Saudi Arabia-based Almarai, the Gulf's largest dairy company by market value, plans to invest SR650 million ($173.3 million) in a project to make infant formula.

'Studies conducted by the company have shown the strategic importance' of the infant formula industry, Almarai said in a statement.

The plan, which was approved by the company's board of directors, would be financed from both the company's own cash resources and through loans, it added.

Works on the project will last 18 months after the award of the contracts, Almarai said, without specifying when they would be awarded.

'If Almarai succeeds in this new product segment, we believe the company will be able to generate about $50 million to $70 million in revenues on a full-year basis,' said Laurent-Patrick Gally, an analyst from Dubai-based Shuaa Capital.

Almarai has diversified its revenue sources through acquisitions and said it plans to spend SR6 billion in the five years to 2013. The firm said it had acquired two juice and dairy manufacturers in Egypt and Jordan.

Last year, Almarai began consolidating the earnings from its 2006 acquisition of Western Bakeries and International Bakery Services Co. It paid SR709 million in stock for the companies. – Reuters