Industrial parks · Real estate and construction
Industrial parks where every plot carries its share of the infrastructure
An industrial park spends on roads, substations, water and effluent treatment long before most of its plots are allotted. We allocate that infrastructure to every plot on a stated basis, so early sales do not look more profitable than they are. The cost of what is still owed to allottees stays in view.
In one paragraph
An industrial park sells serviced land. Private parks, plotted industrial estates and developers working alongside state industrial development agencies sell or lease plots and sheds to manufacturers. For their promoters and finance heads, margin depends on how common infrastructure is shared across plots sold over many years. The developer usually keeps running utilities and maintenance after the sale.
Promoter or managing director, with the finance head
The economics
How the money moves in this trade
Land is assembled parcel by parcel, converted for industrial use and laid out into plots. Then the common infrastructure goes in: internal roads, drainage, power distribution, water supply and often effluent treatment. Plots are sold outright or on long leases with an upfront premium and an annual rent, and absorption can take many years. A plot sold in the first year has consumed only a fraction of its share of the infrastructure that will eventually serve it.
After allotment the developer, or a maintenance entity it controls, often supplies water, recovers power and treatment cost and collects maintenance charges from occupants. Those recoveries are a running business with its own cost base and its own disputes. Whether a long-lease premium is a sale or a lease for accounting depends on the specific terms. So does the GST on premiums, rent and recoveries. The exemption for upfront premiums on long industrial leases covers only state industrial development corporations and other lessors at least half owned by government. Both questions need settling before the first allotment, not after.
The problem
Where the numbers usually break down
Infrastructure cost is not allocated to plots
Roads and utilities are capitalised as a single project, so plots sold early carry only land cost and show a margin the park as a whole will not earn.
Land cost is not traced to survey numbers
Parcels bought at different prices and dates, with conversion and stamp duty paid separately, are pooled, and the cost of a specific plot cannot be shown to a buyer, a partner or an assessing officer.
Obligations to allottees are not provided for
Infrastructure promised in the allotment terms but not yet built is a cost already committed against revenue already booked, and it rarely appears in any schedule.
Utility recoveries run below cost
Water, treatment and power backup are recovered at flat rates that have not been compared with what the park actually pays, so the maintenance entity runs at a loss nobody has measured.
Premium, rent and maintenance are mixed in one receipt
Allottees pay a single amount that covers lease premium, annual rent and maintenance, and the split needed for revenue, tax and arrears tracking is made later and inconsistently.
What we do
The work, and the result each part produces
Land register by survey number
Purchase price, conversion charges, stamp duty and holding cost traced to each parcel and then to the plots laid out on it.
The land cost of any plot can be shown and defended.
Infrastructure allocation by plot
Budgeted and actual cost of common infrastructure allocated to plots on saleable area or another stated basis, and revised as the budget moves.
Each plot carries its full cost from the first sale.
Committed-infrastructure schedule
Infrastructure promised to allottees listed with its estimated cost to complete and matched against revenue already recognised.
Margin on sold plots reflects what is still owed on them.
Allottee ledger by component
Premium, annual rent, maintenance and utility charges billed and collected separately, with arrears aged by allottee.
Each revenue stream can be tracked, taxed and collected on its own terms.
Utility and maintenance cost recovery
Cost of water, effluent treatment, power backup, security and upkeep compared with recoveries billed to occupants.
The park knows whether its maintenance business pays for itself.
Absorption and cash phasing
Plot sales and leases modelled against infrastructure spending and land finance cost, phase by phase.
The next phase is opened when cash supports it.
Where we start
The first steps of an engagement
Land records and infrastructure budget
We ask for purchase deeds and conversion orders by survey number, the layout plan with saleable areas, the infrastructure budget and contractor bills, and the allotment register with lease terms.
Land cost traced to plots
Purchase price, conversion charges and stamp duty are traced from each survey number to the plots laid out on it, and reconciled to the land balance in the books.
Allocation basis and receipt split
A written basis for sharing common infrastructure across plots is agreed with you. Allottee receipts are split into premium, rent, maintenance and utility charges from then on.
Full cost per plot
The first report shows full cost per plot with infrastructure allocated, the margin on plots already sold, and the committed infrastructure still owed to allottees.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Full cost per plot, with infrastructure allocated
- Land cost reconciled to survey numbers
- Committed infrastructure cost to complete
- Utility and maintenance recovery against cost
- Allottee arrears by component
- Plots absorbed against plan, by phase
Who it suits
Written for, and not the right fit for
- You need land title verification or conversion approvals handled; that work sits with your lawyer and liaison team.
- You need a statutory audit or a statutory valuation of the land; those are signed by independently engaged professionals.
- Private developers of industrial parks, plotted estates and logistics-and-industrial zones selling or leasing to manufacturers.
- Promoters running a maintenance or utility entity for a park after allotment.
- Parks preparing to bring in a financial partner or to open a new phase.
Services
Services this work draws on
Costing and profitability
What each product, line and customer really contributes.
Explore service ↗Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗GST, TDS and tax compliance
GST, TDS and income-tax prepared from reconciled data, not a working file.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
How should infrastructure cost be shared across plots?
Saleable area is the usual starting point, but plots on the main road, corner plots or plots with heavier utility connections may justify a different basis. What matters is that the basis is written down, applied consistently and revised when the budget changes.
Is a 99-year lease premium treated as a sale?
It depends on the lease terms and the accounting framework you follow. We document the terms and the treatment, and where a view needs to be signed off, your statutory auditor confirms it.
Should the park's maintenance company keep separate accounts?
It should have its own books, but they're best run alongside the park's, because the cost pools and the recoveries need to be compared month by month. We can keep both.
5th Quadrant maintains land, plot and recovery accounts and prepares the supporting schedules. Statutory audit, tax-audit reports, statutory valuations and legal opinions on title or lease terms are provided by independently engaged licensed professionals, coordinated through 5th Quadrant. Full detail is on our Professional Scope page.
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