urmad Umar

D edicated to m
y
Parents and teachers
Who always help me
and care me.
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ACKNOWLEDGEMENT.

Person is not a perfect in all the contexts of his life. He has a limited mind and mind
thinking approaches. It is the guidance from the almighty Allah that shows the man light
in the darkness and the person finds his way in this light. Without this helping light,
person is nothing but a helpless creation.

The teaching of the Holy Prophet Muhammad (PBUH) were also the continuous source
of guidance for us especially his order of getting knowledge and fulfilling once duty
honestly was key motivation force for us.

I am very grateful to Almighty Allah who permitted me to be trained in a real

world organization, KAPCO, as well as to complete this report in a very limited time. I
am also very grateful to every person of kapco staff.
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PREFACE.

It is difficult to understand fully the real-life applications and challenges solely through
textbooks and lectures. The success of today’s professional life hinge on realizing the
importance of a specific region’s demographic, cultural, organizational and political
characteristics, knowledge that is best learned through experience and cultural immersion.
D G khan campus Internship Program gave me the opportunity to study the bookish
concepts in a very different type of classroom. In particular, the internship gave me the
opportunity to explore my interest in researching the business activates of KOT ADDU
Power Company. My six week internship taught me more about financial activities than
I could have possibly ever learned in a traditional classroom. Things are really difficult in
practical life and to meet the requirements of this practical aspect my internship will help
me a lot.
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Table of contents

Dedication

Acknowledgement

Preface

Vision Mission Statement

Board of Directors

Introduction

History

Location

Map

Share Holder Structure

Management functions

Finance department

Procurement department

OD department

SWOT analysis

Recommendations
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VISION STATEMENT

To be a leading power generation company, driven to exceed our shareholders’ expe

ctations and meet our customer’s requirements.

MISSION STATEMENT

• To be a responsible corporate citizen

• To maximize shareholders’ return
• To provide reliable and economical power for Our customer

• To excel in all aspects relating to safety, quality And environment

• To create a work environment which fosters Pride, job satisfaction and

equal opportunity for career growth for the employees.
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Board of directors
Mr. Shakil Durrani

Chairman

Mr. Aftab Mahmood Butt

Chief Executive Officer

Mr. Vince Richard Harris OBE

Director

Mr. Malcolm Peter Clampin

Director

Mr. Muhammad Azhar Iqbal

Director

Mr. Anwar Ul Haq

Director
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Introduction
KAPCO is the largest Independent Power Producer (IPP) having the largest Combined
Cycle Power Plant in Pakistan with total capacity of 1600 MW. The plant is located in
KOT ADDU; district Muzaffargarh on 180 acres of land. A further 200 acres are covered
by the residential colony which comprises of over 900 houses, a ten bed hospital, staff
and officer’s recreational facilities, two shopping centers, a bachelor hostel, three guest
houses, two schools with over 1,400 students and three mosques

History
KAPCO is the first industrial privatization in Pakistan and came into being on 27th of June
1996 under an agreement between the Government of Pakistan, National Power – the
UK’s largest power company (Now called “International Power”) and the Water and
Power Development Authority (WAPDA).

The company has the solid background of profits and efficiency catering to the 7 %
energy requirements of the country with a share of 29 % in the total power generation of
IPPs in Pakistan. In theory the tariff structure of every IPP is such that its shareholders are
guaranteed a fixed return, assuming they meet certain conditions set in Power Purchase
Agreement (PPA) with Wapda. KAPCO has a three way relation with WAPDA. All at
the same time, Wapda is its customer, lender as well as shareholder.

Initial Public Offering (IPO):

Privatization Commission of Pakistan has offered 20 % shares to Resident / Non-resident

Pakistani Investors and the transferred KAPCO employees
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Location

The Power Plant is situated in District Muzaffargarh, Punjab, 90 K.M. north west
of Multan on the left bank of the River Indus at a distance of 16 K.M. from
Taunsa Barrage. The area is surrounded by agricultural land on the north and west
side of Kot Addu.

MAP
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MANAGEMENT FUNCATION
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Finance department
VOUCHING
Very first and an important function of finance department is recording the
business transactions on vouchers. This is also called process of vouching.
This is made for internal record keeping. Auditors specifically audit
vouchers. Wrong vouching will lead to error in the system and ultimately
create problems.
From vouchers information is recorded in daybook and cashbook. As each
voucher along with its invoice, PO and other necessary documents are kept
in the record room so daybook is one that can give information about parties
DR and name of account CR along with amount.

