Officials at a dairy product manufacturer in Kanazawa, Ishikawa Prefecture, admitted Monday that the firm knew it was breaking food sanitation laws when it reused milk it collected from a supermarket to make milk for school lunches.

Nearly 400 kindergarten, elementary and junior high school students in the city and the town of Uchinada said they felt sick after drinking the milk, which was produced by Jersey Takagi Nyugyo, last week. All of them are now recovering, officials said. Subsequent inspections by local health officials showed that the company collected 213 1-liter cartons of milk Tuesday from a supermarket in neighboring Toyama Prefecture after receiving word the product smelled bad.

But Junichi Yamaguchi, head of the firm's production division, told health officials he decided to use the collected product to make more milk after drinking from five or six of the cartons and finding nothing wrong.

Officials added that they were aware their actions violated the Food Sanitation Law, but that it was the first time they had reused such milk, sources close to the case said.

A Health Ministry ordinance issued under the law bans the reuse of milk once it has been shipped out as product.