##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    December 31,
    2009Oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-32312
  Novelis Inc.
 (Exact name of registrant as
    specified in its charter)
  Canada

98-0442987(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)3399 Peachtree Road NE, Suite 1500
    Atlanta, Georgia(Address of principal
    executive offices)

30326(Zip Code)   Telephone:
    (404) 814-4200
 (Registrants telephone
    number, including area code)
  þ o
  Regulation S-T o o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o   Rule 12b-2 o þ




---



##### 



TABLE OF
    CONTENTS
   
 PART I. FINANCIAL INFORMATIONItem 1.


Financial StatementsCondensed Consolidated Statements of Operations
    Three and Nine Months Ended December 31, 2009 and 2008
    (unaudited)


2Condensed Consolidated Balance Sheets
    December 31, 2009 and March 31, 2009 (unaudited)


3Condensed Consolidated Statements of Cash Flows
    Nine Months Ended December 31, 2009 and 2008 (unaudited)


4Condensed Consolidated Statement of
    Shareholders Equity Nine Months Ended December 31,
    2009 (unaudited)


5Condensed Consolidated Statements of
    Comprehensive Income Three and Nine Months Ended
    December 31, 2009 (unaudited)


6Notes to the Condensed Consolidated Financial
    Statements (unaudited)


7Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


42Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


68Item 4.


Controls and Procedures


71PART II. OTHER INFORMATIONItem 1.


Legal Proceedings


73Item 6.


Exhibits


73EX-31.1EX-31.2EX-32.1EX-32.2   1




---



##### Table of Contents



PART I.
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  Novelis
    Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (unaudited)(In millions)
  Three Months


Nine MonthsEnded


EndedDecember 31,


December 31,2009


2008


2009


2008Net sales

$
2,112


$
2,176


$
6,253


$
8,238Cost of goods sold (exclusive of depreciation and amortization
    shown below)


1,788



2,023



5,049



7,645Selling, general and administrative expenses


99



73



260



246Depreciation and amortization


93



107



285



330Research and development expenses


10



11



27



33Interest expense and amortization of debt issuance costs


44



47



131



138Interest income


(2
)


(3
)


(8
)


(13
)(Gain) loss on change in fair value of derivative instruments,
    net


(40
)


396



(192
)


516Impairment of goodwill






1,340







1,340Restructuring charges, net


1



15



7



14Equity in net (income) loss of non-consolidated affiliates


(8
)


166



12



166Other (income) expenses, net


(2
)


20



(21
)


531,983



4,195



5,550



10,468Income (loss) before income taxes


129



(2,019
)


703



(2,230
)Income tax provision (benefit)


48



(196
)


247



(329
)Net income (loss)


81



(1,823
)


456



(1,901
)Net income (loss) attributable to noncontrolling interests


13



(9
)


50



(7
)Net income (loss) attributable to our common shareholder

$
68


$
(1,814
)

$
406


$
(1,894
)    2




---



##### Table of Contents



Novelis
    Inc.CONDENSED CONSOLIDATED BALANCE SHEETS
    (unaudited)(In millions, except number of
    shares)
  December 31,


March 31,2009


2009ASSETSCurrent assetsCash and cash equivalents

$
252


$
248Accounts receivable (net of allowances of $4 and $2 as of
    December 31, 2009 and March 31, 2009, respectively) third parties


998



1,049 related parties


11



25Inventories


1,059



793Prepaid expenses and other current assets


45



51Fair value of derivative instruments


235



119Deferred income tax assets


17



216Total current assets


2,617



2,501Property, plant and equipment, net


2,714



2,799Goodwill


611



582Intangible assets, net


768



787Investment in and advances to non-consolidated affiliates


757



719Fair value of derivative instruments, net of current portion


12



72Deferred income tax assets


4



4Other long-term assets third parties


96



80 related parties


23



23Total assets

$
7,602


$
7,567LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
149


$
51Short-term borrowings


61



264Accounts payable third parties


818



725 related parties


44



48Fair value of derivative instruments


112



640Accrued expenses and other current liabilities


425



516Deferred income tax liabilities


39



Total current liabilities


1,648



2,244Long-term debt, net of current portion third parties


2,493



2,417 related parties






91Deferred income tax liabilities


501



469Accrued postretirement benefits


522



495Other long-term liabilities


358



342Total liabilities


5,522



6,058Commitments and contingenciesShareholders equityCommon stock, no par value; unlimited number of shares
    authorized; 77,459,658 shares issued and outstanding as of
    December 31, 2009 and March 31, 2009






