SALMA ASHRAF

MBA - HR
Ghazi University, Dera Ghazi Khan

KAPCO (KOT ADDU

POWER COMPANY)
Internship Report

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1
 Dedication

Dedicated to my Respected DAD Muhammad Ashraf & Loving MOM

and Those who are praying for my success.

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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. Ghazi University, D.G.Khan Internship Program gave me the opportunity to
study our 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
activities of Kot Addu Power Company. My six week internship taught me more about
HR (Ops) / OD / CS / Security activities then 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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 Acknowledgement

All Praises be to Allah, the Beneficent, the Merciful, the Gracious, the Creator and Sustainer of
the Universe, the Lord of All Lords, who gave me strength, power and courage to complete this
project.

I believe that successful completion of my internship and this report has become possible only
due to the support, love and kindness of all the people who encouraged me throughout this
time period.

I am very thankful to the management of Kapco especially to Mr. Nawaz Chattha for permitting
me to execute internship at Kapco. I am also grateful to Mr. Muhammad Kamran Khan and
HR Team for encouraging me during my internship.

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 CONTENTS
KAPCO (Kot Addu Power Company)............................................................................................7

Power Plant Technology.................................................................................................................7

Material Agreement........................................................................................................................7

Vision.............................................................................................................................................8

Mission...........................................................................................................................................8

Board of Directors..........................................................................................................................9

Organizational Hierarchy..............................................................................................................10

Departments at Kapco...................................................................................................................10

Human Resource Department.......................................................................................................11

Human Resource Development.....................................................................................................11

HR Mission...................................................................................................................................11

HR Hierarchy................................................................................................................................12

HR Responsibilities......................................................................................................................13

LMI’s and LP’s:............................................................................................................................13

Recruitment..................................................................................................................................14

Selection.......................................................................................................................................16

Induction and orientation Management........................................................................................17

Internship Training Program.........................................................................................................17

Security.........................................................................................................................................18

Transport Management.................................................................................................................20

House Allocation..........................................................................................................................20

Employees’ Health Surveillance...................................................................................................21

Disciplinary Procedure.................................................................................................................22

Accident and Incident Reporting Procedure.................................................................................23

Trade Union at Kapco...................................................................................................................23

Salary and benefits........................................................................................................................24

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Pension.........................................................................................................................................24

Provident fund..............................................................................................................................25

Organizational Development:.......................................................................................................25

Finance Department......................................................................................................................28

Hierarchy......................................................................................................................................28

Functions......................................................................................................................................28

Exact Software..............................................................................................................................29

Short term investment...................................................................................................................29

Payments to suppliers...................................................................................................................30

Petty cash book.............................................................................................................................30

Sale invoice recording..................................................................................................................30

Fair price shop dealings................................................................................................................30

Purchases......................................................................................................................................31

Financial Analysis.........................................................................................................................31

Current ratio.................................................................................................................................32

Quick ratio....................................................................................................................................32

Interest coverage ratio...................................................................................................................33

Total Asset Turn over....................................................................................................................34

Debt Ratio.....................................................................................................................................35

Tax:...............................................................................................................................................36

Income tax:...................................................................................................................................36

Sales Tax:......................................................................................................................................36

Advance tax:.................................................................................................................................37

SWOT ANALYSIS.......................................................................................................................39

Strengths.......................................................................................................................................39

Weaknesses...................................................................................................................................39

Opportunities:...............................................................................................................................39

Threats:.........................................................................................................................................40

Recommendations........................................................................................................................41

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References....................................................................................................................................42

KAPCO (KOT ADDU POWER COMPANY)

Kot Addu Power Plant (the "Power Plant") was built by the Pakistan Water and Power
Development Authority ("WAPDA") in five phases between 1985 and 1996 at its present location
in Kot Addu, District Muzaffargarh, and Punjab. In April 1996, Kot Addu Power Company
Limited ("KAPCO") was incorporated as a public limited company under the Companies
Ordinance, 1984 with the objective of acquiring the Power Plant from WAPDA. The principal
activities of KAPCO include the ownership, operation and maintenance of the Power Plant.

POWER PLANT TECHNOLOGY

KAPCO is Pakistan's largest Independent Power Producer (IPP) with a name plate capacity of
1600 MW. The Power Plant comprises of 10 multi fuel fired gas turbines and 5 steam turbines
installed in 5 phases between 1985 and 1996. These turbines are divided into 3 energy Blocks
with each Block having a combination of gas and steam turbines. The Power Plant's combined
cycle technology enables KAPCO to use the waste heat from the gas turbine exhaust to produce
steam in the Heat Recovery Steam Generator, which in turn is used to run the steam turbines
thereby resulting in fuel cost efficiency and minimum wastage.

