INTERNSHIP REPORT

ON

KOT ADDU POWER COMPANY LIMITED

SUBMITTED TO:

DR. ZEESHAN MEHMOOD

SUBMITTED BY:

MUHAMMAD ABDUL BASIT

MCMM-17-17

M.Com(Morning)
Session 2017-2019

DEPARTMENT OF COMMERCE
BAHAUDDIN ZAKARIYA UNIVERSITY

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MULTAN

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3
 Dedication

Dedicated to my Respected DAD Muhammad Hashim & 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. Department of Commerce BZU
Multan 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 / Finance/ contracts & Procurement 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. Faheem Masood
and Finance Team for encouraging me during my internship.

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 EXECUTIVE SUMMARY:

Until 1996, Government of Pakistan had monopoly over power generation and
transmission all over the country. Government ran this business through State owned
“Water and Power Development Authority” (WAPDA). In 1996, the then Government
decided to privatize WAPDA in different stages. Because of excessive in-efficiencies in
the operation of WAPDA’s and to encourage in-ward investment into Pakistan.

KotAddu Power Company came into existence in June 1996 when the Government
privatizes its 26 % shares to International Power England through open bidding with an
option to purchase another 10 %. This 10 % was also purchased by International Power
England. Therefore, in June 1996 a new company named “KotAddu Power Company”
came into existence.

The power complex is spread over 280 acres of land. It has three independent blocks
and each block has machines of different make where different technology is used.
Production department operates the plant and maintenance department is responsible
for up keep of the plant through preventive maintenance, trouble shooting and major /
minor overhauling after predetermined period.

Forecasting of the company is entirely dependent upon the forecasting received from
WAPDA. Mainly forecasting is done for various maintenance operations. Forecasting is
also done for the provision of raw material supplies i.e. Furnace Oil, High Speed Diesel
and Spare Parts for the plant machinery.

The company maintains an inventory of 21 days for Furnace Oil and High Speed Diesel.
It also maintains a huge inventory of spare parts. A fairly good Supply Chain
Management System exists within the organization.

The company’s basic business is to produce required amount of power according to the
customer demand with No liquidated damages. The company believes in quality by
maintaining high efficiency level of its operations. There is ISO certification obtained by
the company.

The company is shifting its existing manual information system to modernized

information technology based system in which approximately 120 new computers along
with a server had already been installed.

In this report a detailed analysis of procurement procedures has been carried out.

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 TABLE OF CONTENTS
EXECUTIVE SUMMARY:...........................................................................................................................5

KAPCO (KOT ADDU POWER COMPANY)................................................................................................9

POWER PLANT TECHNOLOGY.................................................................................................................9

VISION......................................................................................................................................................................... 10

MISSION..................................................................................................................................................................... 10

BOARD OF DIRECTORS..................................................................................................................................11

MATERIAL AGREEMENT............................................................................................................................12

MAINTENANCE BLOCK 1 GAS TURBINE DESCRIPTION.........................................................13

MAINTENANCE BLOCK 1 STEAM TURBINE DESCRIPTION...................................................13

MAINTENANCE BLOCK 2 GAS TURBINE DESCRIPTION.........................................................14

MAINTENANCE BLOCK 2 STEAM TURBINE DESCRIPTION...................................................14

I &C BLOCK GAS TURBINE DESCRIPTION........................................................................................14

I & C BLOCK STEAM TURBINE DESCRIPTION................................................................................14

ORGANIZATIONAL HIERARCHY.................................................................................................................17

DEPARTMENTS AT KAPCO...........................................................................................................................18

DEPARTMENTS AT KAPCO...........................................................................................................................18

HUMAN RESOURCE DEPARTMENT........................................................................................................18

HUMAN RESOURCE DEVELOPMENT................................................................................................19

HR MISSION........................................................................................................................................................ 19

HR HIERARCHY................................................................................................................................................20

HR RESPONSIBILITIES................................................................................................................................21

INTERNSHIP TRAINING PROGRAM...............................................................................................21

SALARY AND BENEFITS........................................................................................................................22

PENSION............................................................................................................................................................... 22

PROVIDENT FUND..........................................................................................................................................22

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 ORANIZATION DEVELOPMENT.............................................................................................................23

PROCUREMENT DEPARTMENT:..........................................................................................................24

