you become complacent. I believe there’s always room for
improvement.

Naila Naqvi, CEO

2.5 Investing in Technology

With the expanding footprint, the scale of production grew manifold creating challenges in terms of inventory
operations - managing inventory records for purchases and additions to the inventory, issuance requests for
production, and the remaining inventory left to be utilised.

Pie in the Sky has leveraged technology to revamp its inventory management processes, fostering efficiency,
accuracy, and transparency in its operations as they grew. The journey of system deployment began in 2005 with
the introduction of the Restaurant POS management system Microse 2000 at the first retail outlet in Zamzama.
From there, the company gradually expanded its technological capabilities, introducing a basic off-the-shelf
inventory and accounting system in 2007. Subsequently, between 2008 and 2013, the company implemented a
local system called Syber-Edge for accounts, HR, and inventory management, marking a significant step towards
streamlining operations. This progression culminated in the adoption of a more advanced ERP system in 2014,
Technosys, representing a substantial advancement in the company's technological infrastructure. Since then,
the company has continued to enhance its systems, deploying a separate HR system, Flow-HCM, in 2021, and
currently transitioning to Odoo as its ERP system across all operations since January 2023. The implementation
of automated systems helped streamline various aspects of operations:

• ERP System Integration

The adoption of an ERP system marked a turning point in PITS's inventory management strategy,
streamlining processes and enhancing control over inventory levels. By digitizing inventory tracking and
management, the bakery minimized the likelihood of inventory discrepancies and unauthorized access,
safeguarding its assets and ensuring accurate stock records. Inventory management system helped
company to enhance inventory planning from materials, packaging to finished goods forecasting and
procurement of materials.

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• Enhanced Order Processing

In the early days of the business, manual order-taking processes posed challenges, sometimes leading to
missed orders and communication lapses between retail outlets and the production facility. With the ERP
system implementation, a paradigm shift occurred in order processing. Salespersons now input all
customized orders directly into the system, enabling real-time communication and confirmation with
dispatch and the production team.

This seamless integration has bolstered traceability, improved order accuracy, and ensured timely
fulfilment of customer orders, enhancing overall operational efficiency and customer satisfaction.

2.6 Internal Controls & Reporting Mechanism

Pie in the Sky’s growth journey, while remarkable, could not have been sustainable without an evolution in the
internal controls system and overall monitoring mechanism within the organisation. Rapid expansion necessitated
a shift towards a more formalized system of checks and balances. Multiple branches across geographically
distinct locations introduce complexities in areas like inventory management, recipe consistency, quality control,
financial oversight, and uniform customer service. Expansion also broadened the risk landscape and introduced
issues like theft, inventory shrinkage across multiple locations, or even accidental lapses in food safety protocols.
With a growing number of employees and a geographically dispersed operation, maintaining transparency and
accountability also became more challenging. With a 32-branch network and over 500 employees as of 2024, Pie
in the Sky had felt the need of having strong control systems to ensure operational excellence and financial
integrity. Over the years the management has meticulously crafted a comprehensive system of internal controls
and reporting mechanisms to fortify its business operations.

Additionally, by focusing on clear and effective communication, the management conducts regular meetings on a
monthly, quarterly, and half-yearly basis to review the financial landscape and strategic planning of the business.
These meetings serve as a forum for in-depth discussions, fostering informed decision-making and aligning the
company's financial goals with its operational strategies.

In 2010, a formal financial reporting structure was embedded within the organization, enabling the development
and review of annual Business plans by the management in collaboration with insights from the sales and
marketing team. This systematic reporting approach facilitated a holistic view of the business's financial position
and sales forecasting, guiding the bakery towards sustainable growth and strategic alignment.

