NEW YORK, NY – April 1 ^st , 2004 – The Baran Group Ltd. (hereunder, “ Baran ”) (NASDAQ, TASE: BRAN) announced that on April 1 ^st , 2004, Carmel Desalination Ltd. (hereunder, “ CDL ”) in which Baran Holds 33%, received a letter from the Israeli Water Desalination Governmental Authority (hereunder, “ the WDA ”) in which the WDA notifies CDL of the termination of the Desalination Facility BOO Agreement dated October 28 ^th , 2002 (hereunder, “ the Agreement ”).

The expected scope of the water desalination project was approximately NIS 450 million ($100 million).

In the letter, the WDA claims that the termination is due to CDL’s breach of obligations contained in the Agreement, including CDL’s failure to execute financing agreements.

The WDA further announced that on May 2 ^nd , 2004, it intends to collect the Performance Bond issued to it by CDL on the sum of NIS 10 million ($2.22 million), Baran’s share of the Performance Bond is NIS 3.3 million ($0.74 million).

CDL rejects all the allegations made against it and intends to use all applicable legal measures against WDA.

Disclaimer Statement

This document contains forward looking statements that are subject to risk factors associated with Baran Group Ltd. businesses. It is believed that the expectations reflected in these statements are reasonable, but may be affected by a variety of variables which could cause actual results or trends to differ materially, including, but not limited to: price fluctuations, industry competition, economic and financial market conditions, exchange rates, interest, political risks, project delay approvals and cost estimates.