Pavan Korada 
New Delhi: Sarath Chandra Reddy, Aurobindo Pharma director and approver in the Delhi liquor scam, faces new allegations of coercion and manipulation in acquiring Kakinada Seaports Ltd. (KSPL) and Kakinada SEZ Ltd. (KSEZ) – in a case that also appears to involve the former chief minister Y.S. Jagan Mohan Reddy.
These claims appear in a First Information Report (FIR) filed with the Andhra Pradesh Criminal Investigation Department (CID) by Karnati Venkateswara Rao, former chairman and managing director of KSPL.
The FIR accuses Sarath Reddy, V. Vijayasai Reddy and Y. Vikranth Reddy – son of Member of Parliament Y.V. Subba Reddy – of using audits, threats, and undervaluation tactics to force Rao to sell his stakes in these profitable businesses at deeply discounted prices. According to the FIR, these actions were allegedly directed by then-chief minister Jagan Mohan Reddy.
The complaint describes a series of events starting in 2019, when government audits allegedly laid the groundwork for the eventual takeover. The FIR claims the involved parties manipulated audit findings and used legal pressure to acquire KSPL and KSEZ shares below their market value.
Allegations in the FIR
According to the FIR, accessed by The Wire, the sequence began in November 2019 when the Andhra Pradesh government commissioned PKF Sridhar & Santhanam LLP to audit KSPL’s finances from 2015 to 2019. Kroll India conducted a follow-up forensic audit in December 2019. The FIR alleges these audits were used to fabricate financial irregularities and pressure Rao. Kroll India completed its report, but the FIR mentions that the government later ended its contract, creating uncertainty about the findings.
In May 2020, MP V. Vijayasai Reddy allegedly approached Rao about Y. Vikranth Reddy and Sarath Chandra Reddy’s interest in his KSPL and KSEZ shares. In a subsequent meeting, Vikranth Reddy and Sarath Chandra Reddy claimed KSPL owed Rs. 1,000 crore in state taxes and fees. They allegedly threatened Rao with legal action and raids if he refused to sell. When Rao tried to contact Chief Minister Jagan Mohan Reddy directly, his attempts were blocked, intensifying the pressure.
At a June 24, 2020, meeting in Vikranth Reddy’s home, Rao faced Sarath Chandra Reddy and legal representatives. They allegedly presented two documents: a Share Purchase Agreement and a Deposit Agreement. The purchase agreement left the sale price open, to be determined by the buyers’ chosen merchant banker. Rao’s company, KIHPL, received a Rs. 100 crore deposit on July 10, 2020.
Manohar Chowdhry & Associates, selected by Aurobindo Realty, valued Rao’s 41.12% KSPL stake at Rs. 494 crore – a figure Rao contested as severely undervalued. Despite his objections, on September 3, 2020, an addendum finalised this price, with Rao claiming he was forced to sign. After the deal, he was allegedly made to meet with Jagan Mohan Reddy, who reportedly ordered him to follow Vikranth Reddy’s instructions.
KSEZ faced a similar fate. On October 22, 2020, Rao sold his 48.74% stake for Rs. 12 crore, despite a previous Rs. 400 crore offer from GMR Group. The remaining Rs. 394 crore for KSPL was paid in February 2021, and the KSEZ deal concluded in July 2021. Aurobindo later bought all remaining KSEZ shares.
After the acquisitions, Rao claims KSPL’s funds were diverted to benefit Aurobindo Group companies. The FIR states KSPL paid Rs. 102 crore in dividends and transferred Rs. 280 crore as inter-corporate deposits to Aurobindo entities. Rao argues these moves weakened KSPL financially and served only the buyers’ interests.
The FIR notes that lenders “red-flagged” KSPL following the unauthorised share transfer, limiting its access to credit. The company had to clear its existing loans to restore its financial status.
Sarath Chandra Reddy’s controversial history
Sarath Chandra Reddy, whose father P.V. Ram Prasad Reddy founded Aurobindo Pharma, has faced several controversial allegations. Beyond this case, he was allegedly deeply involved in the Delhi liquor scam as a key “South Group” member, accused of offering bribes to influence Delhi’s excise policy. Arrested in November 2022, he received bail for health reasons in May 2023 and later became an approver, cooperating with the Enforcement Directorate for immunity.
His legal issues date back to 2012, when he was implicated in Jagan Mohan Reddy’s disproportionate assets case over a questionable land deal. The Kakinada acquisitions case adds another chapter to his mounting legal challenges.
Rao apparently waited until December 2024 to file the FIR, citing fears of retaliation during Jagan Mohan Reddy’s tenure as chief minister, which ended in April 2024. The complaint alleges violations of several sections of the Indian Penal Code and one of the Bharatiya Nyay Sanhita – including criminal intimidation, cheating, and forgery – plus breaches of the Business Networking Standards Act of 2023.
The Andhra Pradesh CID has acknowledged the FIR and stated that the investigation is ongoing. Lookout notices have been issued against Vijayasai Reddy, Sarath Reddy, and Vikranth Reddy, though no arrests have been made yet.