The company also developed an independent internal audit function in 2012 which evolved over the years
comprising of dedicated teams conducting routine visits to all outlets. These internal audits encompassed cash
audits, inventory checks, and meticulous scrutiny of operational standards and quality control measures. Retail
staff are held accountable for sales and inventory management along with the rest of the employees, ensuring
transparency and accuracy in financial records. The findings of internal audit reports are carefully reviewed by
the board, providing valuable insights into the effectiveness of inventory control measures, and informing the
strategic decision-making processes. By safeguarding against financial discrepancies and enhancing operational
efficiency, the internal audit team played a crucial role in preserving the financial integrity of Pie in the Sky.

While emphasizing the importance of the Internal Audit team, Naila said:

The amount that we spend on our internal audit team, they probably save us multiples of
that.
Naila Naqvi, CEO

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To further enhance independent feedback on service quality, Mystery shopping was conducted in which PITS staff
acted as regular customers to evaluate the quality of service, adherence to company standards, and overall
customer experience. This was done during 2021/ 2022 as a test initiative, for front -line retail sales team
performance and management guided the front-line retail sales team for necessary actions where needed.

2.7 External Advisory for SOP Development

In response to the growing needs of a burgeoning business, the PITS board recognized the importance of
standardising and optimising its business processes through the development of Standard Operating Procedures
(SOPs). This pivotal decision marked a significant milestone in the bakery's evolution, signifying a commitment to
operational efficiency and consistency in its operations.

In 2012 they proactively engaged a reputable consultancy firm to spearhead the development of SOPs tailored to
streamline its HR and Operational policies. This was followed by another major SOP development for asset
management policies in 2016. This covered assets like baking equipment, outlet display units, IT hardware,
furniture, vehicles, ACs, Freezers, cold storages, etc.

Over time, a robust framework comprising over 50 meticulously formulated SOPs has evolved. These SOPs and
policies serve as a blueprint for operational excellence and standardized practices across various departments.
These SOPs encapsulate industry leading practices, regulatory compliance requirements, and tailored operational
guidelines to ensure consistency and quality in every aspect of the bakery's operations.

In a decentralized approach to SOP management, the company entrusts departmental managers with the critical
responsibility of updating, maintaining, and owning the SOPs within their respective domains. This decentralized
model has helped to foster accountability and ownership at the managerial level while ensuring that SOPs remain
dynamic, responsive to evolving business needs, and reflective of the latest industry standards. SOPs in
operational areas are discussed in cross functional meetings when there is need to evolve in the practices to meet
the needs of customers and remaining assured of smooth services.

2.8 Investing in People

PITS’s approach on hiring centres on identifying candidates who not only possess the necessary skills but also
demonstrate the right attitude and the enthusiasm to learn. For PITS, finding individuals who possess a genuine
enthusiasm for learning is crucial. In short, they align with the values of the organisation, and herself. Naila’s
philosophy revolves around having a team that shares her vision. By fostering an environment where individuals
share her passion and commitment, they collectively strive towards turning ideas into impactful outcomes.

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I surround myself with the people who can understand my vision, so they can then
translate my vision into reality.

Naila Naqvi, CEO

This in turn, aligns with Pie in the Sky's emphasis on teamwork and cultivating a fair workplace culture, a vision
actively championed by the CEO and management. The management, from the company’s inception, recognised the
shortfall in supply of trained talent in the bakery business and committed to offering market-competitive salaries
and fringe benefits. For talent retention and welfare, Pie in the Sky focused on introduction of progressive policies,
such as staff's family health insurance and educational support, bonuses, transportation to female employees,
continuous skill development and upgradation through multiple trainings. While the training approach lean towards
informality, the organization ensures training for retail staff through assistant managers and area supervisors,
blending classroom sessions with on-the-job learning. Regular employee briefings further enhance staff
competency in customer service and product knowledge, bolstering the overall customer experience.

