5/6/2018 Management Audit

K-Electric: Revenue Recovery and

Protection Department

Group Members:
Fareeha Abbas (11164)
Hafsa Faheem (11267
Shirmeen Anwar (10908)
Syeda Hafsa Maruf (11156)
Varisha Alam (11255)
Acknowledgement

In performing this task, we were helped and guided by some people, who deserve our greatest
gratitude. First and foremost, our most sincere gratitude to our Course Instructor Sir Mirza
Sardar Hussain, for giving us the apt advice over numerous consultations throughout the process.
In addition, we are grateful to Mr.Ghufran Ul Huda who took out time for us, answered our
questions, and explained the functions of the firm.
We would also like to extend our appreciation to all those who have directly and indirectly helped
us with the report. Many others, especially senior students and our Teacher’s assistant, have made
valuable contribution to this report through suggestions which helped us improve our report. We
thank everyone for their help.
 Table of Contents

Introduction ................................................................................................................................................... 7
Vision and Goals:...................................................................................................................................... 8
Organizational Culture .............................................................................................................................. 8
Mechanistic Organizational structure ....................................................................................................... 9
Organization Chart: ................................................................................................................................. 10
Planning, Organizing, Leading and &Controlling ...................................................................................... 11
Planning: ................................................................................................................................................. 11
Organizing: ............................................................................................................................................. 11
Leading: .................................................................................................................................................. 12
Planning and Execution: ..................................................................................................................... 13
Leadership Style: ................................................................................................................................ 13
Controlling: ............................................................................................................................................. 14
Controlling in Operation Burq: ........................................................................................................... 14
Controlling in K-Electric: ................................................................................................................... 14
CHANGE and INNOVATION ‘A COMPANY REBORNED’ ................................................................. 16
Innovation: .............................................................................................................................................. 16
Growth of K-Electric: ............................................................................................................................. 17
The Journey from KESC to K-Electric: .................................................................................................. 17
Change in the Leadership and Management of the Organization: ...................................................... 18
Rebranding KESC:.............................................................................................................................. 18
Tackling major problems of Load shedding, Electricity Theft and Bill Payments: ............................ 19
K-Electrics Initiatives and Campaigns: ............................................................................................... 19
Building stronger Customer Relationship and improving Customer Experience: .............................. 20
Creating Awareness: ........................................................................................................................... 21
SWOT ANALYSIS .................................................................................................................................... 22
STRENGHTS: ........................................................................................................................................ 23
WEAKNESS:.......................................................................................................................................... 23
OPPORTUNITY: .................................................................................................................................... 24
THREATS: ............................................................................................................................................. 24
TOWS MATRIX ........................................................................................................................................ 25
PEST ANALYSIS: ..................................................................................................................................... 26
POLITICAL FACTOR: .......................................................................................................................... 26
 ECONOMICAL FACTOR: .................................................................................................................... 27
SOCIO-CULTURAL FACTOR: ............................................................................................................ 27
TECHNOLOGICAL FACTOR: ............................................................................................................. 27
Conclusion and Recommendations ............................................................................................................. 29
Bibliography .............................................................................................................................................. 32
Table of Figures

Figure 1 SWOT analysis .............................................................................................................. 22

Figure 2 TOWS analysis .............................................................................................................. 25
Figure 3 PEST analysis ............................................................................................................... 26
Executive Summary:

This report was commissioned to audit the management functions that are performed at K-Electric
Company. An ongoing maneuver, “Operation Burq” that is being conducted by the K-Electric was used to
examine the management techniques and functions that were carried out by the managers to ensure
successful completion of the operation which took place after the merger.

K-Electric had been facing losses in past few years because it was unable to recover many dues. This
operation was carried out not only to recover dues but also to punish culprits who stole electricity by using
a “Kunda”. A thorough advertising campaign was carried out to ensure that people were aware of the
consequences of this project. With the help of Police and law making authorities, K-Electric has been able
to recover a major portion of its dues and reduce electricity theft from many areas.

During the managerial audit the assessment yielded findings, such as: all of the operational and tactical
goals of the business are linked to the vision of the organization. The business uses a centralized approach
therefore; planning phase is executed by the higher tier of management. All department heads are given the
autonomy and authority to organize and control the work of employees in order to align the departmental
goals with the organizational goals according to the framework.

K-Electric has been able to increase its profits by 87% in the last few years. This has led to an increased
pay for the workers. The management structure does not allow greater participation for employees and
delegation from managers, this has led to very low levels of motivation. Several steps could be taken to
ensure that the labour turnover is reduced so that many costs associated to this could be reduced and an
efficient workforce can be maintained.