Additional paid-in capital


3,497



3,497Accumulated deficit


(1,524
)


(1,930
)Accumulated other comprehensive loss


(36
)


(148
)Total Novelis shareholders equity


1,937



1,419Noncontrolling interests


143



90Total equity


2,080



1,509Total liabilities and shareholders equity

$
7,602


$
7,567    3




---



##### Table of Contents



Novelis
    Inc.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (unaudited)(In millions)
  Nine MonthsEndedDecember 31,2009


2008OPERATING ACTIVITIESNet income (loss)

$
456


$
(1,901
)Adjustments to determine net cash provided by (used in)
    operating activities:Depreciation and amortization


285



330(Gain) loss on change in fair value of derivative instruments,
    net


(192
)


516Deferred income taxes


230



(400
)Write-off and amortization of fair value adjustments, net


(139
)


(178
)Impairment of goodwill






1,340Equity in net (income) loss of non-consolidated affiliates


12



166Foreign exchange remeasurement of debt


(17
)


21Gain on reversal of accrued legal claim


(3
)


(26
)Inventory reserves and adjustments






38Other, net


8



4Changes in assets and liabilities:Accounts receivable


107



89Inventories


(218
)


98Accounts payable


34



(439
)Other current assets


9



(25
)Other current liabilities


35



(45
)Other noncurrent assets


(16
)


8Other noncurrent liabilities


39



(10
)Net cash provided by (used in) operating activities


630



(414
)INVESTING ACTIVITIESCapital expenditures


(74
)


(107
)Proceeds from sales of assets


4



4Changes to investment in and advances to non-consolidated
    affiliates


3



17Proceeds from related party loans receivable, net


15



18Net proceeds (outflow) from settlement of derivative instruments


(432
)


160Net cash provided by (used in) investing activities


(484
)


92FINANCING ACTIVITIESProceeds from issuance of debt, third parties


177



8Proceeds from issuance of debt, related parties


4



Principal payments, third parties


(20
)


(11
)Principal payments, related parties


(95
)


Short-term borrowings, net


(211
)


193Dividends, noncontrolling interest


(13
)


(5
)Debt issuance costs


(1
)


Net cash provided by (used in) financing activities


(159
)


185Net decrease in cash and cash equivalents


(13
)


(137
)Effect of exchange rate changes on cash balances held in
    foreign currencies


17



(13
)Cash and cash equivalents  beginning of period


248



326Cash and cash equivalents  end of period

$
252


$
176    4




---



##### Table of Contents



Novelis
    Inc.CONDENSED CONSOLIDATED STATEMENT OF
    SHAREHOLDERS EQUITY (unaudited)
    (In millions, except number of shares)
  Novelis Inc. ShareholderAccumulatedRetained


OtherAdditional


Earnings


Comprehensive


Non-Common Stock


Paid-in


(Accumulated


Income (Loss)


controlling


TotalShares


Amount


Capital


Deficit)


(AOCI)


Interests


EquityBalance as of March 31, 2009


77,459,658


$



$
3,497


$
(1,930
)

$
(148
)

$
90


$
1,509Net income attributable to our common shareholder














406











406Net income attributable to noncontrolling interests






















50



50Currency translation adjustment, net of tax provision of $4
    included in AOCI


















105



16



121Change in fair value of effective portion of hedges, net of tax
    benefit of $  included in AOCI


















(1
)






(1
)Postretirement benefit plans:Change in pension and other benefits, net of tax provision of $5
    included in AOCI


















8







8Noncontrolling interests cash dividends






















(13
)


