Dedicated to my
Parents and teachers
Who always help me and care me.
ACKNOWLEDGEMENT.
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 functions
Finance department
Procurement department
OD department
SWOT analysis
Recommendations
VISION STATEMENT
To be a leading power generation company, driven to exceed our shareholders’ expectations and meet our customer’s requirements.
· 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
| Chairman |
KAPCO is the largest Independent Power Producer (IPP) having the largest Combined Cycle Power Plant in Pakistan
History
KAPCO is the first industrial privatization in Pakistan UK
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
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.
MAP
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 present
shareholding of 46%...Following the successful completion of the Offer for Sale by the
Privatization Commission (on behalf of WAPDA) in February 2005, 18% of Mapco’s shareholding is now held by the General Public. On
MANAGEMENT FUNCATION
Finance department
VOUCHING
Very first and an important function of finance department is recording the business transactions on vouchers. This is also called process of vouching. This is made for internal record keeping. Auditors specifically audit vouchers. Wrong vouching will lead to error in the system and ultimately create problems.
From vouchers information is recorded in daybook and cashbook. As each voucher along with its invoice, PO and other necessary documents are kept in the record room so daybook is one that can give information about parties DR and name of account CR along with amount.
LEDGER
In order to see accounts in condense form ledger is used. From daybook all the entries are posted in ledger. Ledger represents DR or CR balance of each party. So from ledger we can see amount that is to be paid to a party or the amount that is to be received and the balance at the end of the month.
TRIAL BALANCE
After this all the DR balances and CR balances of all the parties are posted in trial balance. The trial balance must be equal at both sides. Otherwise there is any error in recording the transactions.
Now trial balance becomes the source of profit and loss and balance sheet.
This department also designs the accounting policies. All the work in this department is being take place on accrual basis.
The department prepares trial balance at the end of every three months and Profit and loss accounts and balance sheet are prepared at the end of year. The financial year ends on june30 of each year. The financial statements are presented to shareholders.
Exact Software:
KAPCO is using accounting software named as EXACT. This software helps in preparing the final annual statements.
The Finance department of KAPCO is responsible for the entire accounting process of the organization and for an efficient handling of the accounts. The accounts department mainly performs the following functions:
RESPONSIBILTIS OF GM FINANCE
The finance department of kapco is responsible for investment of funds in different companies but with the approval of thGM finance.all major decission as investment and loan are made with the approval of GM finance.
. Financial Analysis
Financial analysis involves the use of various financial statements. These statements do several things. First the balance sheet summarizes the assets, liabilities, and owner equity of business at a moment of time. Next the income statement summarizes the revenues and expenses of the firm over a particular of time. For financial analysis we use the ratio analys.
Liqudity ratios
Current ratio
This ratio shows the firm ability to pay the current liabilities which will arise in next accounting year. The this ratio will be the more strong the company will be considered more strong.
Current ratio = current assets/ current liabilities
Year ratios
2008 1.38
2007 1.85
2006 3.97
The firm has 138 rupee in current assets for the nest year liabilities.
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.
Quick ratio= current asset-inventory/current liabilities
Year ratios
2008 1.09
2007 1.23
2006 2.59
liquduty ratios
Interest coverage ratio
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.
= EBIT/interest expense
Year ratios
2006 6.87
2007 6.71
2008 4.64
It shows that the firm has 4.64 rupee for each one rupee of interest
Expense.
Debt Ratio
The debt Ratio indicates the firm long term debt paying liability and it is computed as follow
Formula
Total liabilities/ Total asset
Year ratios
2008 62%
2007 52%
2006 41%
This ratio shows that the firm 62% percent of total assets are financed through debt. And this ratio is increasing.
Profitability ratios
Return on comman equity
FORMULA
(Net income-preferred dividends) / average common equity.
YEARS RATIOS
2008 0.69
2007 0.26
2006 0.25
Ratio increasing is a positive sign for the company because return is incerasing on equity
OPERATING INCOME MARGIN.
