INNER Mongolia Mengniu Dairy (Group) Co has suffered "a lot" of damage to sales from the milk scandal, President Yang Wenjun said.

The company, the main operating unit of Hong Kong-listed China Mengniu Dairy Co, is preparing an assessment of the losses that will be completed within two months, Yang said at a press briefing in Inner Mongolia Autonomous Region yesterday. Mengniu has reduced spending on planned long-term expansion, he said.

"We removed all the milk in the market from shelves for inspection before returning them afterward," Yang said. "This has affected sales a lot," he said, declining to disclose figures. He said sales have started to pick up.

Mengniu was among 22 firms in China identified as having produced dairy products contaminated with melamine, an industrial chemical used to make plastics which can cause kidney stones, Bloomberg News said.