The Power Plant is a multi-fuel gas-turbine power plant with the capability of using 3 different
fuels to generate electricity, namely: Natural Gas, Low Sulphur Furnace Oil and High Speed
Diesel to generate electricity. The Power Plant is also the only major plant in Pakistan with the
ability to self start in case of a country wide blackout

MATERIAL AGREEMENT

KAPCO is managed through a suite of agreements signed between it and its customer (WAPDA),
Government of Pakistan, and fuel suppliers. These include

Power Purchase Agreement ("PPA")

The PPA is between WAPDA and KAPCO. Inter alia, the PPA determines the tariff structure and
principles of operating the Power Plant. KAPCO has robust and effective engineering, financial,
procurement and HR strategies in place to ensure that contractual capacity levels are maintained.

Gas Supply Agreement ("GSA")

The GSA is between Sui Northern Gas Pipelines Limited ("SNGPL") and KAPCO. Inter alia, the
GSA guarantees a certain quantity of gas deliveries during off peak months from SNGPL

Oil Supply Agreement ("OSA")

The OSA is between KAPCO and Pakistan State Oil Company Limited ("PSO"). PSO is the
largest oil marketing company in Pakistan and is engaged in the nationwide storage, distribution
and marketing of various petroleum, oil and lubricant products. Inter alia, the OSA covers the
supply to KAPCO of fuel, diesel, oil, greases, lubricants and additives for the requirement of the
Power Plant.

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8
 VISION

“To be a leading power generation company, driven to exceed our shareholders' expectations
and meet our customer’s requirements”

MISSION

 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 Mehmood Butt CEO

Mr. Vince Richard Harris Director

Mr. Malcolm Peter Clampin Director

Mr. Muhammad Azhar Iqbal Director

Mr. Anwar-ul-Haq Director

Mr. Khalid Rasheed Director

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 ORGANIZATIONAL HIERARCHY

DEPARTMENTS AT KAPCO

The company has following divisions which are divided in to departments and sections

 Finance

 HR ,OD, Security & CS

 Engineering

 Audit

Departments:

 Finance

 Procurement

 HR, OD & CS

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  Maintenance block 1

 Maintenance block 2

 Maintenance block 3

 Operations

 projects

These departments are further divided into different section.

Departments of my concern are finance, HR & CS and procurement.

HUMAN RESOURCE DEPARTMENT

KAPCO with its broad vision of Human Resource Management provides life-long career
development opportunities for qualified, competent and hard-working professionals. Currently the
employee strength is approximately 588. All of the employees are well-trained and committed to
their jobs.

KAPCO is an equal opportunity employer. KAPCO maintains a strict induction standard and uses a
merit base when hiring new employees to ensure the concept of the "Right Person for the Right
Job".

HUMAN RESOURCE DEVELOPMENT

KAPCO greatly values its employees and therefore Human Resource Development ("HRD") is a
high priority in KAPCO’s corporate objectives. HRD programs are developed, from time to time,
with a view not only to enhance essential business and professional skills but also to focus on the
personal development of employees.

A long-term view has been established to address personal development and succession planning
through effective training programs

HR MISSION

“To strengthen the workplace harmony and

To ensure employees’ satisfaction”

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 HR HIERARCHY

GM HR & CS

Sr. Manager

HR & CS

Manager HR Manager CS Manager OD Manager

Operations Corporate Service Org. Development Security

Compensation & Transport Asstt. Asstt.

Benefit Specialist Supervisor Manager OD Manager

Asstt. Manager HR Transport Sec. Asstt.

OPs i.e. Drivers Asstt. OD
Security

Asstt. Manager HR
OPs Asstt.
Manager CS

HR Supervisor
OPs Asstt. CS

Library

HR staff

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 HR RESPONSIBILITIES

Human Resource Department develops policies and procedures related to recruitment, selection,
compensation, benefits, security and organizational development. It describes methods in which
local management instructions (LMI) and local procedures (LP) are controlled, administered and
implemented.

Kapco has set up its human resource department by dividing into following sections;

 Human resource operations section

 Corporate services section

 Organizational development section

 Security section

LMI’S AND LP’S:

LMI’s defines policies, responsibilities and identify staff and LP’s gives details of what to do.

Procedure:

 LMI’s and LP’s are written and compiled by section heads or any member of staff
delegated to do so. They are responsible to ensure the accurate content and compliance with
any statutory requirements and Kapco policy.

 Then author of document compiles the document distribution list which is circulated to
managers and section heads to whom the document is concerned. Operation director,
Admin. Manager and manager OPs are on distribution list of all LMI’s & LP’s.

 LMI front page contain a field which lists the staff who have defined responsibilities within
the document. It is compiled by the author.

