This paper focused on enhancement of power quality in Unique Macaroni factory which is found in Bahir Dar Town. Necessary data have been collected from the factory and based on the analysis of collecting data, the factory working power factor is low around 0.7125, voltage variations up to 9.09%, average voltage unbalance is 2.2% and total harmonic distortions of load currents and voltage are 24.17% and 10.16% respectively. Harmonic components existed in power distribution system of factory. Based on analysis power quality problem in the factory, Distribution static compensator (DSTATCOM) and its control system has been designed and simulated by using Matlab software, to boost power quality of the factory. It has observed from outputs of the Matlab simulation, DSTATCOM can improve the power quality of the factory. In general, the wave form shape of the load voltage and current is improved and total harmonic distortion(THD) level of load voltage is minimized to 1.55% and load current THD level is 7.09%. The reactive power needed by the loads (442kVAr) is almost provided by the DSTATCOM so reactive power from source supply is very small such as 22kVAr so that the power factor of the source tends to unity.