Friday Oct 23, 2026
Friday Oct 23, 2026
Friday, 23 October 2026 04:45 - - {{hitsCtrl.values.hits}}
Industrial Asphalts (Ceylon) PLC’s Board has rejected its external auditor’s disclaimer of opinion on the company’s financial statements for the year ended 31 March, 2026. The disclaimer led to the company’s securities being transferred to the Colombo Stock Exchange (CSE) Watch List with effect from 20 October, 2026, the company said yesterday.
This is the company’s second Watch List transfer in under two months. It was first placed on the Watch List on 7 September, 2026 for failing to submit its Annual Report for the year ended 31 March, 2026. It was moved out on 13 October, 2026 after the report was submitted, only to return a week later because of the auditor’s disclaimer.
The first transfer stalled a mandatory offer for the company. Under the CSE Listing Rules, Directors of a company on the Watch List may not transact in its shares without explicit prior approval from the Securities and Exchange Commission (SEC).
On 11 September, 2026, the SEC informed the offerors, Arcasia Investment and Trading Ltd., and ATX Partners Ltd., that it would not approve the share transfer involving Industrial Asphalts Executive Director Ramanan Govindasamy until the company remedied the non-compliance that led to its Watch List placement. The joint offer closed the next day, 12 September, 2026, with acceptances for 1.88 billion shares, or 50.16% of the company, from two major shareholders, Govindasamy and Srikumar Balasubramaniyam.
The company said the main bases for the disclaimer by external auditor B.R. De Silva & Co. were the fair valuation of its investment property and an advance given to Key Management Personnel (KMP) during the year.
According to the company, the auditor disagreed with the investment property valuation report as at 31 March, 2026, prepared by KPMG Real Estate & Valuation Services Ltd., despite a detailed explanation and written clarification from KPMG. After the Annual Report 2026 was published, KPMG provided a further written clarification that it had clearly set out the methodology, market analysis and principal assumptions used to arrive at the fair value. The Board said the auditor had not stated its reasons for disagreeing.
On the KMP advance, the company said the Board Audit Committee obtained an independent legal opinion from an expert legal firm confirming the validity of the payment, which was subsequently settled in full. The auditor rejected that opinion on the grounds that its internal expert had rejected it. The Board then obtained a second legal opinion, which the company said was consistent with the first.
A third basis for the disclaimer related to deferred tax on the revaluation of investment property. The company said it had followed a policy of recognising the investment property revaluation surplus over the years when arriving at the deferred tax impact, but the auditor took a different view in FY 2025/26.
The Board said it would continue to seek clarification from the auditor on its reasons for disputing the KPMG valuation and the legal opinion, together with the profiles of the internal experts who disputed them. It will also take steps to obtain an independent audit opinion from an audit firm, in line with the CSE Listing Rules, so the company can move out of the Watch List. The AGM date will be notified in due course to take this process forward.
The Board intends to resolve the matters within a maximum of six months, as set out in the CSE Listing Rules. If they are not resolved within six months of the Watch List transfer, trading in the company’s securities will be suspended. If the suspension continues for more than 12 months, the CSE’s Board of Directors will delist the securities.