 These documents are forwarded to Assistant Director Admin ADA for monitoring then
document is returned to author for verification that ensure content agreed field is signed by
respective dept. manager.

 Then documents are forwarded to OPs Director for approval and authorization for issue.

 Then document is returned to ADA for distribution, recording an issued doc. Index that is
maintained by Kapco IT system.

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  Admin manager reviews these issued documents after six months every year.

Responsibilities:

 Operation Director:

 Ensuring adequate management system within safety, engineering, formal

documentation system.

 Distributing the document to appropriate manager

 Ensuring approval of any local policy documents before issuing to relevant

personnel.

 Administration manager:

 Issuance and circulation of documents.

 Reviewing the documents annually.

 Senior Managers:

 Identifying requirements for LP’s and other support documents

 Evaluation of documents

 Ensure approval of documents

 Ensure appropriate staff has reviewed document annually.

 Engineer or other delegated person:

 Compilation of specified documents and procedure

 Reviewing the documents in relevant to his plant area on annual basis to ensure
LP are relevant and up-to-date.

RECRUITMENT

Human resource management has made recruitment procedure in such a way to identify and
recruit appropriate talent with optimum skills and aptitude required fir working towards company
goals

Forms:

 Employee Requisition form

 Application for employment

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  Candidate evaluation sheet

 Interview panel recommendation form

 Offer letter

 Appointment letter

 Training contract

 Performance review

Procedure:

 Need Assessment: Every GM identifies staff requirement in his departments and prepare
recruitment plan that is submitted to Sr. Manager HR & CS.

 Recruitment Methods:

 Internal Recruitment: Initially all vacant positions are internally advertised

(within Kapco) through notices on boards and circulars by HR OPs.

 External Recruitment: After exhausting internal resources, external recruitment is

used. There are two ways i.e. Advertisement (in National newspaper or
company’s website) and Placement consultant (search firms) as well as referrals.

 In case of urgency, a single candidate is approached by approval of GM HR&CS and

with consent of concerned GM.

 Process for External Recruitment:

 Placement Consultant: Search firms are appointed for this purpose and they are
selected on the basis of their repute, experience and success rate of selection. GM
HR&CS and Sr. Manager HR&CS are responsible for selection and evaluation of
placement consultants.

 Advertisement: If it is decided to advertise then Manager HR OPs advertises the

post in forthcoming Sunday newspaper or on the website of company.

 Application Process: Applicants submit their applications along with CV, experience
certificate and all other documents specified in advertisement through post, e-mail or
courier.

 Scrutiny of applications: Application are short listed by manager HR ops with help of
relevant sectional head within 10 working days.

 Predefined Criteria at Kapco:

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 Education 35%

Relevant Experience 35%

Skills and competencies 20%

Suitability for position 10%

100%

Only short listed candidates are called for interviews and no. of these candidates are
maximum 10 and minimum 3.

 Regret letters for not selected candidates are sent within 30 days of selection.

SELECTION

Selection at Kapco is done through assessment centers and procedure is as follows;

 Written Test: HR OPs conduct written test as pre specified time and it has three sections
of MCQs that are English, general knowledge and technical. It is prepared by subject
specialist and reviewed by another specialist to remove biasness. Manager HR OPs
review the marks allocated by examiner.

 Group discussion: A group is given a topic and they have to discuss it and conclude it in
15 minutes. Assessors evaluate and monitor the person in the group. They assess
interpersonal skills, leadership qualities, confidence and problem solving etc.

 Presentations: Each candidate in a group make a brief presentation and topic of

presentation is selected by panel. They judge on body language, beginning intro and
conclusion, sound, quality of ideas etc.

 Interview: Panel of interviewer is constituted by GM HR & CS consisting of three or

more interviewers ranging from HR OPs to Sr. Manager. They assess the candidate by
concentrating on motivation, interest, technical aspects of job.

 Result: Weightage assigned to each assessment center phase is

Written test 60%

Group discussion and presentation 20%

Interview 20%

100%

 Panel Recommendation form: Panel members prepare and send their recommendation
to HR OPs section that prepare merit list within 5 working days. GM HR&CS and Sr.
Manager HR&CS and manager HR OPs discuss recommendations and arrive at a
consensus for appointment of candidate.

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  List of Reserve candidates: Candidates who were not selected are called reserve
candidates and list of those is prepared in case if first selected leaves the job within 1
year.

 Post interview process: After acceptance of job offer, Medical test of successful
candidate is carried out. Upon joining Kapco, appointment letter detailing compensation
and benefits is prepared by Sr. Manager HR OPs.

 Regret letters: these are sent to unsuccessful candidate for encouraging them.