Naila, throughout the growth journey of the business has emphasized the importance of Talent Management -
recruiting and retaining the right individuals to drive organizational success. To address this, the organization while
maintaining an up-to-date HR manual, reflecting evolving practices and ensuring consistency and compliance
across all HR functions, prioritizes internal promotion of employees as a means to boost their motivation. This
commitment to nurturing talent is evident as there are more than ten individuals within the organization who have
been with PITS since the very beginning and have accumulated extensive experience over years of dedicated
service, each bringing a wealth of knowledge and expertise to contribute to the company's success. The business
also ensures clarity and accountability among its employees through well-defined job descriptions (JDs) and key
performance indicators (KPIs). Each employee is provided with a comprehensive JD outlining their roles,
responsibilities, and expectations within the organization. Additionally, specific KPIs are established to measure
their performance and progress towards organizational goals. This structured approach not only enhances
employee understanding of their roles but also facilitates effective performance management, ensuring alignment
with the company's objectives.

PITS Employee Growth in Percentage

70% 64%
60%
50%
Percentage Growth YoY

50% 39%
38%
40%
30%
30%

20%
13%
6% 8%
10% 2% 4% 3% 0%
0%
0%
2011 2012 2013 2014 2015 2016 2016 2018 2019 2020 2021 2022 2023

Years

*Note: 2011 has been taken as base year

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For streamlined decision making and efficient management, Pie in the Sky established a hierarchical structure, with
retail supervisors overseeing individual outlets under the guidance of area managers. Regional managers provide
strategic oversight within their respective regions, ensuring operational cohesion and performance alignment. This
helped Naila in effectively translating her vision for the business into actionable strategies, fostering innovation and
growth.

Board of
Directors

Naila Naqvi
CEO

CFO GM Pdoduct Sr. Manager Sr. Manager Sr. Manager Manager

and R&D HR Marketing IT Legal

Manager Sr. Manager

Sr. Manager Corporate & Deputy
Internal Retail Sales Market Sales COO
Audit

Sr. Manager
Quality
Assurance

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2.9 Risk Mitigation

As discussed earlier in this case study, the potential risks to the business include operational challenges such as
inventory management issues, finished goods inventory discrepancies, fraudulent activities, and the threat of cash
theft. Additionally, financial reporting risks, including inaccuracies in financial statements, could undermine
transparency and trust among stakeholders. However, Pie in the Sky has implemented proactive measures to
mitigate these risks and safeguard its financial assets through a robust risk management framework. By
conducting regular cash and inventory audits, the internal audit department plays an essential role in identifying
potential risks, discrepancies, and fraudulent activities, thereby fortifying the bakery's financial integrity and
operational resilience.

Market research is fundamental to Pie in the Sky's decision-making process, particularly regarding
location-related strategies. Understanding the significance of choosing optimal locations, the bakery now
conducts extensive market analyses before finalizing any decisions particularly regarding new outlets. Utilizing
tools like SWOT analysis, the company evaluates the strengths, weaknesses, opportunities, and threats associated
with potential locations. This rigorous scrutiny allows Pie in the Sky to identify viable locations and develop
well-informed strategies for expansion and growth, thereby minimizing the risk of selecting inappropriate
locations.

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 Study on Corporate Governance in SMEs | Pie In the Sky (Pvt) Limited

3. IMPACT ON BUSINESS GROWTH

The gradual adoption of the corporate governance practices over its journey, helped PITS put in place a
formidable team with a clear vision, and resilient operations with, robust systems, fostering transparency and
stability. This allowed Pie in the Sky to spread its wings and aim for scales of growth and diversification that would
never have been envisioned at the beginning of its story as a one-shop enterprise. Corporate Governance
practices have been instrumental in guiding PITS through challenges and driving sustained business expansion
through the years. This is evident by PITS’ significant uptrend in revenue numbers that can be seen in the below
graph:

Year - wise Revenue (Masked*)

200
178
180
160
145
140
120
98
Revenue

100
76 76 80
80
64
60 52
40 33
14 20
20 6 10
0
2011 2012 2013 2014 2015 2016 2016 2018 2019 2020 2021 2022 2023

*Note: Numbers have been masked for confidentiality purposes.

