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                                                                   EXHIBIT 10.27

                                    AGREEMENT

         This Agreement ("Agreement") is made between Caraco Pharmaceutical
Laboratories, Ltd. (the "Company") and Narendra N. Borkar ("Borkar") as of the
date set forth above the parties' signatures below.

                                    RECITALS

         Borkar has been employed as the Chief Executive Officer, President and
Treasurer of the Company. Borkar and the Company entered into that certain
Employment Agreement dated September 22, 1998 (the "Employment Agreement"). The
Employment Agreement provides for a term of five years and then automatically
renews for successive one year periods unless notice is provided 90 days prior
to any renewal. The Employment Agreement automatically renewed for the period
September 22, 2003 to September 21, 2004. Among other things, in the event
Borkar terminates without cause, the Employment Agreement provides Borkar with
no severance package and includes extensive non-compete restrictions.

         Borkar wishes to retire effective the close of business on September
30, 2003 (the "Retirement Date"). The parties recognize Mr. Borkar's
contributions to the success of the Company and wish to accommodate Mr. Borkar's
desire to retire on the Retirement Date pursuant to the agreements set forth
below.

         ACCORDINGLY, IT IS AGREED as follows:

         1.       RESIGNATION. Borkar voluntarily resigns employment with the
         Company effective the close of business on the Retirement Date.
         Borkar's resignation includes without limitation his resignation from
         all officer positions with the Company, including his positions as
         Chief Executive Officer, President and Treasurer of the Company as set
         forth in the written and signed letter of resignation included as
         Exhibit A hereto. Borkar also agrees to resign as a director of the
         Company if he, directly or indirectly (and whether or not for
         compensation), works for, is employed by, owns, manages, operates,
         controls, finances, participates or engages in, or has any interest in,
         any person, firm, entity, partnership, limited partnership, limited
         liability company, corporation or business which engages in the
         Business as defined in the Employment Agreement whether as an employee,
         owner, sole proprietor, partner, adventurer, member, shareholder,
         officer, director, agent, creditor, consultant or in any capacity which
         calls for the rendering of personal services, advice, acts of
         management, operation or control (except with respect to Sun
         Pharmaceutical Industries Limited and its affiliates).

         2.       RETIREMENT PAYMENT. The Company shall pay to Borkar, as a
         retirement payment, his base salary at the annual rate of $156,000,
         less applicable deductions and withholding, payable bi-weekly
         commencing October 1, 2003 through March 31, 2004, in accordance with
         the Company's regular payroll procedures and prorated accordingly
         ("Retirement Payment"). The Company shall report such payments as
         income to Borkar with the filing of W-2 forms. Except as set forth in
         this Agreement, Borkar shall not receive any other compensation from
         the Company including, without limitation, Borkar shall not be paid any
         bonus or incentives for 2003. Borkar's compliance with this Agreement
         is a condition to the Company's obligations to pay the Retirement
         Payment or any installments thereof and to provide the benefit
         continuation under Section 3 and the benefits under Section 4.

         3.       CONTINUATION OF CERTAIN BENEFITS. All benefits to Borkar from
         the Company shall terminate as of the Retirement Date, except as
         provided in Sections 2 and 4 and as follows:

                  (d)      Health and life insurance will be continued at
                           Company cost through March 31, 2004.

                  (e)      Borkar shall be paid for accrued but unused vacation
                           through the Retirement Date.

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                  (f)      Borkar shall receive a monthly car allowance of $380
                           through March 31, 2004.

                  (g)      Borkar shall receive a contribution of $5,400 for his
                           retirement account in January 2004.

                  (h)      Borkar shall receive two weeks "vacation" pay to be
                           paid for the two week period ending April 14, 2004.

         4.       VESTING OF OPTIONS. The Company agrees that Borkar's option
         for 40,000 shares of its Common Stock which was part of the grant of
         options to purchase 200,000 shares of Common Stock under the Company's
         1999 Equity Participation Plan (the "1999 Plan"), and which under the
         current terms of Borkar's Option Agreement become exercisable on June
         2, 2004, is hereby accelerated and shall become exercisable commencing
         October 2, 2003. The Company further agrees that Borkar's options under
         the 1999 Plan which are currently exercisable (and the option for
         40,000 shares made exercisable pursuant to this Section 4) shall not
         expire within 90 days following the termination of Borkar's employment
         (i.e., 90 days from the Retirement Date), but, rather, shall expire 90
         days from the date Borkar ceases to be a director of the Company.

