BEIJING - A major Chinese dairy producer Thursday denied its role in an unfolding scandal involving the manufacturing of drugs and food products using toxic gelatin.

Beijing Sanyuan Food Co responded to a report run by Southern Metropolis Daily in an online statement, saying it had no business links with the Hebei Xueyang Glair Gelatin Factory.

The Hebei factory was revealed by China Central Television on Sunday to be selling industrial gelatin to a medicine capsule company in Zhejiang. The plant was later set ablaze by its owner to destroy evidence.

A report by Southern Metropolis Daily, however, said they found an account book at the factory site, which documented transactions between the plant and several other food companies, including Sanyuan.

Chen Lijun, vice general manager of Sanyuan, said they did not find any transaction with the industrial gelatin plant after scrutinizing the financial records and supplier list of the company.

Sanyuan only imports edible gelatin from a foreign company, Chen said, adding its use of gelatin complied with relevant regulations on food processing.

The latest yet-to-be-confirmed involvement of Sanyuan has fueled the online buzz over the scandal. While many netizens are sharing knacks of swallowing medicine without capsules, there have been appeals for boycotting Sanyuan's dairy products.

As of Thursday, Chinese police had detained 53 suspects and closed 10 industrial gelatin and gel capsule factories believed to have been involved in producing contaminated medicine capsules, the Ministry of Public Security said in a statement.

More than 230 tons of industrial gelatin have also been confiscated in Hebei, Zhejiang, Jiangxi and Shandong provinces, the statement said.

Edible gelatin is widely used in the making of medicine capsules and foodstuffs such as jelly and yoghurt. Industrial gelatin, however, is toxic as it contains a greater amount of chromium.