Indian police say a security guard has admitted killing an Australian grandmother who disappeared more than two months ago while undertaking charity work in the country’s south.

Toni Anne Ludgate, 75, went missing in late August in the holy town of Puttaparthi in Andhra Pradesh state where she was working at an ashram for popular Hindu guru Sai Baba.

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The security guard at the apartment building where the Sydney mother was living and two others appeared in court on Saturday on initial charges of strangling her for several hundred dollars and burying her body in fields.

“The watchman has confessed to the crime,” deputy police superintendent P Srinivas told AFP from Puttaparthi.

“He has even showed us the place where he and his friends buried the body.”

Ludgate’s remains were exhumed on Saturday by police, before she was cremated in a traditional Hindu ceremony at the request of her family.

Srinivas said police became suspicious after the guard himself lodged a missing person’s report but officers then found discrepancies in his statements.

“The watchman himself had registered a complaint saying Ludgate was missing in order to mislead the police,” he said.

Srinivas said police have been in contact with Ludgate’s family as well as with officials at the Australian High Commission over the investigation.

Ms Ludgate’s Sydney-based daughter Traci Harding said she felt sorry for the accused killer.

“I haven’t felt any anger towards this man and what he has done,” she told AAP.

“I’m not a seek retribution person. It’s up to the Indian authorities to decide what to do.”

A memorial service is expected to be held in line with Ms Ludgate’s birthday later this month.