         5.       RETURN OF COMPANY PROPERTY. Except as otherwise set forth in
         this Agreement, Borkar agrees on the Retirement Date to return all
         property of the Company including, without limitation, all keys, access
         passes, parking sticker, credit cards, computers, equipment, software
         and all Company records and documents (without retaining any copies
         thereof).

         6.       DUTIES AS TO CONFIDENTIAL INFORMATION AND NONINTERFERENCE.
         Borkar agrees that Section 7 of the Employment Agreement will remain in
         full force and effect until the Retirement Date. After the Retirement
         Date, Borkar agrees that (i) he will keep confidential and not disclose
         any and all Confidential Information of the Company as defined in and
         pursuant to the terms and conditions of Section 7 of the Employment
         Agreement, and (ii) also pursuant to the terms and conditions of
         Section 7 of the Employment Agreement, he will not, directly or
         indirectly, during the thirty-six (36) month period following the
         Retirement Date, induce or attempt to induce, any person who is an
         employee or consultant of the Company to leave the employ or consulting
         relationship with the Company. For purposes of clarification, on and
         after the Retirement Date, except with respect to the surviving
         provisions of Section 7 of the Employment Agreement relating to
         confidentiality and the prohibition on Borkar's inducing employees or
         consultants to leave the employ or consulting relationship with the
         Company, the other non-compete provisions of Section 7 of the
         Employment Agreement will not be in effect or applicable to Borkar.
         This Section 6 shall not apply to any such Confidential Information
         which is or becomes in the public domain and/or in the generic drug
         industry through no action on the part of Borkar, was available to
         Borkar on a non-confidential basis from sources other than the Company
         or its representatives or advisors, is known, through no action on the
         part of Borkar, to a generic drug company which employs Borkar, is
         generally disclosed to third parties by the Company without restriction
         on such third parties, or is approved for release by written
         authorization of the Company.

         7.       REPRESENTATIONS. Borkar represents that he has been advised by
         the Company that he should consult with an attorney before executing
         this Agreement.

         8.       Miscellaneous.

                  (a)      This Agreement constitutes the entire agreement
                           between Borkar and the Company and supersedes any
                           prior or contemporaneous promises, agreements or
                           representations except as otherwise set forth in this
                           Agreement. This Agreement cannot be modified orally
                           but only in a written document signed by Borkar and
                           an authorized representative of the Company.

                  (b)      This Agreement shall be governed by the laws of the
                           State of Michigan.

                  (c)      The captions and headings of the Sections of this
                           Agreement are for convenience of reference

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                           only and are not to be considered in construing this
                           Agreement. This Agreement accurately sets forth the
                           intent and understanding of each party. This
                           Agreement shall not be construed for or against
                           either party as a result of the drafting hereof if
                           there is any dispute over the meaning or intent of
                           any of its provisions.

                  (d)      If any provision of this Agreement, in whole or in
                           part, is determined to be unlawful or unenforceable,
                           the parties agree that such provision shall be deemed
                           modified, if possible, to the extent necessary to
                           render such provision valid and enforceable to the
                           maximum extent permitted by law and, if not possible,
                           it shall be severed from the Agreement. In either
                           event all remaining provisions of this Agreement
                           shall remain in full force and effect.

                  (e)      This Agreement may be executed in counterparts, which
                           together shall be considered as if one Agreement. A
                           photocopy of this Agreement is effective as an
                           original.

                  (f)      The parties acknowledge that as of the Retirement
                           Date, they have no claims and/or causes of action of
                           any nature against each other except that any claims
                           and/or causes of action prior to the Retirement Date
                           regarding fraud, breach of fiduciary duty,
                           dishonesty, reckless or willful misconduct, gross
                           negligence, embezzlement, conversion, self dealing or
                           criminal conduct are expressly preserved. In
                           addition, the parties retain all rights against each
                           other with respect to their obligations and
                           responsibilities under this Agreement.

         Executed effective as of 2nd day of October, 2003.

                                   READ BEFORE SIGNING

Witness:

-------------------------------         /s/ Narendra N. Borkar
                                        ----------------------
                                        Narendra N. Borkar

                                        Caraco Pharmaceutical Laboratories, Ltd.

-------------------------------         By: /s/ Jitendra N. Doshi
                                            ---------------------
                                                Jitendra N. Doshi
                                        Its:    Chief Operating Officer

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                                    EXHIBIT A

I resign as Chief Executive Officer, President and Treasurer of Caraco
Pharmaceutical Laboratories, Ltd. effective September 30, 2003. A photocopy of
this resignation is effective as an original.

Date: 2nd day of October, 2003               /s/ Narendra N. Borkar
                                             ----------------------
                                             Narendra N. Borkar