INDUCTION AND ORIENTATION MANAGEMENT

 Orientation:

Manager HR OPs induct and orientate the new entrants regarding organizational structure, core
values, codes of conduct, job description in detail by an immediate senior.

 Probation:

Every employee serves a mandatory probation period of three months. During this period, Dept
Head is responsible for monitoring performance of probationer. On completion of this period line
manager prepares probation performance report and forward it to concerned Sr. Manager for
onward submission to Sr. manager HR&CS.

After it there are three possibilities;

1. Confirmation of employment

2. Extension in probation period for further period to improve performance.

3. Termination of his employment.

 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.

INTERNSHIP TRAINING PROGRAM

Kapco provides internship training whose procedure is defined by HR.

 Internship Requests: A minimum qualification to apply is diploma/degree in any

discipline of engineering/chemistry. These requests are routed through concerned
educational institution. These requests are made to Admin and HR dept. Approval is
taken by taking consent of concerned dept manager.

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  No. of Internship Training: The no of internship trainings is about 100 over a year..

 Internship Duration: It should not exceed 6 months during a year.

 Facilities to trainees: Company may provide accommodation, messing, and reasonable

stipend if it considers appropriate depending upon availability of resources.

 Training program: Training program is designed by training engineer who implement it

as well as coordinate the trainees.

 Certificate of internship: trainees could have certificates when they submit their reports
to training engineer.

 Records: Proper records of all applications and reports of all trainees are kept by training
engineer.

SECURITY

Security management is done by Security manager working under Sr. manager HR & CS. At
Kapco, there are following security activities.

 Security Staff: Kapco has following security staff;

Security officer 1

Gate Sergeants 4

Security Sergeants 4

Security Guards 87

This staff is deployed on four shift basis.

 Duties:

 Power house and colony is bounded by 8 feet high wall with 3 feet barbed and
wires of 5 lines.

 Watch towers are there for effective watch over area and security guards are on
these towers round the clock.

 Perimeter wall, power house area, colony roads are provided with security lights
to afford clear observation during night.

 Security also keeps watch against fire hazard.

 Facilities: Guard rooms are there on colony gate and power house gate and have many
facilities like small Kate (for keeping weapons), guest room, and office with telephone.
Sentry Post is also constructed for duty security staff to provide shelter.

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 Access and Egress:

 Visitors book and passes: Security staff maintain accurate record of visitors and
issuance & cancellation of passes

 Security passes: All employees have lapel passes to enter through a fixed entry
gates.

 Vehicles: Vehicles are checked by security staff at gates and maintain record of
exit and entry from power houses.

 Movement of material and equipment: for this purpose written permission of

respective resident engineer/ section head is obtained.

 Non-Kapco individuals in Kapco vehicle: These individuals‘s entry is strictly

forbidden without registering on gate.

 General Security:

 Areas having high degree of risks require security consciousness from all
employees like turbine halls, gas station, oil decanting station.

 There is roaming about of suspected personnel or stranger.

 Officer who is in charge of offices ensure about closure of offices after working
hours.

 General Conduct: Following are forbidden at Power house;

 Pasting posters or banners with out permission of management

 Meeting in or near power house

 Unauthorized communication of official document and information

 Taking part in politics and elections

 Taking part in assisting public demonstration against Government of Pakistan

and Kapco decision.

 Colony Security:

 security of residential accommodation through general patrolling at night

 registering unauthorized person

 handling of shopkeepers and milk sellers with written permission from

management

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  keeping of private servant in colony secured by notifying servant to security
officer

 No sub-letting of residential colony

TRANSPORT MANAGEMENT

Kapco provides transport for business and non-business use to permanent or regular employees.

Procedure:

 Manual form: A transport Requisition form that provides information about planning/
arrangement of transport and facilitates both transport section and Requisitioner is to be
filled by employee who needs transport on special occasion.

 Request thru E-mail: Employee can make request through e-mail during office hours.
This request is sent to manager CS with copy to concerned section head and dept
manager. Then it is submitted to transport section giving reasonable time prior to journey.

 In case of emergency officer/staff requesting transport files the requisition explaining

emergency then approved by manager CS. Then after deciding the vehicle transport
facility is provided immediately.

 Transport for Medical purpose:

 Requisition form is filed by Kapco medical center for referral of patients and
sends to transport section.

 Patients contact to Sr. medical officer for medical transport.

 All patients report at Kapco Medical Center at specified time.

 Transport for non-business use: Company provides transport also for non-business
journeys under following circumstances;

 Staff Welfare & Humanitarian; bus shopping trips etc

 Cultural, Religious & Social events; religious gathering like Ashura, recreation
trips on Eid day, Independence day, Attend funeral or Qul etc

 Public Relations; local admin.