K-Electric have made many changes when transitioning from government organization to private
organization. K Electric has innovated a new type of wire called Area Bundle Cable. We have talked
about journey from KSEC to K-Electric. These changes have evolved the image of KESC from
inefficient and loss-making organization to a relatively profitable and improved K-electric
Introduction

Karachi, the City of Lights is a metropolis of over 20 million. It is one of the most popular cities
in the world. K-Electric Limited formerly known as Karachi Electric Supply Company Limited
(KESC), is at present the only vertically-integrated power utility in Pakistan that manages the
generation, transmission and distribution of electricity to the city, with its headquarter at DHA,
Karachi. The Company covers a vast area of over 6,500 square kilometers and supplies electricity
to all the industrial, commercial, agricultural and residential areas that come under its network,
comprising over 2.2 million customers in Karachi and in the nearby towns of Dhabeji and Gharo
in Sindh and Hub, Uthal, Vindar and Bela in Balochistan.

It was established one hundred years ago, on September 13, 1913 and is one of the oldest
companies operational in Karachi. It was set up under the Indian Companies Act of 1882 as the
Karachi Electric Supply Corporation Limited. The entity was nationalized in 1953 but re-
privatized on November 29, 2005. KESC came under new management in September 2008 and
was renamed as the Karachi Electric Supply Company. Over the last few years, KESC has
demonstrated a strong ability to bring about a sustainable change. It has pursued a path of visible
growth and transformation which has placed it amongst the most dynamic institutions in Pakistan
and in the region. The Company is now a renewed entity with a brand-new vision and a progressive
outlook. KESC has now been rebranded as K-Electric, with the renewed hope that it will serve
Karachi with more vigor, more energy and a fresh purpose.

According to the sales revenue, K- Electric is the 5th largest company overall and 2nd largest
private company after Hub Power. It is the largest company overall according to the total assets
and the largest company in the private sector of Pakistan. K-Electric is the main provider of
electricity throughout the city and hence its estimated revenue per fiscal year is 190.4 billion PKR.
It has 64 grid stations, customer care centers and complaint centers. It generates electricity with
an installed capacity of 1827 MW and has power purchase agreements of 1021 MW from
Independent Power Producers like, WAPDA, KANUPP and through imports
Vision and Goals:

K-Electric’s vision is to restore and maintain pride in K-ELECTRIC. The mission that they follow,
the purpose behind the existence of this company is to provide the best quality service; that is to
generate sufficient amount of electricity and transmit it efficiently throughout the city. They aim
to brighten lives by building the capacity to deliver uninterrupted, safe and affordable power to the
people of Karachi.

The employees, the managers and the chief collaborate to achieve the company’s organizational
goals. Its strategic goal is to change the company for the better, to improve its services and to
enhance its productivity and to transform K-Electric into a customer-centric power utility in line
with their customers’ aspirations. Among the eight categories of the strategic goals, the company
follows most of them. Its marketing goal is to provide reliable customer service and for this there
are many customer care centers across the city. Among its innovational goals is the launching of
the 1st Shariah compliant listed Sukuk worth PKR 6 billion which was oversubscribed within the
first 12 business hours. K-Electric fulfils its Human Resource goals as well as Financial Resource
goals, Farooq Ahmed Adhmani being the main investor.

As far as the Physical Resources goal is concerned, the company entered into an agreement with
China Datang Overseas Investment Company in 2015 (CDTO) and China Machinery Engineering
Company (CMEC) to set up a 700 MW of power. Social Responsibility and Profit Requirement
goals are also achieved to some extent.

Each division of the company works efficiently to achieve their tactical goals and each department,
for example, the Transmission department including SCADA, Load Dispatch Centre, and Grid
System Operations, makes sure that electricity is transmitted with least loss and maximum
efficiency. The departments and the individuals together achieve the operational goals. Overall,
K-electric is operating efficiently and effectively and enhancing its performance time by time.

Organizational Culture

The culture followed by the people at K-electric is powered by their belief system, their values,
and their determination to work and to provide the best output by working with passion, in
harmony. This promotes a strong culture in the organization, which eventually facilitates the
achievement of its organizational goals. Diversity is a major element of their culture. The company
has employees and managers from different backgrounds and walks of life. This helps in exchange
of ideas among people belonging to different cultures and propagates chances of improvement and
success.

The values which K-ELECTRIC, follows include integrity, accountability and the need for
continuous improvement. The pursuit of these values creates opportunities for success and the
potential to provide their customers with increasingly pleasing services. These values also lead
them to manage K-Electric’s environmental impact in ways that strike the right balance between
society’s economic and environmental needs. The people at K-Electric are trustworthy, open and
precise as they speak simply, but never patronize. Employees at K-Electric are promoted to do the
right thing and adopt the good practices of anyone they come across. They are encouraged to act
in a responsible manner towards people, places and environment. The managers of the customer
service departments are welcoming and easily approachable and are always already to help their
customers in the best possible manner

(K-Electric).