MY EXPERIENCE.............................................................................................................................................29

FINANCE DEPARTMENT................................................................................................................................. 30

HIERARCHY........................................................................................................................................................ 30

FUNCTIONS........................................................................................................................................................ 31

EXACT SOFTWARE........................................................................................................................................32

SHORT TERM INVESTMENT....................................................................................................................32

PAYMENTS TO SUPPLIERS.....................................................................................................................32

PETTY CASH BOOK.......................................................................................................................................33

SALE INVOICE RECORDING....................................................................................................................33

FAIR PRICE SHOP DEALINGS................................................................................................................34

PURCHASES.......................................................................................................................................................34

FINANCIAL ANALYSIS..................................................................................................................................35

KEY FIGURES......................................................................................................................................................... 36

KEY OPERATING AND FINANCIAL DATA OF THE LAST 5 YEARS......................................36

PROFIT AND LOSS ACCOUNT....................................................................................................................37

CURRENT RATIO........................................................................................................................................40

QUICK RATIO................................................................................................................................................ 40

INTEREST COVERAGE RATIO...........................................................................................................41

TOTAL ASSET TURN OVER.................................................................................................................41

DEBT RATIO...................................................................................................................................................42

OPERATING INCOME MARGIN:........................................................................................................42

RETURN ON INVESTMENT:.................................................................................................................42

RETURN ON EQUITY:..............................................................................................................................43

INVENTORY TURNOVER:.....................................................................................................................43

TAX:.......................................................................................................................................................................... 44

INCOME TAX:................................................................................................................................................ 44

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 SALES TAX:.................................................................................................................................................... 45

ADVANCE TAX:................................................................................................................................................. 45

MY EXPERIENCE........................................................................................................................................46

SWOT ANALYSIS..................................................................................................................................................47

STRENGTHS....................................................................................................................................................... 47

WEAKNESSES...................................................................................................................................................48

OPPORTUNITIES:............................................................................................................................................48

THREATS:............................................................................................................................................................. 48

RECOMMENDATIONS.......................................................................................................................................49

REFERENCES........................................................................................................................................................ 50

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 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

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 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

Lt General Muzammil Hussain Chairman

Mr. Aftab Mehmood Butt CEO

Mr. Owais Shahid Director

Mr. Aqeel Ahmed Nasir Director

Mr. Saad Iqbal Director

Mr. Muhammad Arshad CH. Director

Mr. Muhammad Ikram Khan Director

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 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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 INTRODUCTION of All BLOCKS:

Following are the blocks in KAPCO:

1. Block 1
2. Block 2
3. Block 3
PLANT DISCRIPTION

Maintenance Block 1 Gas turbine Description

Gas Turbines Manufacturer Capacity Fuel Installationyear

(MW)
GT-1 Siemens 95 Gas / HSD / 1987
Germany LSFO
GT-2 Siemens 95 Gas / HSD / 1987
Germany LSFO
GT-3 Fiat Italy 82 Gas / HSD / 1987
LSFO
GT-4 Fiat Italy 82 Gas / HSD / 1987
LSFO

Maintenance Block 1 Steam turbine Description

Steam Manufacturer Capacity Fuel Installation

Turbines (MW) year

STG-9 ABB Germany 87 No Fuel 1991

STG-10 ABB 97 No Fuel 1991

Germany

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 4.

Maintenance Block 2 Gas turbine Description

Gas Turbines Manufacturer Capacity Fuel Installation

(MW) year
GT-5 GE-Alsthom 79 Gas / HSD / 1988
France LSFO
GT-6 GE-Alsthom 82 Gas / HSD / 1988
France LSFO
GT-7 GE-Alsthom 77 Gas / HSD / 1988
France LSFO
GT-8 GE- 79 Gas / HSD / 1988
AlsthomFrance LSFO

Maintenance Block 2 Steam turbine Description

Steam Manufacturer Capacity Fuel Installation

Turbines (MW) year
STG-11 GE-Alsthom 76 No Fuel 1995
France
STG-12 GE-Alsthom 82 No Fuel 1995
France

I &C Block Gas turbine Description

Gas Manufacturer Capacity Fuel Installation

Turbines (MW) year
GT-13 Siemens 106 Gas/HSD/LSFO 1994
Germany
GT-14 Siemens 106 Gas/HSD/LSFO 1994
Germany

I & C Block Steam turbine Description

Steam Manufacturer Capacity Fuel Installation

Turbines (MW) year
STG-9 ABB Germany 87 No Fuel 1991

STG-10 ABB 97 No Fuel 1991

Germany

5.

