An east China haircare products company has been fined for using a banned chemical in products bound for the Singapore and Hong Kong markets, China's food and drug watchdog said Tuesday.

The Zhangguang 101 Co., Ltd., based in Zhejiang Province, paid 245,040 yuan (37,145 U.S. dollars) in fines and had its illegal gains confiscated, said a statement issued by the State Food and Drug Administration (SFDA).

The penalty was imposed in October last year, after an investigation the previous month found some products made by Zhangguang 101 were found to contain minoxidil, an anti-hypertension drug.

Minoxidil is banned as an ingredient in cosmetic products. Clinical studies have shown it can stimulate hair growth and slow balding, but side effects include possible itching, redness or irritation of the skin.

The statement did not specify which products contained the banned chemical.

The SFDA also reported that another Chinese firm, Guangzhou-based Bawang, was found last year making false claims about two shampoo products.

In China, the production of nourishing hair products, as special cosmetics, must be approved by the Ministry of Health. The two Bawang products claimed, without the required approval, that the shampoos could strengthen hair follicles.

In August last year, the company had stopped using such packaging for the products, and recalled them, said the statement.