Mechanistic Organizational structure

The organizational structure for Revenue Recovery and Protection (RPR) department of K-Electric
is tall and narrow with around six layers of hierarchy. The organizational structure for K-Electric
as a whole is departmentalized with each department having its own organizational structure. The
organizational structure of the RPR department is mechanistic with narrow span of control. Only
two data processing officers are working under three assistant managers. The span of control is
very narrow due to the complexity of the work but the managers pay close attention to them and
supervise their activities. With lower employees working under one manager and several layers of
hierarchy the employees have a clear idea about the progression of their career and promotional
opportunities. The organizational structure is formal with less or no cross functional links thus
there is less co-ordination between employees of different levels or different departments.
However, there are eighteen-meter inspection officers that work under the same three assistant
managers, this is because the work being done by them is routine and standardized therefore the
managers do not have to pay great attention to their work.

Organization Chart:

General Manager

Deputy General
Manager

Manager

Assistan Manager
(Customer Assistan Manager Assistan Manager
Complaints) (Industry) (Ordinary Complains)

MIOs DPO DPO

(16)

LIne man
(3rd Party)
Planning, Organizing, Leading and &Controlling

Planning:
The need for Operation Burq arouse as a last resort that had to be used to recover the organization’s
money. Before that there are some standard procedures. Every area is assigned a line man from
the Reconnection and Disconnection department (RCDC). Every line man is responsible for his
own area and has to notify households when the due date of payments has passed. In the case that
households pay off their debt the issue is resolved but, in the case, where they misbehave with the
line man, their electricity is cut off as soon as the line man reports the ill behavior. Sadly, this
doesn’t end here. As soon as the line man leaves, the households get an illegal reconnection
through a “Kunda” (which is punishable by the law). On inspection when the Kunda is found, it is
immediately removed but the households keep acquiring it through different means. This became
the reason why operation Burq had to originate.

This operation plans to achieve a community which works towards abolishing electricity theft and
default. As an incentive to their consumers, K-Electric promises the provision of uninterrupted
power supply, if the dues are met on time. On 13th May 2015, the CEO of K-Electric met with the
director of FIA, Mr. Shahid Hayat Khan, who assured his full support for the operation against
electricity defaulters and thieves in the city.

After the meeting, a K-Electric spokesman stated: “we are getting ready to pounce on such culprits
who are present in most pockets of this city. We want them to know that we are serious about this
and after the amnesty ends, there would be no going back for such people”
(http://www.liverostrum.com/k-electric-and-fia-operation-burq/20411.html)

Soon after this meeting, K-Electric started an advertising campaign, as a warning to all their
defaulters to pay their dues, mentioning the consequences.

Organizing:
For this operation, last year’s bills are reviewed and a list of made of all the defaulters, including
their accrued amount and the last date when they paid. Every area has its own Revenue, Protection
and Recovery department which looks after their respective defaulters. When the list has been
finalized dates are set for sting operations for the defaulters, every sting operation is carried out by
a team of K-Electric workers, the RPR manager of the specific area and the police. According to
procedure, the defaulter’s NIC is taken and an FIR is registered against him. Furthermore, his
electricity is cut off and it becomes the responsibility of the police to deal with the defaulter by
imprisoning him and bringing him to court, until he clears all his dues including an addition cost
that he imposed on K-Electric to come after him. Initially the organization faced a lot of opposition
since their practice was not very appropriate. In the beginning K-Electric would just use the police
to bring the defaulters to the police station and pressurize them to clear their dues. But because no
warrant was issued to bring them to the police station the organization was sued. Since then they
have improved their practice, making it their first priority to get a FIR registered. In rare cases,
where the defaulter pleads to pay part of his dues just as the K-ELECTRIC task force raids him,
the top manager of the RPR department can evade the imprisonment charge on the defaulter, if the
defaulter agrees to pay a significant portion of his accruals. The top manager gets to decide if the
payment being made is significant enough. In such a scenario, the firm is saved from all the cost
and fatigue it would have to undergo while pursuing a legal suite against the defaulter. Also, to
reduce cost of these extensive operations, k-Electric have acquired contract cars so that in case of
any damage to them as a result of retaliation from the defaulters, the organization will bear no cost.

Leading:
Operation Burq resulted in a reduction of load-shedding for over 200,000 households and
commercial operations across the city. This significant milestone is a testament to the impact of
our efforts. This is what we have strived for since the beginning – the provision of uninterrupted
power supply to each of our consumers (Operation Burq)

The facts mentioned above show the boundless success of this operation and obviously this has to
be attributed to the phenomenal leadership that made this possible. The leadership environment in
K-electric is autocratic. As observed by the questionnaire 50% of the people voted “hardly” when
asked about how easily they can discuss their issues with the top managers. But the top managers
said in the interview that, “Every individual plays an important role in the evolution of our
organization. Our leadership follows the values of integrity, accountability and the drive for
continuous improvement, which means striking the right balance between society’s economic and
environmental needs”

If we talk about the leading of Burq Operation following are the steps taken:
Planning and Execution:

In the beginning a list of the heavy dues consumers list are fetched by the RCDC (Reconnection
and Disconnection) and RPR (Revenue Protection and Recovery) departments heads through SAP,
which is then bifurcated into the areas and regions.

