GMR Infrastructure [Get Quote], the Bangalore-based infrastructure developer, is understood to be driving a hard bargain to gain 100 per cent control over South-Africa based Homeland Mining & Energy at a little less than $100 million, a third of the initial valuation.

Homeland Mining is understood to have close to 400 million tonnes of coal reserves and is a subsidiary of the Homeland Energy Group of Canada, which also owns uranium mines. GMR Energy, a part of GMR Infrastructure, had valued this coal mining firm at $310 million when it acquired a small stake in April 2008.

A senior GMR Group official confirmed that an offer was made considering that the prices of all commodities has been declining. "In our due diligence, we have also found out that we had valued this firm much higher based on various factors such as how many layers one has to mine to access the worthwhile coal," he added.  

GMR Energy initially had offered to buy 50 per cent stake in a two-step process -- first it bought a 5 per cent stake for $15 million and it reserved the right to increase it by another 45 per cent by September 2008. But, after a thorough due diligence, GMR Energy is understood to have indicated to Homeland that it will not be increasing its stake to 50 per cent and that they wanted to walk away from the deal.

After various negotiations, GMR took a stand wherein either it gets its $15 million back or gets to hold a stake in the holding company.

"There was some initial understanding that this stake in the holding company would be offered to us. However, there are clear indications that this may not happen and we will get complete control over the coal mining firm alone," the official said.

When contacted, the group officials said that until negotiations are complete they will not be able to comment.

In addition to the South African firm, GMR Energy is understood to be finalising papers to acquire 100 per cent stake of a coal mining firm in Indonesia, which has coal reserves of 100 million tonnes for $80 million.