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MUMBAI: Adani Power Ltd (APL) on Monday said its arm Mahan Energen Ltd had approved a proposal to merge coal mining firm Stratatech Mineral Resources with itself.

This will help improve fuel security, the company said.

Stratatech Mineral Resources, a subsidiary of Adani Enterprises, has been allocated to Dhirauli Coal Mine in Madhya Pradesh. The coal mine is close to MEL's thermal power plant.

Dhirauli Coal Mine has a peak-rated capacity to produce 6.5 million tones per annum of coal.

The company said SMRPL is a wholly-owned subsidiary of Adani Enterprises Limited and is engaged in the business of mining coal, minerals and ores, and other allied activities. MEL is engaged in the business of generation and sale of power.

The proposed amalgamation will allow MEL to operate the Dhirauli Coal Mine as a captive coal mine and improve its fuel security.

However, the proposed scheme of amalgamation is subject to necessary approvals including that of shareholders.

the wholly-owned subsidiary Mahan Energen Limited (MEL or the transferee company) has approved a scheme...for amalgamation of Stratatech Mineral Resources Private Limited (SMRPL or the transferor company) with MEL," the company said

Adani Power's scrip ended at Rs 875, up 15.64% on the BSE on Monday. Benchmark Sensex ended 3.39% higher.