Police, which had intensified checking of vehicles following intelligence report about terrorist threat to Madurai and coastal areas of Tamil Nadu, said they detained driver Shamsuddin and checked the receipt book he was carrying.
Some 202 detonators and 50 kg of chemicals mentioned in the receipt book were missing from the vehicle, they said.
According to police, though Shamsuddin said the stock was coming in another vehicle, it was found to be not true.
Police were concerned because the explosive substances could be used for terrorist activities.
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"We are looking in that angle," an official said.
Police officials said as there had been intelligence alert about possible attack on Madurai, they would hold a detailed probe about the missing explosives, before releasing the vehicle.
IGP Abhaikumar Singh gave a cash award to intelligence wing constable Jayakumar for alerting authorities about smuggling of explosives.