The utilization of power is increasing day by day due to high demand. When the demand increases,utility and production also increases. Power factor is affected due to reactive power consumption. Power factor is one of themajor cause which influences the economic growth of a institute or a company. The power factor correction of electrical loads is a common problem to all places. In an electrical power systems, a load with a low power factor draws more current than a load with a high power factor for the same amount of useful power transferred. In this 21st century, power quality has become one of the greatest concerns due to the rapidly increased number of industries and consumers who primarily depend on inductive loads and distortion inducing electronic equipment etc. Earlier technique of power factor correction is done by switching capacitor banks manually. But this system uses load switching and disconnecting which solves the power factor issue. This reduces the cost of the system and also eliminates the hazard caused by the capacitor banks. This system disconnects the loads that are secondary and allows the primary load that leads to power factor improvisation. In this project uses arduino, current sensor and relay as primary components. Arduino makes future development and expansion is very easy. Current sensor is an easiest and efficient way to measure current. Relay helps in disconnecting the loads.