How KSPL chairman was forced to sell shares at 'Jagan's behest'

Amaravati: Andhra Pradesh Crime Investigation Department (CID) registered an FIR against YSRCP leaders including Rajya Sabha MP V Vijaysai Reddy, Y Vikranth Reddy, Sarath Chandra Reddy, and two companies for allegedly acquiring stakes in Kakinada Seaports Ltd (KSPL), and Kakinada SEZ (KSEZ) Ltd through “cheating, criminal intimidation, conspiracy".

The shares were bought at a throwaway price for Aurobindo Realty (renamed as Auro Infra).

It is alleged that a 41.12 percent share of the port, valued at ₹2,500 crore, was forcibly acquired for ₹494 crore.

Interestingly, Karnati Venkateswara Rao, Chairman and Managing Director of KSPL, has named YSRCP chief and former chief minister YS Jagan Mohan Reddy in the FIR. Rao said he was forced to transfer shares at Jagan’s behest. He alleged that he and his family were as threatened with criminal proceedings.

According to a complaint filed by KV Rao, his family-owned firm's 41.12 percent stakes in KSPL and 48.74 percent in KSEZ were estimated to be worth over Rs 3600 crore. However, these were acquired in 2020-21 for a little over Rs 500 crore.

Who are the four accused:

1. Y Vikranth Reddy, S/o YV Subba Reddy.

2. V Vijayasai Reddy, YSRCP MP.

3. Sarath Chandra Reddy (Son-in-Law of Vijaya Sai Reddy).

4. M/s PKF Sridhar& Santhanam LLP

5. M/s Aurobindo Realty and infrastructure Pvt. Ltd. It's Directors and others.

Where did this all begin?

According to KV Rao, he was informed that since Jagan Mohan Reddy took over as the Andhra Pradesh chief minister in 2019, the directors of the port and State Maritime Board did not cooperate with KSPL in its operations. Rumors were afloat in the market that KSPL would be taken over by third parties.

Rao said the company was truthfully maintaining the accounts relating to gross revenue receipts and payment of revenue share to the government of Andhra Pradesh (GoAP).

KSPL received a letter dated November 13, 2019, from the GoAP appointing PKP Sridhar & Santhanam (PKF) to conduct special audits for ports and the KSPL. He was called upon to furnish the entire data for the financial years from 2015-2016 to 2018-2019. The audit company requisitioned many records of the company, visited the port office, and started conducting the special audit.

A team from Kroll India came to Kakinada and obtained the requisite documents and also gained remote access to all the financial operations of the company. Kroll India completed the forensic audit as directed and submitted their report to the GoAP. Subsequently, the GoAP terminated the engagement of Kroll India.

It claimed the government was deprived of a revenue share of about ₹1,000 crore between 2014-2015 and 2018-2019.

KV Rao said the Chief Executive Officer (CEO) of Andhra Pradesh Maritime Board informed KSPL that the government had accepted the request of the auditors to conduct a special audit of KSPL for 2008-2009 to 2013-2014 and also for 2019-2020. The company was asked to cooperate with the audit party. He claimed the CEO was intending to further threaten him and the company.

Vijay Sai Reddy's role:

In May 2020, Vijay Sai Reddy called KV Rao and informed that Vikranth Reddy would contact him for the acquisition of shares in Kakinada Port.

Following this, Vikanth Reddy asked KV Rao to visit his home in Hyderabad. During the conversation, KV Rao was informed that there will be a demand of about Rs IOOO crore from the GoAP in respect of revenue share of the GoAP as per the special audit report.

KV Rao was also informed that if a demand is raised by the GoAP, the KSPL would be in deep trouble and hence, he was asked to part with his 50 percent stake in KSPL and 48.74 percent in KSEZ.

Shares for YS Jagan:

"I tried to explain that there were no irregularities and all this was invented with the help of fabricating records by the auditors, who conducted the audit. I was asked to part with my 50% stake in KSPL and 48.74% in KSEZ. During the discussion, Vikranth Reddy informed that it is not him, that he is trying to acquire shares, but being acquired by YS Jagan Mohan Reddy. If I do not agree to the transfer of shares, then there will be a spate of criminal cases and vigilance inquiries leading to my arrest `and other family members," said KV Rao in the complaint.

KV Rao was also informed that they would pay a nominal amount of money for the transfer of his shareholdings.

However, Jagan did not meet him during the primary discussions.