Which areas to raid for meter inspection, which procedures to follow, what minimum amount to
recover from a defaulter and what additional expenses to charge defaulters with as prenatally are
decided by the Manager RPR, Manager RCDC, Assistant Manager RCDC and Assistant Manager
RPR decides in collaboration with each other. They also go along with the Operation Burq teams
to supervise the activity and this shows their dedication towards this operation.

Leadership Style:

K-electric, culturally, understands that the leader has to give direction not only to employees but
also has to motivate employees to work towards organizational goals. In K-ELECTRIC each
individual assumes a vital part in the advancement of the organization. Our group guarantees
execution and quality and gives inside and out oversight on key issues.

K-electric is value driven company in which leader has to emphasis on four things which include
thought leadership, knowledge-based learning, values and social responsibility. The administration
takes after the estimations of honesty, responsibility and the drive for ceaseless change, which
implies striking the right harmony between society's financial and natural needs.

In K-ELECTRIC has different leadership model for different departments, it follows both
democratic and autocratic leadership model. When K-ELECTRIC was privatized, it hired many
new efficient employees who were up to date with the changes in the market. So those new
employees followed democratic leadership in which their motive was to enhance communication
among organization for fluent operation of tasks. But after privatization many previous employees
were kept in organization as they had better expertise, these people followed autocratic leadership.
In K-ELECTRIC most managers follow autocratic rather than democratic leadership.
Controlling:

Controlling in Operation Burq:

In order to avoid unfavorable circumstances and control the situation, the meter inspection team
and all the leaders head towards their target area along with security, police and line men. Approx.
30 people are selected to go and conduct the operation every time using MTL (K-electric
transport). Before reaching there the assigned head of security has already made some
arrangements with the area police for controlling measures in adverse situations.

Controlling in K-Electric:

After genuine execution has been measure, contrasted and built up as execution benchmarks, the
following stride in the controlling procedure is to make a remedial move. In other words, corrective
action focuses on correcting organizational mistakes that hinder organizational performance.

 Pre-control is utilized as the company adapts the target selection of each department and
overall target of the integrated business cycle (IBC) in a web manner. Meaning, first the
targets of IBC are assigned which are 100% safety points.
 Safety recovery expenses are within budget, billing, consumer complain resolution and
transference of hook connection temporary or permanent to the new metered connection.
So each point of these targets are further elaborated as the whole sole targets of the
individual department and then linked to each person so that each individual performs his
100% and completes his target collectively.
 Con current control: this alludes to the control that happens as work is being performed.
The tracking of each personal target is done through APA (Annual Performance Appraisal)
which is developed for each person as per their departmental work.
 This is done by mutual consensus of line managers and his employees and reviewed
monthly or quarterly.
 Also, if any person makes a mistake during their task, in order to rectify or teach him a
lesson a disciplinary note or the explanation letter (an allegation letter) is sent to him in
 hard or soft copy. After two such letters the person is terminated from the job, but in case
of any corruption such as being involved like bribery or any other benefits from consumer,
there is a very strict policy of termination right on the spot.
 Feedback Control: this alludes to the control that focuses on the post organizational
performance. Feedback is carried out through survey of human resource persons. The
feedback is of three types:
 PORTAL TYPE: In this, forms are sent to each employee and they have to fill and submit
them. After analysis of the result, they are then forwarded to higher management for
controlling measures to be taken.
 Next is the HR person visits to the IBC to acquire respective data.
 Thirdly, the members of the intelligence team surveil the person dressed as civilians and
note the departmental team’s performance without notifying them.
 If at the end of every three months the quarter goals are not accomplished, root cause
analysis is carried out by the department’s heads to find out the major lacking area.
CHANGE and INNOVATION ‘A COMPANY REBORNED’

KESC (Karachi Electric Supply Company) was a government company which was in total loss,
therefore the company was privatized. After being privatized it formed a new identity and emerged
as ‘K-electric’. Now K-Electric is a private company that made a turnaround by using innovations
and is in a contant struggle to further improve itself.

K-Electric has a changed feel with the new logo intact and the tagline “Energy that moves life”
added. The new logo comprises of three feathers of a partridge in three different colors; Orange,
Blue and Green. Orange stands for energy, Blue stands for Community and Green stands for
Environment.

The Abraaj group controls the company as they have the highest ownership of KE shares. On
January 1, 2015 Abraaj Capital proposed to invest $2 billion in K-Electric in an effort to boost
power supply to the country’s largest city (Abraj plan $2 billion in K-electric, 2015).

Innovation:

K Electric has innovated a new type of wire called Area Bundle Cable, it’s not yet prominently
used but it has been installed in areas with a high electricity theft ratio. There are two commonly
known ways to steal electricity:
1) Tempering with the meter to make it show lesser units of electricity used in comparison to the
actual consumption.
2) “The Kunda” an illegal connection with the live wire going through the areas, which provides
electricity that, cannot be associated to a particular customer.
The area bundle cable takes away both these opportunities. The area bundle cable assigns only one
transformer to a particular small-scale unit such as a street, it has only one meter, which is placed
on the transformer pole which is inaccessible to be tampered with and there are no live wires
suspended throughout the area, instead the wires are directly going into the houses through the
ground and hence no one can acquire a Kunda.

