This paper presents the design and implementation of capacitor banks to improve the performance of captive generation in petrochemical industry. Now-a-days many industries faces the problem of maintaining power quality during scheduled power outages. While transferring the load from utility supply to the captive generation supply, facing the problem of voltage dip due to heavy loading condition, affects the system performance. In order to overcome this problem, situation was analyzed and suggested to install capacitor banks at the generator feeder to improve the system performance. Power World simulator is used to analyze the problem and to observe the performance of the system after the installation of the capacitors. The case study of petrochemical industry has been taken to identify the actual problem analysis and its solution.