 Emergencies; situations having no alternative transport.

HOUSE ALLOCATION

HR Dept has procedures to allocate residence to all employees of Kapco.

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  House allocation is based on grades and depending upon type of availability. However,
Kapco has right to allocate houses as they may see fit.

Grade House type

MG 1 & 2 B-type

MG 3 & KSG-16 C-type

KSG-11 to 15 D-type

KSG-01 to 10 E-type

 Seniority within each grade is used to allocate houses if there are not enough houses of
certain type. Most senior class will be allocated that type of house according to following
criteria of seniority;

 Kapco Staff Grade

 Length of service in that Grade

 Length of service at Kot Addu

EMPLOYEES’ HEALTH SURVEILLANCE

HR Department has made health surveillance procedure for all regular employees of Kapco to
assist the employee in maintaining good personal health and to provide healthy workplace
environment.

 Medical Facilities: These are provided free of cost to employees at the Kapco medical
centre and hospitals referred by the company.

 Eligible Dependents:

 Wife/Husband

 Children up to the age of 25 years

 Unmarried daughters and unemployed son

 Parents residing with and dependent upon the employee who are neither
pensioner nor they are getting medical facilities from other sources.

 Enrolment: There is a complete enrolment form of each employee that lists the name,
ages and relationship of all eligible dependents and is approved by GM (A&HR) who
maintain a register of it.

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  Medical Treatment: HR Dept has provided a team of qualified doctors that works in
Kapco medical centre and is providing medical facilities. This medical treatment includes
use of all facilities available at complex, specialist consultation, blood treatments, dental
treatment, nursing, supply of medicines and accommodation. But medical treatment that
requires surgery, major operations like organ transplantation and expenses rendered
outside Pakistan are not allowed at expenses of company.

 Pre-Employment Medical Examination: Before registering the employee for medical

facilities within 3 months of commencement of employment or prior to employment this
exam is conducted by HR manager. Cost is borne by company and failure to meet
required results invalidates the employment contract. These results are maintained in
personal file of Employee by HR manager.

 Post-Employment Medical Examination: Every staff member has to have a physical

and medical check up after six months each year to ensure that he/she is not suffering
from any occupational disease. Schedule of physical examination is given to respective
Sectional Heads by HR managers.

DISCIPLINARY PROCEDURE

HR Dept has made and implemented disciplinary procedure in order to deal with any case of
misconduct defined in HR policies.

Procedure:

 At Kapco, if there is any misconduct then Head of dept reports about it to HR manager. A
“show cause notice” is also issued by Factory manager and sends its three copies to
concerned employee, Head of the Dept and Personnel Dept. All copies bear signature of
concerned employee.

 Personnel Dept after receiving the show cause notice calls the concerned employee for
his explanation and thereafter, if it is necessary, holds an inquiry in this regard.

 Inquiry is held in presence of employee and is impartial, comprehensive and complete.

Employee is given full opportunity to defend himself or to deny his guilt by showing his
witnesses who signs the statement they make.

 After inquiry is over, Personnel manager and his nominated responsible officer take into
account the gravity of misconduct, previous record of employee, and views of his dept
Head and make decision about what action has to be taken.

 Employee is notified about the decision in writing and punishment awarded is entered
into the personal file of the concerned employee.

 Appeal: Employee has a right to appeal against a penalty to higher level authority
appointed by Kapco. Appeal is in writing and explained the grounds at which appeal is
made. It is made within 5 working days after the date of final order. Then appellant
authority decides about the penalty imposed is adequate or not or it is complaint with
disciplinary procedure.

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 ACCIDENT AND INCIDENT REPORTING PROCEDURE

There is an accident/ incident reporting procedure made by HR dept at Kapco to ensure that all
accidents occur at Kapco are properly recorded and investigated.

Method:

 All reports are made on accident/incident report forms that are recorded in a record book.
In this book each report form has a unique number and date on them.

 When employees or any other person report about it to supervisor then firstly he take any
remedial action to restore safe conditions. He also informs appropriate officer/manager as
well as head of admin as soon as possible.

 Then he initiates accident/incident report form and allocates number and record form
number and date in record book and progressed to Sr. Engineer and Section head.

 Then he investigates the causes of incident and recommends any remedial action to be
implemented without any delay.

 Then Section head forwards completed form to resident engineer and to personnel
manager/admin manager. And he also identifies training needs that arise from
investigation as well as monitors the effectiveness of remedial action and report to
operation director.

 Personnel and admin manager maintains records of incidents/accidents and review policy
to check its effectiveness.

TRADE UNION AT KAPCO

At Kapco there is a post of CBA (collective bargaining agent) elected after 2 years. This CBA is
entitled to undertake certain activities like collective bargaining with employers on behalf of
employees, give notice, declare the industrial relations according to law.

