The incident occurred at midnight yesterday, they said, adding that forensic experts who inspected the site of the blast, found ball bearings and nails which seem to be remnants of the object which exploded.
The two people who suffered minor burns were sitting on a push cart, police said, though it is still not clear if someone threw the explosive object or set it on fire, causing the blast.
It is suspected that the object which exploded could be a country made bomb, police said.
Meanwhile, the Bhavaninagar police registered a case under various sections of the Explosive Substances Act.