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 Study on Corporate Governance in SMEs | Pie In the Sky (Pvt) Limited

4. THE ROAD AHEAD FOR PIE IN THE SKY

Pie in the Sky after 23 years in the business and evolving through multiple challenges with the help of robust
governance structures is now strategically positioning itself for future growth and expansion through innovative
initiatives aimed at exploring new markets, diversifying product offerings, and leveraging intellectual capital to
propel the bakery towards its next phase of development. As the management delves into the future ahead, focus is
on sustainable expansion and further streamlining the operations and governance, to ensure Pie in the Sky
continues to be a brand beyond excellence::

• International Expansion and Product Diversification

In pursuit of continuous growth and market expansion, Pie in the Sky is actively considering opportunities
to venture into international markets. By exploring new territories, the bakery aims to introduce its
renowned products to a global market, tapping into new consumer demographics and expanding its brand
presence on a global scale. The team also visited the Dubai Food Festival as part of their strategic initiative
to explore opportunities overseas. This move reflects their proactive approach to expanding into
international markets, aiming to capitalize on emerging opportunities and broaden the scope of their
business.

• Leveraging Specialised Expertise for Diversification

Pie in the Sky is keen on diversifying its product portfolio to cater to evolving consumer preferences and
market demands, ensuring a wide and appealing range of offerings for its customers. Expansion of product
range will also enable PITS to expand its customer base as well its reach. E.g., one of the company’s plans of
venturing into frozen goods, jams jellies and other packaged foods will help PITS move beyond the bakery
and confectionary landscape, explore a greater market, and eventually earn a larger space on the shelves of
major grocery stores. Through a forward-thinking approach to expansion, diversification, and strategic
leadership, PITS is focused on onboarding seasoned expert resources who will provide invaluable guidance
and insight to help navigate different pastures and capitalise on opportunities.

• Franchise Model

Having seen its first franchise branch run successfully for almost a year to date, PITS is looking to further
spread its reach by leveraging the franchise model, which would enable more rapid expansion without
requiring the amount of capital investment that retail outlets usually require.

To keep the company on track and resilient through its future growth journey, it is critical for PITS to build further
on its existing corporate governance practices like standard operating procedures, internal controls and risk
management, quality control, internal audit etc. Although PITS is already moving towards maturity in its Corporate
Governance practices, continued growth in this direction will be a key enabler on PITS’s route to achieving its
future goals.

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 Study on Corporate Governance in SMEs | Pie In the Sky (Pvt) Limited

5. ANNEXURE A - MAPPING OF KEY CORPORATE

GOVERNANCE PRACTICES ADOPTED BY PITS
WITH THE LEADING CORPORATE GOVERNANCE
FRAMEWORKS
The table below presents key corporate governance practices adopted by PITS mapped with the principles from
leading corporate governance frameworks along with the outcomes of implementing each principle:

Corporate Governance Principles Key initiatives How it helped PITS

Pillar: Culture and Commitment to good Corporate Governance

Principle: Vision, mission, and core PITS has a vision statement • The vision has acted as a
values of the company are developed articulated. The entity’s vision compass to guide their strategy
and communicated to all stakeholders statement is “To provide the best towards consistently delivering
and updated from time to time. possible product at the best possible high-quality products that meet
price”. customer expectations while
maintaining competitive pricing.

Principle: A well-defined PITS has a formal organizational • A formal organizational structure

organizational structure is in place structure in place and has a flat clearly defined the reporting
with clear reporting lines. hierarchy promoting open lines ensuring operational
communication and encouraging cohesion and performance
idea- sharing. alignment.

Principle: Key policy and procedures PITS Board proactively engaged a • These SOPs and policies served
are in place and formally reputable consultancy firm to as a blueprint for operational
documented. spearhead the development of SOPs excellence and standardized
tailored to streamline its HR and practices across various
Operational policies. departments.

Principle: Responsibilities and PITS ensures clarity and • Helped in setting performance
authorities for key management accountability among its employees expectations, ensuring alignment
positions are documented in the form through well-defined job descriptions with the company's objectives.
of clear job descriptions. (JDs).