Share sold to Aurobindo Realty:

During the course of preparation of the agreements, KV Rao came to know that the shares in KSPL and KSEZ are being sold to Aurobindo Realty and Infrastructure Private Limited (renamed as Auro Infra Private Limited).

Simply asked to sign the agreement:

In June 2020, KV Rao was called to the residence of Y Vikranth Reddy. At that time, Sarath Chandra Reddy of Aurobindo and some other persons were present along with the Lawyers of Varuna Law Firm.

"I was simply asked to sign the share purchase agreement and deposit agreement, on behalf of KIHPL agreeing to sell the shares for an unspecified sum. I have no other option but to sign on dotted lines. This itself demonstrates that the said share purchase agreement is nothing but the product of fraud, cheating, and extortion by the use of fabricated documents. Later, the deposit amount of Rs 100 crore was remitted by RTGS on 10.07.2020 in favor of KIHPL," said KV Rao in the complaint.

Everything is done by YS Jagan:

In September 2020 an addendum to the share purchase agreement was executed duly signed by KV Rao under which, agreed to transfer 41.12% of shares in KSPL for a consideration of Rs.494 crores at the rate of Rs 229.42 ps per share of Rs.10. The agreement records that the purchaser had paid Rs 100 crores already as purchase consideration. The said Rs.100 crores was paid under the deposit agreement, but not as sale consideration of purchase of shares.

After the signing of the agreements, KV Rao went to meet YS Jagan in Vijayawada. In the meeting, Vikrant Reddy explained the happenings.

"When I tried to protest, Jagan didn't allow me to say anything, except ask me to follow what was said by Vikranth Reddy. Thus it is clear that all this is done at the instance of Jagan Mohan Reddy," said KV Rao in the complaint.

Following the meeting, the balance amount of Rs 394 crore was paid to KIHPL on February 9, 2021. The shares were transferred in favor of Aurobindo and the company became the shareholder in place of KIHPL.

It is relevant to state that the transfer of shares was carried out hurriedly without even obtaining approval of the lenders i.e. Axis Bank and Bank of India Ltd. They objected when it was brought to their notice that the shares were transferred. The lenders also red-flagged the company they debar it to approach any banker for credit facilities. In such circumstances, KSPL had no other go than to clear off the entire outstanding loan and approach the court for removal of the red flagging.

Vikrant Reddy played a key role:

The whole process of approval was pursued by Vikranth Reddy. In May 2020 when KV Rao was called to the house of Vikranth Reddy, the bargain was not limited to KSPLs but also in respect of the shareholding of KSEZ.

On that day they also insisted upon the transfer of 48.74% shareholdings in KSEZ to their nominees. Aurobindo has become a shareholder in KSEZ to the extent of 48.74% shares for just Rs.12.00 Crores.

Later Aurobindo acquired the balance of stake of GMR Group, during the same period, and thereby Aurobindo became a 100% shareholder in KSEZ.

Planned by YS Jagan:

From the foregoing facts, it is evident that there was a concerted plan to take over the shareholdings of KSPL and KSEZ by hook or crook by YS Jagan Mohan Reddy, and as per the plan that was hatched by them, they have appointed the auditors for special audit /forensic audit, found non-existent suppression of gross revenue and raised a demand of Rs 965.65 crore with the help of fabricated document as the share of the Government, which was suppressed.

After the transfer of shareholdings in favor of Aurobindo for the FY 2020-21, 2021-22, 2022-23, and 2023-24, the said company was paid nearly Rs 102 crores as a dividend. Not only that KSPL was made to give inter-corporate deposits to the tune of Rs.280 crores in favour of various companies of Aurobindo Group.

KSPL was used as a cash cow for the purpose of funding their projects, which would not have been possible, but for the transfer of the shares in favor of Aurobindo. The events occurred between May 2020 and February 2021.

"I could not file a complaint earlier because YS Jagan Mohan Reddy was Chief Minister of Andhra Pradesh till April 2024. It is only after noticing that several persons started complaining about the atrocities of YS Jagan Mohan Reddy, as the illegal occupation, grabbing of my property, and distribution of dividend amount in the accounts of forcible occupiers is continuing. Now I have gained the courage to lodge this complaint for investigation and for taking appropriate action," said Rao.

Vijay Sai Reddy, Vikranth Reddy and Sarath Chandra Reddy did not respond on the allegations. There was also no response from former chief minister Jagan Mohan Reddy or his office.