LEDGER

In order to see accounts in condense form ledger is used. From daybook all
the entries are posted in ledger. Ledger represents DR or CR balance of each
party. So from ledger we can see amount that is to be paid to a party or the
amount that is to be received and the balance at the end of the month.
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TRIAL BALANCE

After this all the DR balances and CR balances of all the parties are posted in
trial balance. The trial balance must be equal at both sides. Otherwise there is
any error in recording the transactions.
Now trial balance becomes the source of profit and loss and balance sheet.

This department also designs the accounting policies. All the work in this
department is being take place on accrual basis.
The department prepares trial balance at the end of every three months and
Profit and loss accounts and balance sheet are prepared at the end of year.
The financial year ends on june30 of each year. The financial statements are
presented to shareholders.

Exact Software:

KAPCO is using accounting software named as EXACT. This software helps

in preparing the final annual statements.
The Finance department of KAPCO is responsible for the entire accounting
process of the organization and for an efficient handling of the accounts. The
accounts department mainly performs the following functions:
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. Financial Analysis
Financial analysis involves the use of various financial statements.
These statements do several things. First the balance sheet summarizes the
assets, liabilities, and owner equity of business at a moment of time. Next the
income statement summarizes the revenues and expenses of the firm over a
particular of time. For financial analysis we use the ratio analys.

Liqudity ratios
Current ratio
This ratio shows the firm ability to pay the current liabilities which will arise
in next accounting year. The this ratio will be the more strong the company
will be considered more strong.
Current ratio = current assets/ current liabilities

Year ratios
2008 1.38
2007 1.85
2006 3.97
The firm has 138 rupee in current assets for the nest year liabilities.
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CONTRACT AND PRUCUREMENT DEPARTMET:

Purchasing refers to a function in business whereby the enterprise obtains the inputs for
what it produces, as well as other goods and services it requires. The contract and
procurement department of KAPCO is consists of ten individuals which are working
under the supervision of Mr.Jamal Younis. The purchase procedure of KAPCO is consists
of following steps.

1) Identification of Requisition
2) Stock verification of Inventory in stores
3) Selecting potential suppliers or contractors
4) Invitation for tender
5) Tender opening and analysis of offers.
6) Authorization from Technical Engineer and Finance manager for budget purpose.
7) Placement of order
8) Payment (including taxes)
9) Maintaining records of performance
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Call off orders

The specification should clearly make reference to the fact that the order will operate as a
call off order, and should clearly define the duration of the order.

Additional Rates
In call off orders if there is need to change the prices due to any reason (inflation, change
in the value of currency) of these items than the company is in the policy to set the new
price with the negotiation of the suppliers if they ask.
Urgent /Emergency Purchase
As the KAPCO is in production industry and a lot number of machines are used at the
plant and always there is danger to happen any emergency regarding the working of these
machines. So for this the engineers are allowed to submit emergency purchase order.
Reorder level
It is the level of different items which is set by the engineers with the negotiation of the
purchase department. In simple words it is that quantity at which the engineer will give
requisition for new purchase.

Reorder quantity
It is the quantity the engineer can ask at reorder level. For example if reorder level of any
item is 2 and reorder quantity is 10 than the engineer is allow to send the requisition of 10
items when the 2 items are remain in the store.
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Stores process:
Procurement department is managing seven stores. Three storekeepers manage all stores
with their assistants and a store manager supervises all these stores. The stores names are
alphabetically from A to G.These stores contain about 30,000 inventory level, which is
controlled by software, named as Q4w stock.

PROCEDURE TO ISSUE ITEMS FROM STORE:

In KAPCO, store department had issued an ‘ISSUE BOOK’ to every department. The
requisitioning department fills the store issue note and gets approval from the store
manager. The stores issue the required goods to the specified department. The storekeeper
at that time makes required entries in the issuance register as well as in software. Three
copies of store issue note are prepared, one copy is kept in department, second copy is
sent to accounts and the third copy is kept in store record.

