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. 

  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.  

Table of contents  

Dedication          Acknowledgement Preface  Vision Mission Statement   Board of Directors Introduction History  Location Map  Share Holder Structure Management functionsFinance departmentProcurement department

OD department

SWOT analysis

Recommendations

VISION   STATEMENT

To be a leading power generation company, driven to exceed our shareh

olders’ expectations 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.

Board of directors  

Mr. Anwar Ul Haq

Director

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 –

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 

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

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. 

 

   Shareholder structure  

On June 27, 1996, following international competitive bidding by the Privatization Commission Government of Pakistan (the "Privatization Commission"), the management of KAPCO was transferred to National Power (now International Power) of the United Kingdom, which acting through its subsidiary National Power (KOT ADDU) Limited ("NPKAL"), bought shares representing a 26% stake in KAPCO. Later, NPKAL bought a further 10% shareholding in KAPCO increasing its total shareholding to 36%The other majority shareholder in KAPCO is WAPDA with a presentshareholding of 46%...Following the successful completion of the Offer for Sale by thePrivatization Commission (on behalf of WAPDA) in February 2005, 18% of Mapco’s shareholding is now held by the General Public. On April 18, 2005 KAPCO was formally listed on all three Stock Exchanges of Pakistan.

MARKET ANALYSIS

EARNING PER SHARE

Net income – preferred dividends / weighted average number of shares

YEAR RATIOS

2008 9.05

2007 5.67

2006 6.04

it is a good sign for the share holders because EPS has increased.

BOOOK VALUE PER SHARE

stock holders equity – preferred stock / average outstanding shares

years ratios

2008 10

2007 10

2006 10

This ratio is same for three years.

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

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.

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.

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

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.

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 is consist 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

Field Total Marks Marks Obtained

APPEARANCE/PERSONALITY 20

TECHNICAL/PROFESSIONAL

KNOWLEDGE

25

EXPERIENCE 20

POTENTIAL 20

MATURITY 20

ALERTNESS 05

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 prescribes number of

posts.

Orientation

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

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

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.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

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.

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.

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 effecting 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.

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.

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.