(13
)Balance as of December 31, 2009


77,459,658


$



$
3,497


$
(1,524
)

$
(36
)

$
143


$
2,080    5




---



##### Table of Contents



Novelis
    Inc.CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
    INCOME (unaudited)(In millions)
  Three Months Ended


Three Months EndedDecember 31, 2009


December 31, 2008Attributable to


Attributable to





Attributable to


Attributable toOur Common


Noncontrolling





Our Common


NoncontrollingShareholder


Interests


Total


Shareholder


Interests


TotalNet income (loss)

$
68


$
13


$
81


$
(1,814
)

$
(9
)

$
(1,823
)Other comprehensive income (loss):Currency translation adjustment


(21
)


2



(19
)






(8
)


(8
)Net change in fair value of effective portion of hedges


3







3



(27
)






(27
)Postretirement benefit plans:Change in pension and other benefits


7







7



(17
)






(17
)Other comprehensive income (loss) before income tax effect


(11
)


2



(9
)


(44
)


(8
)


(52
)Income tax provision (benefit) related to items of other
    comprehensive income (loss)


3







3



11







11Other comprehensive income (loss), net of tax


(14
)


2



(12
)


(55
)


(8
)


(63
)Comprehensive income (loss)

$
54


$
15


$
69


$
(1,869
)

$
(17
)

$
(1,886
)   Nine Months Ended


Nine Months EndedDecember 31, 2009


December 31, 2008Attributable to


Attributable to





Attributable to


Attributable toOur Common


Noncontrolling





Our Common


NoncontrollingShareholder


Interests


Total


Shareholder


Interests


TotalNet income (loss)

$
406


$
50


$
456


$
(1,894
)

$
(7
)

$
(1,901
)Other comprehensive income (loss):Currency translation adjustment


109



16



125



(63
)


(31
)


(94
)Net change in fair value of effective portion of hedges


(1
)






(1
)


(24
)






(24
)Postretirement benefit plans:Change in pension and other benefits


13







13



(15
)






(15
)Other comprehensive income (loss) before income tax effect


121



16



137



(102
)


(31
)


(133
)Income tax provision related to items of other comprehensive
    income (loss)


9







9



13







13Other comprehensive income (loss), net of tax


112



16



128



(115
)


(31
)


(146
)Comprehensive income (loss)

$
518


$
66


$
584


$
(2,009
)

$
(38
)

$
(2,047
)    6




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)
  1.
    BUSINESS
    AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    Description
    of Business and Basis of Presentation
    Form 10-K Form 8-K
    Acquisition
    of Novelis Common Stock
    Consolidation
    Policy
   7




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
    Reclassifications
    and Adjustment
    Forms 10-Q Forms 10-K
  Recently
    Adopted Accounting Standards
    Measuring Liabilities at Fair
    Value Fair Value
    Measurements
   8




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  Subsequent
    Events, Subsequent Events
  Consolidation Noncontrolling Interests in
    Consolidated Financial Statements
  Intangibles  Goodwill and Other No. FAS 142-3, Determination of Useful Life of Intangible Assets
  Fair Value
    Measurements and Disclosures No. 107-1 28-1, Interim Disclosures about Fair Value of Financial
    Instruments; No. 157-4, Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly
  Business
    Combinations Business Combinations; Accounting for
    Assets Acquired and Liabilities Assumed in a Business
    Combination That Arise from Contingencies
 9




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
    Investments  Equity Method and Joint Ventures No. 08-06, Equity Method Investment Accounting Considerations)
  Recently
    Issued Accounting Standards
    Amendments to FASB Interpretation No. 46(R) Accounting for
    Transfers of Financial Assets
  Compensation  Retirement Benefits Employers Disclosures about Postretirement Benefit Plan
    Assets
    2.
    RESTRUCTURING
    PROGRAMS   10




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
      North





South





RestructuringEurope


America


Asia


America


Corporate


ReservesBalance as of March 31, 2009

$
61


$
16


$



$
2


$
1


$
80Provisions, net


1



4







(1
)






4Cash payments


(39
)


(9
)






(2
)


(1
)