Received Items in Stores

When goods and material are received in the stores, the relevant storekeeper requests an
inspection of the goods and material by the engineer. The Engineer will check and verify
the material in quantity and quality. In case of rejection of material, supplier will be
notified immediately.
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Human Resources Department

Human resources are the greatest asset of any organization. Each organization either a
manufacturing or service oriented does its best for the proper arrangement of its
employees. These are the employees who are the distinction between organizations.
These are the pillars of success in services or manufacturing organization.
So seeing this need the KAPCO has set up its human resource department has divided
into three sections
• Human resource operations section
• Corporate services section
• Organizational development section
• Security section

Human resource operations section

The human resources (opp) section is performing all day to day activities of
KAPCO regarding human resource. There are six employees which are working in this
department. This section is performing following functions.
 Recruitment and selection
 Training of staff
 Orientation of new employees
 Compensation and benefits
 Employees promotion

 Human resource planning

 Relation of labour with employer
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Recruitment and selection process of KAPCO

“Recruitment involves seeking and attracting a pool of people

from which qualified candidates for job vacancies can be chosen”.
The human resource department of KAPCO is performing all activities purely on merit
and all correspondence is treated very confidential. The recruitment and selection process
of KAPCO is

Initiation of process

The human resource department has developed a form for requesting additional or
vacant position. This form will be filled by sectional head and it should be signed from
the general manager after obtaining approval from competent authority.

Advertisement of vacancies
Human resource department manager with the help of the concerned sectional head will
finalize the contents and format of advertisement.

Applications process
Applicants will be asked to submit their resume/bio-data/curriculum vitae along with
covering letter to human resource manager.
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Scrutiny of applications
All the application received shall be treated as confidential. Once the last date for
submission of application is closed the applications will be short listed by the human
resource manager with the help of relevant sectional head.

Procedure for test/ interview

For selection at KAPCO each individual have to pass three steps which are

Written test
The test of trainee engineers consists of some general knowledge, an easy in English,
some questions relevant to the field of engineering.

Presentation
After written test all candidates will bring for presentation.
Different topics are given to them and they are required to talk on these topics.

Interview
KAPCO is in the practice of group interviews. Different committees are made and the
candidates are divided into groups if they are large in numbers. The interviews will be
conducted in a suitable office with no interruptions. The individulas are assessed on the
basis of
 Appearance
 Technical/ professional knowledge
 Experience
 Potential
 Maturity
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Field Total Marks Marks obtained comments/(ifany)

Appearance//personality 20
Technical/ professional knowledge 25

Experience 20

Potential 20

Maturity 20

Alertness 5

Maturity 10
Total: 100

Post interview process

Immediately following the final interview, each panel member shall independently ranks
the candidates before any discussion takes place amongst them. Then the HR section
representatives will collate the rankings and after mutual discussion, the panel shall arrive
at a consensus on their recommendation for appointment on the prescribe number of
posts.

Orientation
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Orientation refers to the introduction of new employees with the organization, work units
and job. In order to develop an effective work force, it is essential that new entrants are
not only properly inducted at their place of assignment but also that they are well
acquainted with regard to the general policies of the company. So for this purpose human
resources department of KAPCO is responsible for the orientation of new employees. The
time of orientation is not more than two hours in KAPCO. The new employees are guided
regarding
 Organizational structure
 Policies and rules applicable in the company
 Attendance and leave procedure
 General discussion about the company
The orientation is given by human resources manager. He introduces the new employee
with his immediate supervisor, and sectional head.

Training
The training of new engineers and admin officers are different according to their needs.
The new engineers are taught for six months in the rooms by the senior managers and
after this they are given under the guidance of the senior managers who taught them
practical aspect of their job on the work. In this way after the training of one year the new
employees are become permanent but after passing the interview and also the
management see the reports of different senior engineers regarding the work of new
employees. The employees in other departments like finance and procurement etc are
trained on the job with senior officers.

Job rotation
For the purpose to increase the skills of the employees the KAPCO is recently adopting
the policy of job rotation. The employees will be rotate from on job to other of same level
and this will be for both administrative and technical staff.

Salary and benefits

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Salaries are the pay the employees receive in exchange of their work. For retaining
employees and getting their best the companies are setting wages and salaries very
carefully. The importance of salaries increases when a company has technical employees
as they have great demand in the market. As the KAPCO is a semi government
organization so the basic pay scales are same as in other government organization the
other benefits are
 Salary as per basic pay scale
 85 percent kapco allowance
 Free Electricity units according to job rank
 Free medical of the all the dependent of the employee
 Free education for children in KAPCO colony
 Free accommodation/allowance
 Mobile and petrol allowance for officers
 Facility of fair price shop

Pension
In kapco the pension is calculated as per company ploicy which varies from year to year.
The employees are able to get this facility after the 25 year of service. In case of death of
the employee his family can get pension amount but the employee must have completed
10 year of service. The pension is paid 50 percent in lump sum at the time of retirement of
the employee and balance is commutated.