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Block 1 is equipped with three turbines in total. In which four are Gas Turbine (GT1,
GT2, GT3, and GT4) and other two are Steam Turbines (STG 9, STG10).

Gases Turbines (GT1, GT2) are German made and are manufactured by Siemens
engineering co. Ltd. They have overall thermal efficiency 28% and having rated capacity
of 100MW. Rated speed is 50s-1. Steam Turbines (STG 9, STG 10) are manufactured
by ABB. As there is not any kind of compressor, which uses about 60% energy of GT, so
its efficiency is increased up to 50%.

The whole system is based on combined cycle. Where two gas turbines and one Steam
Turbine are equipped with separate generators. These components work together to
form a combined cycle and produce electricity of almost 100 MW.

Block 2:

In block two, there is also same construction of machines (GT4, GT5, GT6, and GT7)
and other two machines are the combine units (STG11, STG12). Their rating and
efficiency is same as that of block 1. All these machines are synchronized directly with
the bus bar i.e. at 220 kV to attach with bus bar.

Block 3:

Block 3 is equipped with three turbines in total. In which two are Gas Turbine (GT13,
GT14) and other one is Steam Turbine (STG 15).

Turbine units

Power station unit’s 15 units

UNITS CAPACITY COMPANY ORIGINAL MANUFACTYRER

Phase1 4358 million

UNITS: 1-2 97.3/100 SIEMENS GERMANY

UNITS: 3-4 97.3/100 FIAT ITALY

Phase224418 million

UNITS 5-6-7-8 97.3/100 GE ALSTHOM

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Phase32777 million

UNITS: 9-10(ST) 97.3/100 JGC JAPAN

Phase4 million

UNITS: 11-12(ST) 97.3/100 GE ALSTHOM

Phase5 5341 million

UNITS: 13-14-15 (ST) 110/130 SIEMENS GERMANY

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ORGANIZATIONAL HIERARCHY

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 DEPARTMENTS AT KAPCO

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

 HR, OD & CS

 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".

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 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

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.

 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.

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 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.

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.

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 ORANIZATION 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

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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 PROCUREMENT DEPARTMENT:
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.

Procurement is the acquisition of goods or services at the best possible total cost of
ownership, in the right quantity and quality, at the right time, in the right place for the
direct benefit or use of governments, corporations, or individuals. 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. In larger businesses, the function is
frequently carried out in a purchasing department, headed by a purchasing manager.

The contract and procurement department of KAPCO is consists of ten individuals which
are working under the supervision of Mr. Jamal Younis.

Procurement 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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Working Process in Purchase Department in KAPCO

Requisition:

This is the very basic step for the procurement process. The purchase demand
requisition contains a full detail of quality and quantity of commodities required. It also
contains price detail of goods purchased previously .Whenever there is any requirement
related to plant, then Technical officer of the individual block prepare a requisition on a
predefine “purchase requisition Form” and after it, send this form to purchase manager
for further process. The “purchase requisition form” contains number of items; quantity
required description about purchase, commodity code, estimated cost, suggested
suppliers orcontractors and signatures of the relevant officer etc.

Stock verification:

As requisition received and reviewed, then staff member verify the stock in stores
through software named as Q4W stock. And also new Enquiry number is issued for
further process.

Selecting suppliers or contractors:

Selecting suppliers or contractors is much important task for KAPCO and the
procurement manager asses the suppliers on their experience and quality control issues
etc.

Invitation for tender:

Procurement department will issue the enquiries to different tenderers. These will be
sent through courier service’s-mail enquiry can be sent in urgent requirement. During
this process it’s the responsibility of purchase department that all renderers are treated
equally. Tender will also include terms and conditions.

Tender opening and analysis of offers:

27
On receiving the tender in a closed envelop, they will be placed in the tender box. Two
locks will secure the tender box and Finance department and purchase department will
hold the keys for these. Tender panel will open the tenders twice in a weak or by their
mutual agreement. The tender panel will stamp and sign the tender. After it procurement
manager will prepare the analysis comparison statement.