There are three Trade unions at Kapco;

1) Al-Takbeer

2) Al-Barq

3) Al-Noor

After 2 years, elections are held by company and winning trade union have the title of CBA.

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HR manager have given some facilities to CBA according to consultation with company.

 Time off: Members of CBA has the facility time off. If there is any meeting held between
CBA and management during the time of duty hours of members of CBA then the hours
during meeting are considered as duty hours. CBA gives reasonable notice of request for
time off.

 Facilities: Company has provided reasonable facilities for official notices and storage of
official documents. They usually request in writing from time to time for facilities.

 Transport: At Kapco, company transport is not permitted for trade union activities but in
case if work is beneficial for both CBA and company then company transport could be
used.

 All posters and notices made by CBA are displayed after approval from administration
department.

SALARY AND BENEFITS

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 policy 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.

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 PROVIDENT FUND

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 appraisal of the
employees. Employees 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

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.

ORGANIZATIONAL DEVELOPMENT:

Organization development (OD) is the study of successful organizational change and

performance.

The objectives of OD are:

1. to increase the level of inter-personal trust among employees

2. to increase employees' level of satisfaction and commitment

3. to confront problems instead of neglecting them

4. to effectively manage conflict

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 5. to increase cooperation and collaboration among employees

6. to increase organizational problem-solving

7. to put in place processes that will help improve the ongoing operation of an organization on a
continuous basis

This is a separate concept from change efforts known as:

1. Operation management
2. Training and Development

3. Technological innovations....etc.

This section was formed on 2006. They perform the following functions

 Training of officers: For this purpose a training need assessment is carried out. There are
two types of 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: In this the employees are sent to different training

institutions. The engineers were sent to LUMS for management training for one
year. The officers were also sent to attend Franklin Covey s’ training
programmed. This was named as “The 7 habits of Highly Effective People” and
held in December 2007 at pearl continental hotel Lahore.

 Evaluation of training: The evaluation of training is done through tests,

discussion or exams during or at the end of training program. At the end of
training an assessment panel may check improvement of trainees through
interviews.

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 My Experience
For being internee at Kapco, it was a very good experience for me. I worked 07 days in human
resource department. During my work, I realized the importance of human resource department in
the organization as it is essential to satisfy its employees.

I worked under Mr. Nawaz Chatha (Manager HR), Ms. Nawal Rana (Compensation & benefit
specialist) and Mr. Zahid Ansar (Asst. Manager HR) / Mr. Muhammad Kamran Khan and
HR (Ops). They were very nice and kind persons. They answered to my every question whatever
I ask even during their busy days. By working under them, I learnt about dealing with unions and
employees’ problems as well as how we can satisfy our employees. They gave me a practical
exposure to application of human resource in organization. They showed me all of their forms
they were using. Mr. Farhan Khan (Manager OD) also helped me a lot and i have learnt
a lot under him. He gave me an assignment to be completed and I present that within time and i
have done that assignment excellent. It was a very knowledgeable experience for me.

I am very thankful to Mr. Nawaz Chatha and Mr. Kamran Khan and Farhan Khan for giving me
their precious time.

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 FINANCE DEPARTMENT

Finance Manger is supervising the all activities of this department. Financial Controller is
responsible for accounting procedure and Tax & treasurer is responsible about the matters of
taxation, and investment.

HIERARCHY

GM Finance

Financial
Controller

Manager
Manager Treasury Manager Tax
Accounts

Asstt. Manager Tax

Asstt. Manager Asst. Manager
Treasury Accounts

Accounts
Assistant

Account
Supervisor

Cashier

FUNCTIONS
There are two sections of finance;

1) Corporate Finance (102)

2) Power station Finance (103)

 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

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 daybook is one that can give information about parties DR and name of account CR
along with amount.

 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.

 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.

SHORT TERM INVESTMENT

The finance department of Kapco is responsible for investment of funds in different

companies but with the approval of the finance manager. The short term investment of
KAPCO in different companies is with the name of placements. The company has TFC of
following companies

 Egro pvt ltd

 Bank al-habib

 Jahagir Siddqui bank

 PMCL

 Defense saving certificate

The interest on DSC is recorded as accruals and it is received on maturity with the principal.

30
 PAYMENTS TO SUPPLIERS

The finance department makes the payments to all suppliers regarding their sales to the company.
The engineers send the inspection report with invoice and goods received note to the purchase
department, which sends these documents to the finance department for payment. If the delivery
is late and no information is given then the finance department charges 0.5 percent for late
delivery. The payments are recorded in purchase ledger invoice.