Provident fund
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It is contributed by the employee and equal contribution is made by the employer. In

kapco the ratio is different for the contribution of the provident fund. it may be 3 percent,
6 percent and 10 percent. The employees can take loan from this fund but maximum
installment for repayment is 48 and also interest is charged on the outstanding loan.

Performance appraisal

Performance refers to the degree of accomplishment of the tasks that make up an

employee’s job. Where as performance appraisal refers to the evaluation and
communication to an employee how he or she is performing the job and establishing a
plan for the improvement.

Performance appraisal method at KAPCO

The kapco is using the management by objective method for the performance appraisals
of the employees.Employes are awarded with cash bonuses. They are according to their
performance which meets the targets or work more than these targets.
I5 % of annual basic pay who meets expectancy
30% of annual basic pay who works more than expectancy
35% of annual basic pay for those who works is exceptional.

Promotion grade reviews

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For retaining the good employees each organization provides the opportunities of
promotion to its employees. In KAPCO each new vacancy is advertised internally and the
employee who is fulfilling the requirements can apply for this. The staff will not be
promoted only because they have some academic qualification or specific length of
service unless there is vacancy which required these skills.
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Organizational development
This section was formed on 2006. They perform the following functions
1. Training of officers
2. Performance appraisal of officers
1) Training of officers
For this purpose a training need assessment is carried out. There are two types of training
I. In- house training
II. External training
In-house training
This is carried out for operations, Maintenance and safety. The last training was
conducted by a company NAVITUS. This was an in house training for the purpose of
safety.
External training
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SWOT Analysis
Strengths

 Kapco has the hardworking, cooperative and trained staff. As well as very friendly
environment.
 The turnover ratio is very low because it is offering best packages to its
employees.
 The HR dept is working for the increasing communication and computer skills of
lower staff.
 All manual procedures have been computerized.
 Modern software’s are in use for quick and efficient system
 .Health and safety department has ensured complete safety and security to
workforce.
 The price of the share of the kapco is always high than the price of share issue 1st
time.
 It has the biggest store in Pakistan.
 Easy access to the top management

 Weaknesses
 As the wapda is the only buyer of electricity so the company is bound to give
supply according to the choice of wapda.
 After 2006 it is paying taxes while the 1st ten years it was exempt from this.
 During the last ten years no expansion has been made for power generation.
 The fear of inquiries is always there as the new government has changed the some
points of power purchase agreement.
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Opportunities:
 All the expansion programs of KAPCO is free of tax.
 As the whole country is facing the problem of electricity the importance of this power
plant has much increased and it is affecting its share price.

Threats:
 As the wapda is the only buyer of the electricity in Pakistan and company is bound
to sale electricity to wapda, so it is totally depending on wapda for payments.
 The kapco has to import the machinery and spare parts as well as the services of
experts from abroad so the security conditions in Pakistan is very important.
 In Pakistan, Several other projects are coming up in power generation. So Kapco
management will face numeral challenges in technical workforce, because new
competitors will offer better packages.
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RECOMMENDATIONS
 Transport facility will provided for pick and drop
 On weekly basis late employee report will send to the General Manager
 There should be awards and prizes for regular employees
 The O.D section will be responsible for the training of the whole staff.
 In apprenticeship the quota for the children of KAPCO employees should be
maintained
 There should be proper career counseling for the employees of KAPCO
 There should be job rotation for different sections as employees should have
maximum skills which are beneficial for the KAPCO.

In purchase department

 Instead of companies the proprietor should be black listed

 The companies owned by the same owners should allow sending single tender
 While going for sending inquiries for the purchase of different supplies the new
supplier should be provided equal opportunities.
 After the comparative statement has been developed the budget holder or
concerned engineer should be call to the procurement department for the purchase
decision and the selection of supplier should be with negotiation.
 There should be proper record of supplier assessment questionnair.
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Finance department
 There should be proper division of work among the
Employees
 There is need of one or two assistant in the tax and reporting section.
 The suppliers should be told in advance about the requirements of company
regarding different document (sale tax invoices) etc.