Authorization from Technical Engineer and Finance manager for

budget:

The comparison statement is then sent to technical officer who analyze the technical
issues and with previous purchase rates and also checks the make of which company.
Then send his report with comments to procurement department for further action. The
purchase manager then negotiate with supplier or contractor for reducing the rates and
finalize the terms and condition. Then file is transferred to the assistant of purchase
department for allocation of codes of budget, if purchase is newly, then new codes are
allotted and if purchase is old or repeated then old stock codes are given to each item.
After allocation of budget codes then file is transferred to Finance department to get the
authorization of budget for payments

Placement of order:

Whenever negotiation has done and finance department gave authorization of budget,
then purchase department place the order to the selected best supplier. Purchase order
consists of lead time, payment terms, Inco terms (Ex-work, C&F, and FOB) and delivery
station.

Import/Export Section:

Import/Export section is the major part of the procurement department because

whenever order is placed to the supplier and if the supplier is foreign, then import section
completes the process of delivery, custom clearance etc. Similarly when the KAPCO
sends its machinery for the overhaulingpurpose to the foreign countries, then this
process is called export cum re-import. And all this process is done by the import/export
section.

Procedure for import purchase:

28
Importer is the person who receives the goods out of the country. Whenever purchase
order raised then supplier sends the invoice to the importer and that invoice contains
H.S. code, payment procedure and delivery date. In response an advance payment,
cash against document or LC is established as per decided in purchase order. The
purpose of LC is explain as follow

LC Establishment:

The letter of credit accomplish their purpose by substituting the credit of bank for that of
the customer, for the purpose of facilitating trade.LC is a contractual agreement between
a bank, known as the issuing bank, on behalf of one of its customers, authorizing
another bank, known as the advising bank or confirming bank to make payment to the
beneficiary. The issuing bank on the request of its customer opens the letter of credit.

Elements of a LC:

 A payment undertaking given by a bank on behalf of a buyer.

 To pay a seller (beneficiary) for a given amount of money.

 On presentation of documents representing the supply of goods within specified

time limits.

 Documents must confirm to terms and conditions set out in LC.

 Documents to be presented at a specified place.

LC Characteristics:

Negotiability: Negotiable instruments are passed freely from one party to another.

Revocability: A revocable LC may be modified for any reason at any time by the issuing
bank without notification.

Irrevocability: The irrevocable LC may not be amended without the agreement of issuing
bank, the confirming bank and the beneficiary.

29
Whenever the LC completed and then company’s specified person n in contact with the
supplier about the delivery period. If suppliers want some amendments in the LC, then
supplier will reply for amendments.

Commercial Documents:

The authority letter will be issued to the clearing agent for collection and the custom
clearance. Whenever completion has done, supplier sends the arrival timing, Airway bill,
packing list, date, and port. Because these documents are required to get delivery order
from airline. Clearing agent gets the documents form importer.

Custom Clearance:

Whenever agent gets the delivery order and prepares the bill of entry. Agent gets the
index number from customs. Agent sends the copy of bill of entry to verify the H.S code
and relevant S.R.Os.Computerized custom system confirms the token number, machine
number and bill of entry. Superintend mark the percentage examination and inspector
check the goods as per declared in bill of entry. After finalizing HS code and value of
goods, principal appraiser finalizes the bill of entry. After custom formalities, agent sends
the goods to the KAPCO.

30
 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.

31
 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

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 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 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.

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 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.

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

34
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

35
Name of income XYZ

36
 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 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

37
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.

 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.

38
 KEY FIGURES

Turnover RS. 91,916 Million

Gross Profit RS. 13,379 Million

Profit After Tax RS. 10,617 Million

Earning Per Share RS. 12.06

KEY OPERATING AND FINANCIAL DATA OF THE LAST 5 YEARS

Financial Year Ending June 30, 2018 2017 2016 2015 2014

Turnover PKR in Million 91,916 81.847 64,178 101,481 113.206

Net Profit PKR in Million 10,617 9,447 9,071, 9,799 7,730

Assets PKR in Million 138,446 116,001 92,213 96,262 95,352

Dividends PKR in Million 8,010 7,966 7,922 6,822 6,382

EPS PKR Per Share 12.06 10.73 10.31 11.13 8.78

Net Output GWH 7,437 7,335 6,583 6,934 6,479

Thermal Efficiency % 44.0 43.7 44.0 44.2 43.7

Load Factor % 63.3 62.4 55.8 59.0 55.1

Availability % 86.0 84.3 81.9 85.5 80.2

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 PROFIT AND LOSS ACCOUNT

For the year ended June 30, 2017

2018 2017
(Rupees in Thousands)