PETTY CASH BOOK

For the payments which are less than 10000 the company has maintained the petty cash book.
For getting amount from petty cash the individual has to fill a form which is approved by finance
manager. Then the payment will be made to the individual and entry will be

Description Debit Credit

Name of employees XYZ

Cash XYZ

After the person submits the invoice of the purchase than the entry will be

Description Debit Credit

Name of expense XYZ

Name of employees XYZ

SALE INVOICE RECORDING

There are different companies which are using the residences and electricity,
gas, house rent facilities of the KAPCO. So it the responsibility of the cash
dealing officer to issue sale invoices to these different firms. The issue entry
will be
Description Debit Credit

Name of company XYZ

Name of income XYZ

FAIR PRICE SHOP DEALINGS

The quotas of different employees are set for their purchasing. From fair price shop and it
is totally on cards which issued to each employee. The deductions are made

31
on monthly basis from the salaries of the employees. When purchases are
made for the fair price shop the entry will be
Description Debit Credit

Fair price shop XYZ

Name of contractor XYZ

PURCHASES

There are two types of purchases which are handling by the finance department of the KAPCO. It
may be

1) Stock item

2) Direct charge expense

In case of stock item the entry will be

Description Debit Credit

Stock XYZ

Bills payable XYZ

In case of direct charge expense

Description Debit Credit

Stock XYZ

Bills payable XYZ

Description Debit Credit

Expense by name XYZ

Account payable XYZ

FINANCIAL ANALYSIS

Financial analysis involves the use of various financial statements. These statements do several
things.

32
  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.

To see the financial positions of any company for short term and long term investment and
for giving loan the analysis of different ratio is very necessary for a finance manager.
Financial ratio is an index that relates two accounting numbers and is obtained by dividing
one number by the other.

The analysis of financial ratios involves two types of comparison.

 Internal comparison: The analyst can compare a present ratio with past and expected
future ratios for the same company. With the comparison of different ratio we can see
whether the firm is going towards improvements or deterioration in the firm’s financial
conditions.

 External comparison: This method of comparing involves the comparing the ratios of
one firm with those of similar firms or with industry averages at the same point in time.

CURRENT RATIO

This ratio shows the firm ability to pay the current liabilities which will arise in next accounting
year. The ratio will be the more strong the company will be considered.

Years Calculation Ratio

2007 17642951/9530326 1.85

2008 37083343/26828443 1.38

2009 41162829/28739296 1.43

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As in above graph, we can see that there is a decrease in Current ratio in 2008 and then a little
increase in 2009. So we can interpret that now Kapco has 1.43 rupee for each one rupee of
liability. Hence, it is a positive sign.

QUICK RATIO

For looking the more liquidity of any firm the calculation of quick ratio is essential. In this, the
slow moving items from assets like prepaid expenses and inventory is deducted from the current
asset.

Years Calculation Ratio

2007 17642951-4313160/9530326 1.39

2008 37083343-4742750/26828443 1.20

2009 41162829-5098691/28739296 1.25

In the above graph, we can see that there is decrease in quick ratio in 2008 and then an increase in
2009. So we have more liquid form of asset to cover liabilities

INTEREST COVERAGE RATIO

It is a ratio used to determine how easily a company can pay interest on outstanding
debt. The major part of the expenses of any business is interest expense which the company has to
pay for the advances which it has taken for different purposes.

34
 Years Calculation Ratio
2007 8911070/1327430 6.71

2008 10267655/2208130 4.64

2009 15133104/6410224 2.36

As we can see in the graph, Interest coverage ratio is declining that means it is a negative sign for
company. At this time, there is 2.36 rupees for each one rupee of interest expense.

TOTAL ASSET TURN OVER

The amount of sales generated for every rupee's worth of assets. It is calculated by dividing sales
in rupees by assets in rupees.

Years Calculation Ratio

2007 37086650/38931026 0.95

2008 55947078/56964461 0.98

2009 69363913/59959254 1.15

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As we can see above in the graph, Total Asset Turn over is increasing and it means that Kapco is
generating more from its assets. At this time, Revenue of 1.15 rupees is generated from each one
rupee’s worth of asset.

DEBT RATIO

It is a ratio that indicates what proportion of debt a company has relative to its assets. The
measure gives an idea to the leverage of the company along with the potential risks the company
faces in terms of its debt-load.

Years Calculation Ratio

2007 20067578/38931026 0.51

2008 35636453/56964461 0.62

2009 36876018/59959254 0.61

By seeing at the graph, it is shown that debt ratio is increasing till 2008 and then there is a slight
decrease. Anyhow it’s a negative sign as debt burden is increasing. At this time, 61% assets are
financed with debt.

36
 TAX:

A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer (an
individual) by a governmental organization in order to fund various public expenditures. A failure to
[1]

pay, along with evasion of or resistance to taxation, is punishable by law.

