Induction motor is most widely used as the driving power in the industrial site. Induction motor current is composed of two parts, magnetizing current and load current. Load current uses energy what is doing the work. Load current varies with load variance but magnetizing current is constant, regardless of load variation. Magnetizing current needs for establishing the rotating magnetic field of induction motor and lags behind the voltage. Generally capacitor is used for power-factor compensation of inductive load. Self-excitation occurs when the capacitive reactive current from the capacitor is greater than the magnetizing current of the induction motor. When this occurs, excessive voltages can result on the terminals of the motor. This excessive voltage can cause insulation degradation and ultimately result in motor insulation failure. In this paper, we analyzed that how the magnetizing current and condenser current is operating at the allowable limit by the load variation. Condenser current is below allowable limit of magnetizing current but magnetizing current is above allowable limit at the lower load operation condition.