I never understood what power factor was finally I did - simply its pure wastage :)

The effects of power factor.

 
Consider a canal boat being pulled by a horse. If the horse could walk on water then the angle (Phi) Ø would be zero and COSINE Ø=1. Meaning all the horse power is being used to pull the load.
However the relative position of the horse influences the power. As the horse gets closer to the barge, angle Ø1 increases and power is wasted, but, as the horse is positioned further away, then angle Ø2 gets closer to zero and less power is wasted