(51
)Impact of exchange rate changes


7











1







8Balance as of December 31, 2009

$
30


$
11


$



$



$



$
41   Europe
        North
    America
      South
    America
   11




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   3.
    INVENTORIES    December 31,


March 31,2009


2009Finished goods

$
289


$
215Work in process


377



296Raw materials


307



207Supplies


91



791,064



797Allowances


(5
)


(4
)Inventories

$
1,059


$
793   4.
    CONSOLIDATION
    OF VARIABLE INTEREST ENTITIES      December 31,

March 31,2009

2009Current assets

$
63


$
64Total assets

$
130


$
124Current liabilities

$
(40
)

$
(35
)Total liabilities

$
(139
)

$
(135
)Net carrying value

$
(9
)

$
(11
)  12




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   5.
    INVESTMENT
    IN AND ADVANCES TO NON-CONSOLIDATED AFFILIATES AND RELATED PARTY
    TRANSACTIONS    Three MonthsEnded


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008Net sales

$
63


$
58


$
183


$
220Costs, expenses and provisions for taxes on income


55



64



195



226Impairment charge






160







160Net income (loss)

$
8


$
(166
)

$
(12
)

$
(166
)     Three Months


Nine MonthsEnded


EndedDecember 31,


December 31,2009


2008


2009


2008Purchases of tolling services and electricityAluminium Norf GmbH(A)

$
61


$
56


$
181


$
203Consorcio Candonga(B)






2



1



15Total purchases from related parties

$
61


$
58


$
182


$
218     (A)
    
    We purchase tolling services from Norf.(B)
    
    We obtain electricity from Consorcio Candonga for our operations
    in South America.    December 31,

March 31,2009

2009Accounts receivable(A)

$
11


$
25Other long-term receivables(A)

$
23


$
23Accounts payable(B)

$
44


$
48     (A)
    
    The balances represent current and non-current portions of a
    loan due from Norf.(B)
    
    We purchase tolling services from Norf and electricity from
    Consorcio Candonga. 13




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   6.
    DEBT    December 31, 2009


March 31, 2009Unamortized








UnamortizedInterest





Fair Value


Carrying





Fair Value


CarryingRates(A)


Principal


Adjustments(B)


Value


Principal


Adjustments(B)


ValueThird party debt:Short term borrowings


1.95
%

$
61


$



$
61


$
264


$



$
264Novelis Inc.Floating rate Term Loan Facility, due July 2014


2.24
%(C)


293







293



295







29511.5% Senior Notes, due February 2015


11.50
%


185



(4
)


181











7.25% Senior Notes, due February 2015


7.25
%


1,124



42



1,166



1,124



47



1,171Novelis CorporationFloating rate Term Loan Facility, due July 2014


2.25
%(C)


861



(48
)


813



867



(54
)


813Novelis Switzerland S.A.Capital lease obligation, due December 2019 (Swiss francs (CHF)
    50 million)


7.50
%


47



(3
)


44



45



(3
)


42Capital lease obligation, due August 2011 (CHF 2 million)


2.49
%


2







2



2







2Novelis Korea LimitedBank loan, due October 2010


2.82
%(C)


100







100



100







100Bank loan, due February 2010 (Korean won (KRW) 50 billion)


4.14
%


42







42



37







37Bank loan, due May 2009 (KRW 10 billion)


7.47
%














7







7OtherOther debt, due December 2011 through December 2012


1.00
%


1







1



1







1Total debt  third parties






2,716



(13
)


2,703



2,742



(10
)


2,732Less: Short term borrowings






(61
)






(61
)


(264
)






(264
)Current portion of long term debt






(158
)


9



(149
)


(59
)


8



(51
)Long-term debt, net of current portion  third
    parties:





$
2,497


$
(4
)

$
2,493


$
2,419


$
(2
)

$
2,417Related party debt:Novelis Inc.Unsecured credit facility  related party, due January
    2015


13.00
%

$



$



$



$
91


$



$
91     (A)
    
    Interest rates are as of December 31, 2009 and exclude the
    effects of accretion/amortization of fair value adjustments as a
    result of the Arrangement and the debt exchange completed in
    fiscal 2009.(B)
    