The organization is using Aluminum wires instead of copper ones to reduce costs and benefit the
consumers. The price of Aluminum and Copper wires per kilogram is approximately same, but
since Aluminum has lower density and is lighter more wires can be made in the same quantity in
comparison to those made by copper, hence K-Electric has reduced their cost. Even though these
aluminum wires are of poor quality in comparison to those made by copper, K-ELECTRIC prefers
these because they benefit the consumers in terms of safety. Copper wires are comparatively very
heavy, and they expand when the heat increases, causing electricity poles to fall and creating a
difficult situation for residents as live wires remain on the ground until the electricity is shut down
by the main distributor and the wires are repaired. Because Aluminum wires are light and have a
lower heat resistance they don’t cause the pole to break instead they melt easily causing the
connection to break off, stopping the current from passing hence the residents are safe from any
fatal accident that could be caused by a live wire falling on the ground. And since more Aluminum
wires can be made with the same cost, the broken wires can be replaced with no additional cost.

Growth of K-Electric:

K-Electric was privatized in 2008. From a company beset by rampant theft, network of rickety
power lines and corruption, it has emerged as a benchmark for other electricity suppliers in
Pakistan. When the company took over it was facing great losses but after it was privatized,
company efficiency increased by 30% in 2009 and it further rose to 37% in 2014. It has
improved it efficiency by introduction of technology by installing smart meters, minimizing
line losses through upgrading the transmission network. K-Electric has contracted Descon to
build a special system at two of its power production sites that will channel waste heat to a
boiler before the resultant steam is reused to generate additional electricity. K-Electric has a
current market capitalization of US$2.2 billion, its share price having grown 1.9 times over the
past 5 years (Hasan, 2014)

The Journey from KESC to K-Electric:

From KESC to K-Electric, the organization’s journey has been shaped by various changes and
decisions which include changes in the organization’s leadership and management, organization
goals, the organization’s staff and employees as well as the power generation methodology and
technologies used by K-electric etc. These changes have evolved the image of KESC from
inefficient and loss-making organization to a relatively profitable and improved K-electric.
Change in the Leadership and Management of the Organization:

Even though, KESC had been managed by other private authorities since 2005, however,
all of these management authorities were ineffective in preventing losses for the
organization. As a result, the image of the organization kept deteriorating with significant
power breakdowns and increasing protests from the public. The turning point for KESC
throughout its journey was when the Abraaj Group, a private equity firm, bought
company’s significant portion of ownership as well as the management control of the
organization. The Abraaj Group’s Tabish Gauhar became the CEO of K-electric in 2009
and worked efficiently for the revival of the organization. When Gauhar became the CEO,
KESC had over 18,000 employees. Therefore, to cut down its cost and improve K-electric’s
efficiency and productivity, Gauhar and the management team decided to outsource non-
core operations of the organization such as power-line repair work and forced around 7,000
employees to take golden handshake and leave KESC. The after-effects of this move were
very negative as many violent protests and attacks against the management became
frequent. However, the management waited patiently, and the current scenario improved.
The change in the management had an immense role in the revival of KESC and
transforming into a profitable K-electric.

Rebranding KESC:

K-electric started to rebrand themselves after 2009 to reflect the new identity under Abraaj
group management. This included but not limited to change of name, logo and tagline.
Before Abraaj group, K-electric (then known as KESC) suffered losses for more than 17
years owing to inefficiencies and corruption and mismanagement of their resources. The
Abraaj management tried to rebrand themselves by creating a new identity for KESC.
Starting with the changing of name the management thought to change it to K-energy but
since it was already taken by one of the company’s subsidiary they settled for K-electric
with the new tagline “energy that moves life” to show that it provides energy to the city of
lights. They also introduced a new logo with blue orange and green color feathers (of
 Pakistan’s national bird) each depicting CSR initiatives, hassle free lives for the people and
environment friendly technologies respectively.

Tackling major problems of Load shedding, Electricity Theft and Bill Payments:

After the Abraaj group had taken control of the KESC’s management control, the most
imminent problem which they first targeted to tackle was the problem of load-shedding.
They increased the generation capacity of K-electric by adding 1010 MW to the existing
capacity. The management also tried to improve the payments of electricity bills by the
consumers and to curb the electricity theft. What the K-electric’s management team
decided to do was to plan and segment the load shedding schedule so that the consumers
can plan their daily activities on the basis of this schedule. This was done to provide
convenience to the customer’s work lives. The management also categorized their
customer base into three categories. The customers were divided on the basis of the bill
recovery. The good customers and all industrial zones were exempted from the load
shedding while for the others the load shedding schedule was planned accordingly. To curb
electricity theft, many operations and initiatives were put forwarded by K-electric which
included daily raids and massive operations as well as the monitoring and cutting off the
power lines for the areas which involved in electricity theft. K-electric has also shifted
towards coal and renewable energy projects to increase the power generation capacity of
the organization. It also is looking forward to using state-of-the-art Smart Grid Technology
which will help in mitigating the electricity theft. All of these initiatives and many others,
led by K-electric have helped improving the current situation of the organization as well as
made it profitable and relatively efficient.

