A warehouse in the Naval victualling yard in Visakhapatnam caught fire early on Tuesday, sources said.
The fire could not be controlled for two hours.
Firefighters of the Navy and Marripalem station extinguished it by 5.50 am.
No one was injured in the incident. The warehouse situated in Asoka Nagar was being used to store clothing and material to be supplied to various Naval canteens. The fire gutted almost everything in it, sources said.
People living nearby ran out of their houses and returned only when the fire was doused.
Naval authorities said a board has been constituted to inquire into the circumstances that led to the incident. Sources, however, disclosed that the fire was apparently caused by a short-circuit.
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