Sun Pharma Responds to Taro's Purported Termination of Merger...(ved your letter dated May 28 2008 as wel...),Health

Date:5/29/2008

ved your letter dated May 28, 2008, as well as the letter of the same date from Taro Pharmaceutical Industries Ltd. ("Taro") notifying our affiliates, Alkaloida Chemical Company Exclusive Group Ltd. and Aditya Acquisition Company Ltd., that Taro has purported to terminate the Agreement of Merger, dated as of May 18, 2007 (the "Merger Agreement"), among Taro, Alkaloida Chemical Company Exclusive Group Ltd. and Aditya Acquisition Company Ltd. pursuant to Section 8.1(b) thereof.

First of all let me state that Taro is not entitled to terminate the merger under the Merger Agreement. I am very disappointed that you have chosen to take this public step without engaging in any meaningful discussions with Sun Pharmaceutical Industries Ltd. and/or its associates ("Sun"). During my meeting with Taro's Board on May 14th, arranged specifically to discuss the merger, you prevented the directors from engaging in any meaningful discussion with me, asking them to remain in "listen-only" mode during the course of the meeting.

Without Sun's equity contributions totaling approximately $60 million, Taro would be unable to boast of survival, much less a purported financial and operational "turnaround." Without our investment, Taro would not have been able to meet the bond payment due within days of our first investment. Further, the only reason Taro has been able to keep its lenders at bay is with Sun's contractual commitments to repay all disclosed indebtedness as part of the merger transactions. In fact, Taro continues to generate very little free cash flow. Taro's press release yesterday noted that Taro has only $47 million in cash as of March 31, 2008. This means that, if not for Sun's cash injections last year of about $60 million, Taro would have virtually negative cash -- hardly the "dramatic" improvement of which Taro has boasted.

Sun invested in Taro, at the request of the Taro Board. The Merger Transaction between Sun and Taro followed a thorough auction pr
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SOURCE Sun Pharmaceutical Industries Ltd. Copyright©2008 PR Newswire. All rights reserved

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