K-Electrics Initiatives and Campaigns:

They introduced Azm- the change manage campaign in 2009. It was the largest cultural
change program in the history of Pakistan which covered various updates and events of
KE. They also went through a major restructuring in HR department and customer
 facilitation departments. They also established their twitter handle as a forum to lodge
complains and provide information about power shortages. They also created a SMS
service and helpline to stay in touch with their customers. They also started a media
campaign including a TVC which ran on all the prominent channels in Pakistan and created
a positive image for new identity of KE. It also lead people to believe that KE is nothing
like old KESC but rather an advanced and efficient energy provider. K-Electric also took
part in various CSR activities and sponsored numerous sports events both to stay true to its
ideologies and generate a positive word of mouth for the company. The company was
successful in terms of generating a positive word of mouth. This lead to KE winning a lot
of awards in recognition of their services.

Building stronger Customer Relationship and improving Customer Experience:

K-electric invested heavily in transforming their contact centers. They modernized their
infrastructure a lot to stay present n all the touch points. They connected with their
customers through website, their integrated business centers, mobile messaging and
different chat services. This decreased the average response time to the customer and
increased first call resolution by K-electric. They have also used SAP for building customer
relationship building and billing their customers. This has also lead K-electric to be the
first Pakistani distributor to get ISO 9001-2008 certification for their integrated Business
Centers which function as a one window services to the customers for all their problems.
Genesys, the worldwide leader in customer experience solutions mentioned in one of its
reports mentioned the fact that K-Electric has now become a phenomenal customer
experience pioneer. Genesys is K-Electric’s consumer friendly IT based service that
handles customers’ complaints via internet which includes both website and social media.
Not only this, but also bill payments via cell phones. The result is the rapid response rate
i.e. in less than 20 seconds 87 percent of contacts are answered. This is further amplified
by the fact that company has one of the biggest contact centers in Pakistan. K-Electric now
has efficient vital care teams that cater immediately to the sudden peaks in demand and
tries to deal with it as efficiently as possible. Furthermore, the company has a back-to-back
chain that integrates both customer and employee engagement that brings everyone on the
 same page. This has led to the business’ optimal solutions. K-Electric now fully ensures
that it does its best to improve consumers’ experience. Two or three years back, it
introduced a Geographic Information System (GIS) i.e. a complaints management system.
It’s a pilot project and has the potential of solving consumer complaints at a speedy rate
especially during power failures. The consumers have already started to experience
massive responsiveness and thus faster solutions. This system will also lead to a reduction
in the response time thus quicker solutions to consumer complaints. Integration of such
modern and latest technologies in K-Electric’s system has led to satisfied consumer
expectations, minimized faults and frauds, improved network operation, reliable
Information Management Systems (IMS) and an overall efficient system which is still
working to enhance the organization as a whole.

Creating Awareness:

K-electric also started Project Ujala to control power theft by creating awareness and
providing area bundled cables which was a safer and reliable way to transmit electricity
and required significantly low maintenance and low-cost meters to low income localities
and tried to bring a positive change in the lives of people of these areas. It also decreased
the power theft in such areas. They approximately converted 3600 PMTs throughout
Karachi and changed the lives of more than 3000000 people

All these changes lead KE to witness a major change with the company reporting profits for the
first time in over 15 years. It also successfully managed to free almost half of Karachi from load
shedding with the duration of load shedding also being reduced significantly. They also curtailed
electricity theft through programs like operation BURQ and introduced zero-hour load shedding
policy for the industrial sector in Karachi.
SWOT ANALYSIS

Weaknesses
Strengths
• 1. High staff turnover
1. Natural Monopoly • 2.Cost Sturcture
2. Economies of Scale. • 3. Load shedding
3. Technology • 4. IPE Electricity.
4. Re-branding
5. ABC cables

Opportunities Threats
1. Change of Taste
1. Alternative energy project.
2. Violate Revenue
2. New transmision projects.
3. Sucess of Alternative energy
3. To enhance operational efficiency.
project

Figure 1 SWOT analysis

STRENGHTS:

1. Economies of scale are the cost advantages that K-Electric enjoys due to the size of its
operations. The greater the volume, the greater specialization hence minimization of
cost which prevents potential competition from entering the market.
2. Superior technology allows K-ELECTRIC to meet the needs of their customers. Better
machines are used to produce electricity with minimized wastage. For example new
generation capacity of 1010 MWs has been added since 2008.
3. It is natural monopoly which ensures protection against competition due to high startup
costs.
4. K-Electric has improved services for its customer by launching ‘ONLINE BILLING
SYSTEM’
5. K-E has been rebranded by changing its name from KESC to K-Electric. This has
improved K-Electric‘s market value and therefore share price has greatly increased.
6. Area Bundle Cables (ABC) has been innovated to reduce electricity theft.