FORMULA.
OPERATING INCOME / NET SALE.
YEARS RATIOS
2008 0.18
2007 0.24
2006 0.31
it is a nagitive sign for company because operating income is decreasing
RETURN ON INVESTMENT.
FORMULA.
Net income / longterm libilities + equity.
Years ratios
2008 0.26
2007 0.16
2006 0.17
it is positive sign for company because maximum profit is being gerated from investment.
RETURN ON EQUITYFORMULA.
Net income / equity
YEARS RATIOS
2008 0.37
2007 0.26
2006 0.26
it is positive sign for company because return on equity has inncreased in this year.
Net income / (beginning + ending assets) / 2
Years ratios
2008 0.16
2007 0.10
2006 0.26
This ratio is decreasing and this is a negative signal for the company but its is improved for some extent in this financial year
INVENTORY TURNOVER.
FORMULA.
Cost of goods sold / average inventory
YEARS RATIOS
2008 1.59
2007 2.44
2006 4.46
it is a nagetive signal for the company because inventory turnover is decreasing its means that sale is decerasing
MARKET ANALYSIS
EARNING PER SHARE
FORMULA
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
FORMULA.
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.
v Recruitment and selection
v Training of staff
v Orientation of new employees
v Compensation and benefits
v Employees promotion
v Human resource planning
v 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
Ø Appearance
Ø Technical/ professional knowledge
Ø Experience
Ø Potential
Ø Maturity
| Field | Total Marks | Marks obtained | comments/(ifany) |
| Appearance//personality | 20 | | |
| Technical/ professional knowledge | 25 | | |
| Experience | 20 | | |
| Potential | 20 | | |
| Maturity | 20 | | |
| Alertness | 5 | | |
| Maturity | 10 | | |
| Total: | 100 | | |
Post interview process
Immediately following the final interview, each panel member shall independently ranks the candidates before any discussion takes place amongst them. Then the HR section representatives will collate the rankings and after mutual discussion, the panel shall arrive at a consensus on their recommendation for appointment on the 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
Ø Organizational structure
Ø Policies and rules applicable in the company
Ø Attendance and leave procedure
Ø 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
Ø Salary as per basic pay scale
Ø 85 percent kapco allowance
Ø Free Electricity units according to job rank
Ø Free medical of the all the dependent of the employee
Ø Free education for children in KAPCO colony
Ø Free accommodation/allowance
Ø Mobile and petrol allowance for officers
Ø Facility of fair price shop
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.
Organizational development
This section was formed on 2006. They perform the following functions
1. Training of officers
2. Performance appraisal of officers
1) Training of officers
For this purpose a training need assessment is carried out. There are two types of training
I. In- house training
II. External training
In-house training
This is carried out for operations, Maintenance and safety. The last t raining was conducted by a company NAVITUS. This was an in house training for the purpose of safety.
External training
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
- 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
- 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
RECOMMENDATIONS
Ø Transport facility will provided for pick and drop
Ø On weekly basis late employee report will send to the General Manager
Ø There should be awards and prizes for regular employees
Ø The O.D section will be responsible for the training of the whole staff.
Ø In apprenticeship the quota for the children of KAPCO employees should be maintained
Ø There should be proper career counseling for the employees of KAPCO
Ø There should be job rotation for different sections as employees should have maximum skills which are beneficial for the KAPCO.
In purchase department
Ø Instead of companies the proprietor should be black listed
Ø The companies owned by the same owners should allow sending single tender
Ø While going for sending inquiries for the purchase of different supplies the new supplier should be provided equal opportunities.
Ø 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.
Ø There should be proper record of supplier assessment questionnair.
Finance department
Ø There should be proper division of work among the
Employees
Ø There is need of one or two assistant in the tax and reporting section.
Ø The suppliers should be told in advance about the requirements of company regarding different document (sale tax invoices) etc.
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