    Debt existing at the time of the Arrangement was recorded at
    fair value. Additional floating rate Term Loan with a face value
    of $220 million issued in March 2009 was recorded at a fair
    value of $165 million. Additional 11.5% Senior Notes
    with a face value of $185 million issued in August 2009
    were recorded at fair value of $181 million (see
    11.5% Senior Notes below).(C)
    
    Excludes the effect of related interest rate swaps and the
    effect of accretion of fair value. 14




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
     As of December 31, 2009

AmountWithin one year

$
1582 years


163 years


164 years


165 years


1,111Thereafter


1,338Total

$
2,655   Senior
    Secured Credit Facilities
    11.5% Senior
    Notes
      
    all of our existing and future Canadian and U.S. restricted
    subsidiaries,
    certain of our existing foreign restricted subsidiaries and
    our other restricted subsidiaries that guarantee debt in the
    future under any credit facilities, provided that the borrower
    of such debt is our company or a Canadian or a
    U.S. subsidiary.   15




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  Short-Term
    Borrowings and Lines of Credit
      Interest
    Rate Swaps
        7.
    SHARE-BASED
    COMPENSATION    Three Months Ended


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008Novelis Long-Term Incentive Plan 2009

$
2


$



$
3


$
Novelis Long-Term Incentive Plan 2010


1







2



Total compensation expense

$
3


$



$
5


$
   Novelis
    Long-Term Incentive Plan
   16




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
        Weighted


Weighted Average


AggregateAverage


Remaining


IntrinsicNumber of


Exercise Price


Contractual Term


Value (USD2010 LTIP

SARs


(in Indian Rupees)


(In years)


in millions)SARs outstanding as of March 31, 2009














Granted


14,075,603
(A)


87.61Exercised






Forfeited/Cancelled


(489,061
)


85.79Expired






SARs outstanding as of December 31, 2009


13,586,542



87.68



6.48


$
21   Weighted


Weighted Average


AggregateAverage


Remaining


IntrinsicNumber of


Exercise Price


Contractual Term


Value (USD2009 LTIP

SARs


(in Indian Rupees)


(In years)


in millions)SARs outstanding as of March 31, 2009


20,606,906
(A)


60.50



6.22



(B
)Granted






Exercised






Forfeited/Cancelled


(9,209,152
)


60.50Expired






SARs outstanding as of December 31, 2009


11,397,754



60.50



5.46


$
20     (A)
    
    Represents total SARs approved by the Board of Directors for
    grant. As noted above, due to the performance criterion based on
    a future earnings target, the amount deemed granted for
    accounting purposes is limited to the individual tranches
    subject to an established earnings target, which includes the
    current and prior fiscal years.(B)
    
    The aggregate intrinsic value is zero as the market value of a
    share of Hindalco stock was less than the SAR exercise price. 17




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
     2010 LTIP

2009 LTIPExpected volatility

51.9  57.1%

56.9  65.6%Weighted average volatility

54.9%

61.4%Dividend yield

0.84%

0.84%Risk-free interest rate

6.66  7.25%

5.38  6.67%Expected life

3.5  5.0 years

1.8  3.5 years         8.
    POSTRETIREMENT
    BENEFIT PLANS      Pension Benefit PlansThree Months Ended


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008Service cost

$
8


$
11


$
24


$
32Interest cost


15



16



43



46Expected return on assets


(10
)


(14
)


(30
)


(40
)Amortization  (gains) losses


3







9



(1
)Curtailment/settlement (gains) losses














1Net periodic benefit cost

$
16


$
13


$
46


$
38     18




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  Other BenefitsThree Months Ended


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008Service cost

$
2


$
2


$
5


$
5Interest cost


2



3



8



8Amortization  (gains) losses














1Curtailment/settlement (gains) losses














(2
)Net periodic benefit cost

$
4


$
5


$
13


$
12     Employer
    Contributions to Plans
    Three Months Ended


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008Funded pension plans

$
10


$
8


$
22


$
19Unfunded pension plans


3



4



11



12Savings and defined contribution pension plans


4



4



11



13Total contributions

$
17


$
16


$
44


$
44     9.
    CURRENCY
    (GAINS) LOSSES    Three Months Ended


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008Net (gain) loss on change in fair value of currency derivative
    instruments(A)