Principle: Training and education is In order to ensure excellent • Training and education of staff
provided to employees about internal customer service, PITS ensures helped the entity to enhance
control policies and procedures. training for retail staff through skillset and knowledge of its staff,
assistant managers and area improving their customer
supervisors, blending classroom handling skills, resulting in
sessions with on-the-job learning. exceptional customer service.

Pillar: Decision Making and Strategic Oversight

Principle: The company's strategy, A formal financial reporting • Facilitated a holistic view of the
results and long-term goals are structure was embedded within the business's financial position and
reviewed on an annual basis. organization, enabling the sales forecasting, guiding the
development and review of annual bakery towards sustainable
Business plans by the management in growth and strategic alignment.
collaboration with insights from the
sales and marketing team.

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 Study on Corporate Governance in SMEs | Pie In the Sky (Pvt) Limited

Corporate Governance Principles Key initiatives How it helped PITS

Principle: Key performance PITS has devised specific KPIs to • Facilitated effective performance
indicators are used as an effective measure the performance and management to achieve overall
performance evaluation and progress of the employees objective of the organization.
motivation tool for key management
and technical staff.

Pillar: Risk Governance and Control

Principle: An appropriate internal The management conducts regular • Meetings served as a forum for
controls system is in place to identify meetings on a monthly, quarterly, and in-depth discussions, fostering
and manage risks to the company's half-yearly basis to review the informed decision-making and
operational, reporting and financial landscape and strategic aligning the company's financial
compliance objectives e.g., planning of the business. goals with its operational
authorization controls, segregation of strategies.
duties, physical controls, monitoring The company also developed an
reports etc. independent internal audit function • The internal audit team played a
which evolved over the years crucial role in preserving the
comprising of dedicated teams financial integrity of Pie in the
conducting routine visits to all outlets. Sky
These internal audits encompassed • Inventory management system
cash audits, inventory checks, and helped company to enhance
meticulous scrutiny of operational inventory planning from
standards and quality control materials, packaging to finished
measures. goods forecasting and
procurement of materials.
PITS adopted ERP system to avoid
risks of inventory discrepancies and • Improved customer experience
missed or inaccurate order due to faster and accurate order
processing. processing.

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About Karandaaz
Karandaaz Pakistan is a not-for-profit public company limited by guarantee set up under Section 42 of the
Companies Act, 2017. Karandaaz was established in 2014 with seed funding from UK Government’s Foreign
Commonwealth and Development Office and the Bill & Melinda Gates Foundation. Karandaaz Pakistan is an impact
investment platform that drives sustainable economic growth and strengthens financial and social protection
systems for inclusion. Its main area of focus is to address challenges faced by SMEs and unbanked individuals1 in
Pakistan with respect to access to finance to foster economic growth and prosperity for Pakistan.

Karandaaz Capital
This vertical provides wholesale structured credit and equity-linked direct growth capital investments
in micro, small and mid-size enterprises that have the potential to contribute to sustainable growth.
and employment generation in Pakistan.

Karandaaz Digital
This vertical focuses on expanding the access to digital financial services in Pakistan by working
across the ecosystem with all stakeholders in the following work areas: digital public infrastructure,
payment systems, policy and regulation, seeding innovation, experimentation and solutions
development, and scale and outreach.

Karandaaz Innovation
This vertical provides risk capital and technical assistance to support innovative solutions aimed at
financial inclusion and entrepreneurship especially in marginalized sectors. A key component of the
work includes providing business development support and growth capital to women led businesses
and green ventures to facilitate their expansion and scale up.

Karandaaz Research & Insights

This vertical supports the company’s core financial inclusion goal by developing and disseminating
evidence-based insights and solutions to influence markets and the financial ecosystem.

For more information, contact us at: [email protected]

www.karandaaz.com.pk
@KarandaazPK /KarandaazPK /company/karandaaz-pakistan

@karandaazpakistan3106 @karandaazpk