There are two types of taxes:

INCOME TAX:

Many jurisdictions tax the income of individuals and business entities, including corporations.
Generally, the tax is imposed on net profits from business, net gains, and other income.
Computation of income subject to tax may be determined under accounting principles used in the
jurisdiction, which may be modified or replaced by tax law principles in the jurisdiction. The
incidence of taxation varies by system, and some systems may be viewed as progressive or
regressive. Rates of tax may vary or be constant (flat) by income level. Many systems allow
individuals certain personal allowances and other nonbusiness reductions to taxable income,
although business deductions tend to be favored over personal deductions. [5]

Personal income tax is often collected on a pay-as-you-earn basis, with small corrections made
soon after the end of the tax year. These corrections take one of two forms: payments to the
government, for taxpayers who have not paid enough during the tax year; and tax refunds from
the government for those who have overpaid. Income tax systems will often have deductions
available that lessen the total tax liability by reducing total taxable income. They may allow
losses from one type of income to be counted against another. For example, a loss on the stock
market may be deducted against taxes paid on wages. Other tax systems may isolate the loss,
such that business losses can only be deducted against business tax by carrying forward the loss
to later tax years.

Five main Income tax heads

 Income from Salary.
 Income from House Property.
 Income from Profits and Gains of Profession or Business.
 Income from Capital Gains.
 Income from Other Sources.

SALES TAX:

Sales taxes are levied when a commodity is sold to its final consumer. Retail organizations contend
that such taxes discourage retail sales. The question of whether they are generally progressive or
regressive is a subject of much current debate. People with higher incomes spend a lower proportion
of them, so a flat-rate sales tax will tend to be regressive. It is therefore common to exempt food,
utilities and other necessities from sales taxes, since poor people spend a higher proportion of their
incomes on these commodities, so such exemptions make the tax more progressive. This is the classic

37
"You pay for what you spend" tax, as only those who spend money on non-exempt (i.e. luxury) items
pay the tax.

ADVANCE TAX:

A withholding tax, or a retention tax, is an income tax to be paid to the government by the payer of
the income rather than by the recipient of the income. The tax is thus withheld or deducted from the
income due to the recipient. The amount of withholding tax on income payments other than
employment income is usually a fixed percentage. In the case of employment income the amount of
withholding tax is often based on an estimate of the employee's final tax liability, determined either by
the employee or by the government.

38
 My Experience

For being internee at Kapco, it was a very good experience for me. I worked 30 days in finance
department and that duration was full of hard work.

I worked under Mr. Zubair Aslam (Manager Tax & Treasury) and Miss Misbah Safdar (Asst.
manager treasury) and Humaer Jahangir (Asst manager tax). They were very nice and kind
persons. They answered to my every question whatever I asked even during their busy days. By
working under them, I learnt about how to manage cash as well as entries they do in system. I
also learnt about use of Microsoft Excel. They gave me a practical exposure to the methods that I
learnt in academic courses. They showed me all of their forms, invoices and vouchers used by
them. It was a very knowledgeable experience for me.

I am very thankful to Mr. Zubair Aslam and Mr. Humaer Jahangir for giving me their precious
time.

39
 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.

 ISO 9001, 14001, 18001 under the umbrella of IMS through SGS has been accomplished.

 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.

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.

40
 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.

41
 RECOMMENDATIONS

 On weekly basis late employees’ report should be sent to the General Managers.

 There should be job rotation for different sections as employees should have maximum

skills which are beneficial for the KAPCO.

 There is need of one or two assistant in the treasury and reporting section.

 Female Employees should also be motivated to get job.

 Medical facilities should be enhanced and medicines at KAPCO Medical Centre should

be bought from well reputed company.

 KAPCO should make such infra structures to provide electricity directly to general

public rather through WAPDA.

 Rewards and prizes should be given on good performance to encourage the employees.

 Appraisal system in KAPCO is not well defined and properly implemented. There must

be an orientation on how managers should measure performances.

 The internship program should be appropriately organized and well-defined, where few

routine tasks or any projects should be allocated to interns.

42
REFERENCES

Muhammad Nawaz Chattha Manager HR (Operations)

(muhammad.nawaz@kapco.com.pk)

Muhammad Zubair Aslam Manager tax and treasury

066.2241336-230

(m.zubair@Kapco.com.pk)

Zahid Ansar Assist HR (Ops)

Humaer Jahangir Asst manager tax

(humaer.jahangir@Kapco.cpm.pk)

Farhan Khan Manager OD

(farhan.khan@kapco.com)

Faheem Masood Manager Accounts

Misbah Safdar Assist Manager Finance Dept.

43