$
(15
)

$
48


$
(66
)

$
13Net (gain) loss on remeasurement of monetary assets and
    liabilities(B)


(2
)


17



(9
)


73$
(17
)

$
65


$
(75
)

$
86     (A)
    
    Included in (Gain) loss on change in fair value of derivative
    instruments, net.(B)
    
    Included in Other (income) expenses, net. 19




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
     Nine Months Ended


Year EndedDecember 31, 2009


March 31, 2009Cumulative currency translation adjustment  beginning
    of period

$
(78
)

$
85Effect of changes in exchange rates


121



(163
)Cumulative currency translation adjustment  end of
    period

$
43


$
(78
)   10.
    FINANCIAL
    INSTRUMENTS AND COMMODITY CONTRACTS    December 31, 2009Assets


Liabilities


Net Fair ValueCurrent


Noncurrent


Current


Noncurrent(A)


Assets/(Liabilities)Derivatives designated as hedging instruments:Currency exchange contracts

$



$



$
(1
)

$
(26
)

$
(27
)Interest rate swaps






1



(9
)






(8
)Electricity swap










(5
)


(18
)


(23
)Total derivatives designated as hedging instruments






1



(15
)


(44
)


(58
)Derivatives not designated as hedging instruments:Aluminum contracts


184



9



(80
)


(1
)


112Currency exchange contracts


51



2



(16
)


(2
)


35Energy contracts










(1
)






(1
)Total derivatives not designated as hedging instruments


235



11



(97
)


(3
)


146Total derivative fair value

$
235


$
12


$
(112
)

$
(47
)

$
88   20




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  March 31, 2009Assets


Liabilities


Net Fair ValueCurrent


Noncurrent


Current


Noncurrent(A)


Assets/(Liabilities)Derivatives designated as hedging instruments:Currency exchange contracts

$



$



$



$
(11
)

$
(11
)Interest rate swaps










(13
)






(13
)Electricity swap










(6
)


(12
)


(18
)Total derivatives designated as hedging instruments










(19
)


(23
)


(42
)Derivatives not designated as hedging instruments:Aluminum contracts


99



41



(532
)


(13
)


(405
)Currency exchange contracts


20



31



(77
)


(12
)


(38
)Energy contracts










(12
)






(12
)Total derivatives not designated as hedging instruments


119



72



(621
)


(25
)


(455
)Total derivative fair value

$
119


$
72


$
(640
)

$
(48
)

$
(497
)     (A)
    
    The noncurrent portions of derivative liabilities are included
    in Other long-term liabilities in the accompanying condensed
    consolidated balance sheets.  Net
    Investment Hedges
      Cash Flow
    Hedges
     21




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
          Three
    Month Comparison:
  Amount of Gain or (Loss)Amount of Gain or (Loss)

Recognized in Income onAmount of Gain or (Loss)

Reclassified from

Derivative (Ineffective PortionRecognized in OCI on Derivative

AOCI into Income

and Amount Excluded from(Effective Portion)

(Effective Portion)

Effectiveness Testing)Three Months

Three Months

Three Months

Three Months

Three Months

Three MonthsEnded

Ended

Ended

Ended

Ended

EndedDecember 31,

December 31,

December 31,

December 31,

December 31,

December 31,2009

2008

2009

2008

2009

2008Electricity swap

$



$
(16
)

$
1


$
2


$



$
2Interest rate swaps

$
4


$
(9
)

$



$



$



$
   Nine
    Month Comparison:
  Amount of Gain or (Loss)Amount of Gain or (Loss)

Recognized in Income onAmount of Gain or (Loss)

Reclassified from

Derivative (Ineffective PortionRecognized in OCI on Derivative

AOCI into Income

and Amount Excluded from(Effective Portion)

