The Andhra Pradesh CID has registered an FIR against three persons based on a complaint by Karnati Venkateswara Rao, the chairman and managing director (CMD) and shareholder in Kakinada Seaports Ltd (KSPL), who has alleged the forcible acquisition of KSPL through Aurobindo Realty and Infrastructure Pvt Ltd at the instance of former Andhra chief minister Y S Jagan Mohan Reddy.
The complaint by Hyderabad-based Venkateswara Rao was submitted at the CID police station at Mangalagiri on December 2. Three people and two firms have been named in the FIR – Y V Vikranth Reddy, son of YSR Congress Party Rajya sabha MP Y V Subba Reddy; YSRCP Rajya Sabha MP V Vijayasai Reddy; director of Aurobindo Pharma Sarath Chandra Reddy; PKF Sridhar and Santhanam LLP; and Aurobindo Realty and Infrastructure Pvt Ltd (since renamed Auro Infra Pvt Ltd).
The named individuals did not respond to repeated calls and messages seeking comment. Jagan or his office and the YSRCP did not respond to queries seeking a comment either. In response to an email, B Adi Reddy, the Company Secretary of Aurobindo Pharma wrote, “Aurobindo Pharma Limited or its subsidiaries are in no way connected with the ownership or operations of Kakinada Seaports Limited and Kakinada SEZ Limited including Auro Infra Private Limited.”
Rao has alleged that 40 per cent of KSPL, valued at Rs 2,500 crore, was forcibly acquired for Rs 494 crore through coercion and intimidation. Rao also stated that 49 per cent of the Kakinada Special Economic Zone (SEZ), valued at Rs 400 crore, was forcibly acquired for just Rs 12 crore, even though another multinational conglomerate had already given an offer of Rs 400 crore.
“This entire operation was planned and conducted to usurp my shareholding in KSPL and Kakinada SEZ and transfer the shares to Aurobindo group. They claimed that KSPL owed Rs 965.65 crore to the Government of Andhra Pradesh as KSPL had suppressed gross revenue, which is false, and threatened to file cases,” he has alleged in the complaint.
When contacted, Rao claimed, “I was afraid to lodge a complaint because Jagan Mohan Reddy was the CM until May this year. My complaint would not have been taken, I would have been harassed, and there would have been no chance of getting any justice. I am emboldened now that others who have faced similar situations are lodging complaints.”
In his complaint, Rao claimed that in May 2020, Vijayasai called and informed him that Vikranth would contact him for the acquisition of shares in KSPL.
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“Vikranth claimed that it was not himself but Andhra CM Jagan Mohan Reddy who was acquiring the shares. I tried to contact the then CM but he did not meet despite best efforts,” Rao has alleged.
Rao claims the coercion started with the insinuation that KSPL suppressed gross revenue and deprived the Andhra government of Rs 1,000 crore from 2015 to 2019.
Rao claimed that after the YSRCP came to power in 2019, KSPL stopped receiving cooperation from the Directors of the Port/AP Maritime Board in the conduct of operations.
On November 13, 2019, KSPL received a letter from the state government that it had appointed the firm PKP Sridhar and Santhanam LLP to conduct special audits for public-private partnership (PPP) ports, and KSPL was directed to furnish the entire data for the financial years from 2015 to 2019.
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Rao has alleged that in May 2020, he met Vikranth, who informed him that a special audit had found that Rs 1,000 crores was denied to the state government as KSPL had suppressed gross revenue and that the state government would raise a demand for Rs 965.65 crore.
He alleged, “I tried to explain that there were no irregularities and that auditors had fabricated records. I was told that if the state government raises the Rs 1,000 crore demand, KSPL would be in deep trouble. In lieu of that, I was asked to part with my 50 per cent stake in KSPL and 48.74 per cent stake in Kakinada SEZ… I was told that it was not Vikranth but CM Jagan Mohan Reddy who was acquiring the shares. I was told that if I did not agree, there would be several criminal cases and vigilance inquiries which could result in my arrest as well as the arrest of my family members. I was told that I would be paid a nominal amount for the transfer of my shareholdings and I was forced to comply.”
Rao alleged that when he made the agreements through a firm appointed by Vikranth, he was unaware in whose favour the agreements were being made and who would deposit the amount. He claimed that he came to know later that the shares in KSPL and KSEZ were being sold to Aurobindo Realty and Infrastructure Private Limited.
Rao claimed that the shares were undervalued, and he was informed that the total value was Rs 494 crores for 41.12 per cent of shares. “I protested that the value would not be less than Rs 2,500 crores, but I was told about the consequences, and forced to sign. After the agreements were made, Vikaranth and Sarath asked me to come to Vijayawada to meet Chief Minister Y S Jagan Mohan Reddy at his house. When I tried to protest, the CM did not allow me to say anything and asked me to follow Vikranth’s directions,” he alleged.
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“In May 2020, I was also asked to transfer 48.74 per cent share in KSEZ for Rs 12 crore, which was transferred to Aurobindo. It later acquired the balance stake from GMR group, thus becoming the 100 per cent shareholder in Kakinada SEZ,” he alleged.
The two companies
Kakinada Seaports Ltd (KSPL) is a company registered under the Companies Act and a concessionaire. In March 1999, it entered into an agreement with the Andhra Pradesh government to invest in, develop infrastructure, maintain, and operate Kakinada Deep Water Port.
The Kakinada SEZ Ltd was formed in 2003 and acquired 8,320 acres of land in villages Ponnada, Mulapeta and Ramannakkapeta around Kakinada in East Godavari District for setting up the special economic zone.