WEAKNESS:

1. High staff turnover: There are 14000 employees working in K-Electric and excessive
turnover can be costly and in turn decrease the efficiency of the company because a
hiring campaign is needed to acquire new employees which then have to be trained.
2. Cost Structure: K-Electric is facing high cost of producing electricity which is imposed
on consumers, who are now looking for alternative sources of energy.
3. Load shedding and power breakages are the biggest source of discomfort for its
customers.
4. IPE electricity: To meet certain shortages, K-Electric buys electricity from other big
organizations that produce their own electricity for example Gul-Ahmad, Tapal. These
organizations sell electricity at a much higher price.
OPPORTUNITY:

1. Alternative energy projects: There is a massive gap in the alternative energy sector in
Karachi which can be tapped by K-electric.
2. There are many new projects which K-electric is looking forward to. For example,
Greenfield Coal, Coal Conversion, and Gas Generation.
3. Conversion of 400 MW of existing “furnace oil” capacity into coal-fired plants -
Structured as an IPP – draft PPA with the newly formed IPP being reviewed - Expected
to be completed by 2017 - Coal Conversion project to save up to $7 billion in foreign
exchange over its life. Conversion of 2 existing fully operational open cycle plants (220
MW and 180 MW GE JB) to combined cycle - Additional capacity of 47.5 MW and
increase in fleet efficiency (5 years journey of Historic turnaround KESC to KE,
January28, 2015).

THREATS:

1. Change of Taste: In Karachi the trend is changing. Nowadays People prefer solar
electricity because it is cheaper. Households are acquiring and installing solar panels
in many parts of the city. If this trend grows, K-electric will be threatened.
2. Revenue is being violated in Karachi due to excessive theft of electricity through the
Kunda system. Furthermore, people with political affiliations do not pay and
organizations such as KWSB, with government support are exempted from paying.
3. There are new projects of alternative energy for example electricity though coal in Thar
and Solar project in Balochistan which are a big threat to K-ELECTRIC. There is a
village known as Zil Musafar Gar in which electricity is produced by solar energy.
 TOWS MATRIX
Internal
Factors
Strengths Weaknesses
External
Factors

SO Strategies WO Strategies

S3, O1. As K-ELECTRIC has natural
monopoly therefore if K-ELECTRIC
expands into alternative energy sector they
Opportunities will gain support from the government and
developing new and more efficient energy
resources will help maintain customer
loyalty.
W3, O3. K-ELECTRIC can resolve its load
shedding weakness by improving its
operational efficiency. If operational efficiency
is met then it will result in higher productivity
at lower cost, hence supplying more and
affordable electricity.

ST Strategies WT Strategies

S6, T1 installation of ABC cables ensures

lower theft chances and better transmission
of electricity but if trend moves towards
Threats
alternative energy, the innovation will not
benefit the organization despite the
expertise in it.

Figure 2 TOWS analysis

PEST ANALYSIS:

Political Economical

socio-cultural Technological

Figure 3 PEST analysis

POLITICAL FACTOR:

Water and Power Minister, Khawaja Mohammad Asif has slightly changed a clause in their
contract in which K-Electric use to take permission to supply electricity to Karachi. He added that
“new contracts will keep the interests of the people of Karachi in view” (Asghar, 2015).

It is stated that K-Electric cannot cut the electricity supply of government organizations even if
they are not paying. Such Organizations include KWSB. There are some rules and regulation
which K-ELECTRIC has to follow for example when government says to reduce the price of per
unit of electricity K-ELECTRIC has to follow without retaliating or objecting. Moreover, K-
ELECTRIC has to pay tax to government as it is private limited company. K-ELECTRIC by law
has to give rights and has to follow employment laws set by government.
ECONOMICAL FACTOR:

Oil prices have fallen sharply in 2016 with a decrease of almost 72% prices has given K-Electric
an option to increase its electricity by importing more oil at the same cost. It is expected by
economic analysts that the supply of World Oil will remain consistent with the discovery of
shale oil and removal of sanctions on Iran. The Demand by China has reduced dramatically
causing World Oil prices to remain very low at almost $30 per gallon. This opportunity was
availed to overcome the electricity deficiency by the Government in June 2016. About 5% or
reduction was allowed on the import of Oil for the generation of electricity from 7% tariff to 2%
tariff (Mirza, 2015).

SOCIO-CULTURAL FACTOR:

K-Electric started a project known as Social Investment Program for the community. The K-
Electric Social Investment Programs (SIP) goes for putting time and assets into ventures that can
change the social and monetary scene of the nation. Under this extraordinarily created model, the
utility is focused on keeping up and improving associations to guarantee that open welfare
foundations are empowered and engaged to make significantly higher quality for the groups they
serve.