Sales 91,915,894 81,846,981

Cost of sales (78,536,832) (67,666,625)

Gross Profit 13,379,062 14,180,356

Administrative expenses (456,787) (451,839)

Other operating expenses (371,085) (221,708)

Other Income 9453,211 4,991,238

Profit from operations 21,995,401 18,498,047

Finance cost (61,887,594) (4,424,942)

Profit before tax 15,807,807 14,073,105

Taxation (5,190,722) (4,626,056)

Profit for the year 10,617,085 9,447,049

Earnings per share Rupees 12.06 10.73

40
 BALANCE SHEET

For the year ended June 30, 2018

2018 2017
(Rupees in thousands)

EQUITY AND LIABILITIES:

CAPITAL AND RESERVES

Authorized capital

3,600,000,000 (2016: 3,600, 000,000)

Shares of Rs 10 each 36,000,000

36,000,000

Issued, subscribed and paid up capital

880,253,228 (2016: 880,253,228) ordinary

Shares of Rs 10 each 8,802,532 8,802,532

Capital reserve 444,451 444,451

Unappropriated profit 25,845,905 23,256,226

35,092,888 32,503,209

NON-CURRENT LIABILITIES

Liabilities against assets subject to finance lease 38,487 64,161

Deferred liabilities 2,710,085 2,138,546

2,748,572 2,202,707

CURRENT LIABILITIES

Current portion of long term liabilities 15,960 411,635

Finances under mark-up arrangements-secured 49,874,599 46,133,174

Provision for Taxation-Net 296,738 _______

Trade and other payables 49,754,942 34,169,485

Unclaimed Dividend 662,289 580,371

100,604,528 81,294,665

41
CONTINGENCIES AND COMMITMENTS

138,445,988 116,000,581

Assets(Current & Fixed): 2018 2017

(Rupees in thousands)

Non-Current Assets
Property, plant and equipment 8,564,577 10,813,412

Intangible assets 7,462 9,577

Assets subject to finance lease 51,747 63,615

Capital work-in-progress 7,327 71,383

Long term loans and deposits 31,821 30,622

Post Retirement benefits - 58,876

8,662,934 11,047,485

CURRENT ASSETS

Stores and spares 4,248,855 4,264,752

Stock-in-trade 6,717,597 5,914,402

Trade debts 115,472,114 89,987,164

Income Tax Refundalbe 275,542

Loans, advances, deposits, prepayments

And other receivables 2,659,533 3,881,518

Cash and bank balances 684,955 629,718

129,783,054 104,953,096

138,445,988 116,000,581

42
 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

2017 104953096/81294665 1.29

2018 129783054/100604528 1.29

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

2017 104953096-5914402/81294665 1.21

2018 129783054-67117597/100604528 1.22

43
 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.

Years Calculation Ratio

2017 14073105/4626056 3.04

2018 15807807/5190722 3.04

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

2017 81846981/116000581 0.70

2018 91915894/138445988 0.66

44
 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

2017 83497372/116000581 0.71

2018 103353100/138445988 0.74

OPERATING INCOME MARGIN:

FORMULA = OPERATING INCOME / NET SALE.

Years Calculation Ratio

2017 18498047/81846981 0.22

2018 21995401/91915894 0.23

RETURN ON INVESTMENT:

FORMULA= Net income / longterm libilities + equity.

Years Calculation Ratio

2017 9477049/2202707+8802532 0.85

2018 10617085/4748572+8802532 0.91

45
 RETURN ON EQUITY:

FORMULA= Net income / equity

Years Calculation Ratio

2017 9447049/8802532 1.07

2018 10617085/8802532 1.2

INVENTORY TURNOVER:

FORMULA= Cost of goods sold / average inventory

Years Calculation Ratio

2017 67666625/5914402 9.75

2018 78536832/6117597 11.69

46
 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.[1] A failure to 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.

47
 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
"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.

48
 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 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.

49
 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

50
 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.

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.

51
 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.

52
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.

53