(Effective Portion)

Effectiveness Testing)Nine Months

Nine Months

Nine Months

Nine Months

Nine Months

Nine MonthsEnded

Ended

Ended

Ended

Ended

EndedDecember 31,

December 31,

December 31,

December 31,

December 31,

December 31,2009

2008

2009

2008

2009

2008Electricity swap

$
(3
)

$
(16
)

$
3


$
10


$
2


$
2Interest rate swaps

$
5


$
2


$



$



$



$
   Derivative
    Instruments Not Designated as Hedges
     22




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
              Three Months Ended


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008Derivative Instruments Not Designated as HedgesAluminum contracts

$
26


$
(340
)

$
123


$
(495
)Currency exchange contracts


15



(48
)


66



(13
)Energy contracts


(2
)


(12
)


(2
)


(21
)Gain (loss) recognized


39



(400
)


187



(529
)Derivative Instruments Designated as Cash Flow HedgesElectricity swap


1



4



5



13Gain (loss) on change in fair value of derivative instruments,
    net

$
40


$
(396
)

$
192


$
(516
)   11.
    FAIR
    VALUE MEASUREMENTS   23




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
            December 31, 2009Fair Value Measurements UsingLevel 1

Level 2

Level 3

TotalAssets  Derivative instruments

$



$
247


$



$
247Liabilities  Derivative instruments

$



$
(132
)

$
(27
)

$
(159
)   March 31, 2009Fair Value Measurements UsingLevel 1

Level 2

Level 3

TotalAssets  Derivative instruments

$



$
191


$



$
191Liabilities  Derivative instruments

$



$
(644
)

$
(44
)

$
(688
)        24




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
    Level 3DerivativeInstruments(A)Balance as of March 31, 2009

$
(44
)Net realized/unrealized gains included in earnings(B)


17Net realized/unrealized gains included in Other comprehensive
    income(C)


(11
)Net purchases, issuances and settlements


11Net transfers in and/or (out) of Level 3


Balance as of December 31, 2009

$
(27
)     (A)
    
    Represents derivative assets net of derivative liabilities.(B)
    
    Included in (Gain) loss on change in fair value of derivative
    instruments, net.(C)
    
    Included in Change in fair value of effective portion of hedges,
    net.  Financial
    Instruments Not Recorded at Fair Value
    December 31, 2009


March 31, 2009Carrying


Fair


Carrying


FairValue


Value


Value


ValueAssetsLong-term receivables from related parties

$
23


$
21


$
23


$
21LiabilitiesLong-term debtNovelis Inc.11.50% Senior Notes, due February 2015


181



206







7.25% Senior Notes, due February 2015


1,166



1,073



1,171



454Floating rate Term Loan facility, due July 2014


293



237



295



200Unsecured credit facility  related party, due January
    2015










91



93Novelis CorporationFloating rate Term Loan facility, due July 2014


813



696



813



584Novelis Switzerland S.A.Capital lease obligation, due December 2019 (CHF 50 million)


44



39



42



36Capital lease obligation, due August 2011 (CHF 2 million)


2



1



2



2Novelis Korea LimitedBank loan, due October 2010


100



95



100



83Bank loan, due February 2010 (KRW 50 billion)


42



43



37



33Bank loan, due May 2009 (KRW 10 billion)










7



7OtherOther debt, due December 2011 through December 2012


1



1



1



1Financial commitmentsLetters of credit






196







134  25




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   12.
    OTHER
    (INCOME) EXPENSES, NET    Three Months Ended


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008Exchange (gains) losses, net

$
(2
)

$
17


$
(9
)

$
73Gains on the reversal of accrued legal claims


(3
)






(3
)


(26
)Loss on disposal of property, plant and equipment, net


1











Gain on tax litigation settlement in Brazil










(6
)


Other, net


2



3



(3
)


6Other (income) expenses, net

$
(2
)

$
20


$
(21
)

$
53   13.
    INCOME
    TAXES    Three Months Ended


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008Pre-tax income (loss) before equity in net (income) loss of
    non-consolidated affiliates and noncontrolling interests

