Yili, the nation's largest dairy maker in terms of sales last year, said the investment will be spent on fixed assets located in an economic development zone in Hohhot, its home city, in Inner Mongolia, the company said in a statement to the Shanghai Stock Exchange yesterday.

The project will help Yili add another 1,200 tons of processed milk powder daily, part of a plan to boost its competitiveness in the milk powder segment as it faces challenges from Mengniu and Shanghai Bright Dairy & Food Co.

Yili said earlier it will invest 500 million yuan in the same zone to build Asia's biggest manufacturing plant for infant milk powder, with an annual output of 60,000 tons of formula milk powder.

Yili announced these investments after posting a 20 percent gain in its net profit to 109 million yuan in the first three months of this year, following a 17.45 percent growth to 345 million yuan for the whole of last year.

However, the company also noticed that its gap with first runner up Mengniu is being narrowed in terms of sales and profit.

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