To TARO Special Committee, Professor Pekelman,

05-20-2012

We are a bunch of unaffiliated individual shareholder(s) of TARO. Some of the shareholders are holding TARO since 2006. Listed at the bottom of this email are our holding details. Our total holdings currently amount to ~119k shares or 0.26% of Taro. We as shareholders take this opportunity to communicate with you our mixed feelings. First of all, we would like to share our gratitude towards the new Management team led by James Kendrowski under the stewardship of the new board and Mr. Shanghvi for improving the operations at TARO and positioning TARO back to growth. While we believe TARO's operations, growth and balance sheet have significantly improved in the last few years, it is evident that the Taro's market price has significantly not caught up to these developments to our expectations. Taro at $42 a share trades at a significant discount at only ~5.5 times Q4-2011 annualized earnings. We believe there are 2 main reasons for this: 1. We believe the board's continuation of evaluation of the offer that is ~40% below the average current trading price(for >3 months) is materially influencing the price negatively and has effectively shunned market participants from participating in TARO shares. The significant uncertainty created by the special committee and the board by continuing to evaluate a grossly inadequate offer for >3 months even when the market price was nearly double that offer, has barred many market participants from investing in TARO. TAROs average volume is still very small for a stock listed in NYSE. 2. In addition, TARO notably operates unlike a publicly listed company with No participation in ANY investor conferences, No Quarterly Earnings Conference calls, No Sales/Earnings guidance, No timely 6k's on drug launches and not even an Investor presentation on its web site. Hence No Sell- side research institution or analyst covers TARO stock and the fund participation in TARO is limited. This is another contributory factor that the TARO story is unknown to market participants and the stock trades at a significant discount to competitors like Perrigo. This is corroborated by the extremely thin volume of trading in TARO shares. Taro's daily share volume is 32k versus Perrigo's 859k. From a daily dollar volume, Perrigo is nearly 64 times that of TARO. Perrigo is covered by 7 analyst firms to Taro's Zero. The above 2 factors have artificially deflated TARO's price in the market. When these 2 factors are effectively cured (see recommendations below), it will enable real price discovery and the fair market price of TARO to be determined. We believe TARO will likely eventually trade near Perrigo's EV/EBIDTA market multiple of 16, which would take TARO's price to ~$120 per share based on annualized Q4-2011 earnings. Please also be aware of the following facts: 1. That TARO is in a limited competition and higher barrier-to-entry generic business.* 2. That Taro has a 50% market share in its top 18 products(see IsZo capital letter dated 05/11). 3. That past generic M&A transactions were at an average of 14.8 times EBIDTA 4. That TARO's competitor Perrigo trades at 16 times ttm EBIDTA. Taro's 3 year sales and EBIDTA growth, operating margin, balance sheet and leverage ratio are all superior to Perrigo. 5. That the valuation of parent Sun's and relative contribution of TARO's to Sun's EBIDTA,

would easily value TARO in excess of $100. 6. That any potential buy-out from Sun would throw up significant synergy savings. Such a buyout would command a premium in the market. *None of the big Indian generic pharma companies that are significant players in the US generics market,
have any meaningful presence in the dermatology and topical market due to the lack of technology. With the acquisition of Taro, Sun pharma would likely end up to be the only Indian company armed with the technology and manufacturing know-how for dermatology/topical from Taro, with the ability to leverage tremendous cost arbitrage opportunities in manufacturing and R&D from India. Inevitably, this will throw up margin expansion and market-share opportunities for Sun Pharma in the dermatology/topical space both for existing as well as for new products.

We request the board to consider following recommendations that would allow the market to price TARO shares fairly and to the benefit ALL TARO shareholders. 1. Stop the 7-month evaluation of a grossly inadequate offer from Sun Pharma. This is materially and adversely influencing the market price of TARO. 2. Put a moratorium on buy-out for a period of 12 months. 3. In the 12 month period, conduct quarterly investor days with full and fair disclosure of 3 year business and restructuring plan of Taro and let the market participants know the TARO story. As stated in TARO's own 2011 press releases, the R&D productivity and other business initiatives are yet to take full fruition. During this period, TARO like any publicly listed company should attend investor conferences, have quarterly earnings conference call, its web site should carry an investor presentation, provide timely 6k's for launches/approvals and possibly also provide sales/earnings guidance. After this 12 month period, TARO could conduct a sale process or be open to evaluating a buyout offer at a premium to the then market price. In order to remove future uncertainty of minority shareholders not getting a fair price in a minority buy-out scenario, the steps 4) to 6) are also needed. Together these steps would send a strong message to the market that TARO would ensure fairness to ALL of its shareholders and facilitate real price discovery in the market without the risk or the uncertainty of a minority squeeze. 4. Remove Items 4 through 8(director liability proposals) from the agenda of the upcoming annual shareholder meeting. 5. Ensure the integrity of the "Majority of the minority" voting standard as stated in IsZo capital's letter dated 05/11. Have a reputed independent shareholder services company like ISS conduct this process. It is critical that none of votes of various Sun's affiliates, their friends, relatives, etc should be counted under minority. 6. Have 2 minority institutional shareholders represented in the board.
Name/Pseudonym
Valery Libenzon Lev Kaplun Alon Gurevich Fabio Cova Minotti

# of Taro Shares
300 700 2000 102500

Holding Since
before 2006 2006-2009 2006-2009 before 2006

Michael Sirr Valerie davis Ronen Ariely Keith Hays Larry Tooker Miro Pastrnak John Anony

500 125 500 50 500 200 11500

2006-2009 before 2006 before 2006 after 2010 after 2010 after 2010 after 2010

~119k shares or ~0.26% of Taro

Please note all the shareholders listed above have electronically signed stating the following information: 1. Their TARO holdings is truthful and that this information be submitted to the Taro Special committee* 2. That they are co-signees of this online petition to the TARO special committee to maximize the value of their TARO holdings. *No further verification has been done to authenticate the ownership due to the cost involved.

Please engage us (retail shareholders) and let us know the board's opinion on our recommendations. We would like to work with you towards this objective of maximizing value for all TARO shareholders. We request you to direct all further communications to this group taro-minorityshareholders@googlegroups.com . Thank you, Taro Minority Shareholders