K-electric is not only concerned about community but also is concerned about its employee. K-
Electric hired a manager, head of safety, to oversee safety improvement. K-ELECTRIC ensures
basic safety issues are addressed, institutionalization of “near miss” reporting standards, Line
managers being trained to impart safety training (Karachi Electric Supply Company, November
2009)

K-Electric is providing free or subsidized electricity to 23 major hospitals and educational

institution few of them are Indus Hospital, Kidney Centre, The Citizen Foundation School, SIUT
and many more (5 years journey of Historic turnaround KESC to KE, January28, 2015)

TECHNOLOGICAL FACTOR:

K-Electric is investing money in research and development. Their goal is to make new lines
through which they can provide electricity. They are mastering their infrastructure such as projects
to replace low quality meter, check meter installation at transformers to track theft, automatic new
connection process, installation of “bus-bar” system in multi-story buildings. Through innovation
they have created the ‘ABC’ which has the potential to protect the organization from theft and
revenue loss.
Conclusion and Recommendations

Half of the employees agreed that level of training is low and ineffective. Workers have the choice
to ask for training however, training is not provided on personal choice. It is not feasible for the
company to provide each employee with the kind of training they prefer, however, and then the
company should not offer generic training which does not significantly benefit its employees. This
demotivates employees since they want to acquire a greater skill set. Therefore, a better option
would be to cluster employees with same tasks and ask them to agree upon the type of training
require. Then training can be provided on the consensus of the employees annually. This can fulfill
affiliative needs of employees. Herzberg identified training among factors that motivate
employees.

The top management reviews the performance of employees almost annually but the method of
reviewing the performance is ineffective; therefore there are very few promotional opportunities
for existing employees. The top manager is provided with a list of names of all employees. He is
only aware of the performance of few employees. And hence the manager fills out the performance
review of the employees he does not know about, based on average marks. Most of the employees
that work above average are rated equal to those employees that work below average and this acts
as demotivating for hard working employees. This has led to very few promotional opportunities
for existing employees. Only 5% of employees have shown interest in their job due to promotional
chances. The company needs to ask the supervisors to review the performance of employees since
they are closer to all the employees and can be a better judge for rating employee performance
than the top manager. Based on the supervisor’s results, workers then can be provided promotions
or performance related bonuses that can satisfy the self esteem needs of employees as identified
by the Abraham Maslow. Another problem with marking the performances of the employees is
that it only states where an employee stands and does not suggest any way on how to improve his
position. Employees show frustration on not knowing how to improve.

The management uses an autocratic style of leadership. Approximately 70% of employees said
that they are not consulted for decisions that affect them. Employees have to leave their work and
accompany the Police and other members of the team on operation Burq. About 90% of employees
stated that they have received threats for being a part of this operation. The K-Electric management
has not created a separate workforce or entity to pursue this operation. A better option could be to
send employees who are willing to go against incentives such as fringe benefits or allowances in
case of any damage. If employees do not show an interest in this operation after these benefits then
a workforce audit can be conducted by the HR department. Employees on temporary contracts can
be hired specifically for operation Burq that can provide greater flexibility. Temporary employees
can be called upon during the operations on flexible hours reducing the overheads cost of the firm.

K-Electric has replaced copper wires with aluminum wires that are cheap and of lower quality
which has been heavily criticized by the customers (Karachi Chamber lambastes K-Electric for
compromising services on cost cutting strategy, 2015). However, more aluminum wires can be
purchased with the same amount as copper wires because of aluminum’s lower density. These
wires tend to be safer than copper wires but customer satisfaction has reduced due to constant
tripping of meters because aluminum wires are not very effective in transmitting electricity. A
better option could be to replace these wires with area bundle cables that have been a success
because they eliminate every possibility of electricity theft .These area bundle cables have been
installed in areas with excessive electricity theft and have helped recover huge amounts of
electricity bills (K-Electric successfully installs Aerial Bundle Cable (ABC) in Rehmat Chowk
Orangi, 2016). The financial benefits gained through operation Burq and aluminum wires which
have increased the company’s profit after tax figure of 2014 by 89% can be invested back in
installing these area bundle cables on a large scale to permanently resolve the electricity theft crises
(K-Electric posts 89% growth in FY14, 2014). The amount of money lost in stealing electricity
is far greater than the amount of money not paid by people thus this strategy can even overcome
the need for operation Burq in the long run.

Low levels of motivation have resulted into low job loyalty which is very detrimental especially
in countries where unemployment rate is falling. In K-Electric the level of job loyalty is hardly
35%. Approximately 65% of the employees are determined to leave their current job if any other
opportunity becomes available. With unemployment falling in Pakistan because of reduced
terrorism and investors investing in Pakistan, the government can provide people with these job
opportunities in short time. Such low levels of job loyalty can leave K-Electric with high turnover
ratio in the coming years. K-Electric needs to carry out a thorough research regarding the factors
that have led to such low levels of job satisfaction. Based on those results then effective decisions
can be taken to retain the senior staff from being poached off by other companies in the future
years.
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