$
121


$
(1,853
)

$
715


$
(2,064
)Canadian statutory tax rate


30
%


31
%


30
%


31
%Provision at the Canadian statutory rate


37



(575
)


215



(640
)Increase (decrease) for taxes on income (loss) resulting from:Non-deductible goodwill impairment






415







415Exchange translation items


(2
)


(64
)


18



(77
)Exchange remeasurement of deferred income taxes


5



(30
)


41



(51
)Change in valuation allowances


3



23



6



41Expense (income) items not subject to tax


(2
)


22



(6
)


28Enacted statutory tax rate changes






1







3Tax rate differences on foreign earnings


2



11



(7
)


(57
)Uncertain tax positions, net


6



1



(19
)


2Other  net


(1
)






(1
)


7Income tax provision (benefit)

$
48


$
(196
)

$
247


$
(329
)Effective tax rate


40
%


11
%


35
%


16
%    26




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
        14.
    COMMITMENTS
    AND CONTINGENCIES  Legal
    Proceedings
  Coca-Cola
    Lawsuit. Coca-Cola Coca-Cola Coca-Cola
  Environmental
    Matters
      clean-up
 27




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
      Brazil
    Tax Matters
      Guarantees
    of Indebtedness
     28




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
      Maximum

LiabilityPotential

CarryingType of Entity

Future Payment

ValueWholly-owned subsidiaries

$
43


$
6Norf

$
14


$
     15.
    SEGMENT,
    MAJOR CUSTOMER AND MAJOR SUPPLIER INFORMATION  Segment
    Information
    Adjustment to Eliminate Proportional
    Consolidation.
   29




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
    Selected
    Segment Financial Information
  North





South

CorporateTotal Assets

America

Europe

Asia

America

and Other

Eliminations

TotalDecember 31, 2009

$
2,649


$
2,984


$
854


$
1,379


$
63


$
(327
)

$
7,602March 31, 2009

$
2,973


$
2,750


$
732


$
1,296


$
50


$
(234
)

$
7,567   Comparison
    of Three Month
    Data:
  Selected Operating Results

North





South

CorporateThree Months Ended December 31, 2009

America

Europe

Asia

America

and Other

Eliminations

TotalNet sales

$
786


$
725


$
390


$
235


$



$
(24
)

$
2,112Depreciation and amortization


41



23



12



14



1



2



93Capital expenditures


12



20



5



3







(12
)


28   Selected Operating Results

North





South

CorporateThree Months Ended December 31, 2008

America

Europe

Asia

America

and Other

Eliminations

TotalNet sales

$
898


$
733


$
344


$
205


$



$
(4
)

$
2,176Depreciation and amortization


41



54



12



17



1



(18
)


107Capital expenditures


13



21



5



6







(8
)


37   Comparison
    of Nine Month
    Data:
  Selected Operating Results

North





South

CorporateNine Months Ended December 31, 2009

America

Europe

Asia

America

and Other

Eliminations

TotalNet sales

$
2,375


$
2,125


$
1,098


$
691


$



$
(36
)

$
6,253Depreciation and amortization


121



117



35



47



3



(38
)


285Capital expenditures


25



42



10



15







(18
)


74   Selected Operating Results

North





South

CorporateNine Months Ended December 31, 2008

America

Europe

Asia

America

and Other

Eliminations

TotalNet sales

$
3,092


$
3,048


$
1,312


$
800


$



$
(14
)

$
8,238Depreciation and amortization


124



171



40



53



2



(60
)


330Capital expenditures


30



57



16



21



1



(18
)


107  30




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
    Three Months Ended


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008North America

$
99


$
1


$
231


$
45Europe


60



48



153



221Asia


39



55



125



83South America


26



35



73



130Corporate and other(A)


(25
)


(11
)


(59
)


(44
)Depreciation and amortization


(93
)


(107
)


(285
)


(330
)Interest expense and amortization of debt issuance costs


(44
)


(47
)


(131
)


(138
)Interest income


2



3



8



13Unrealized gains (losses) on change in fair value of derivative
    instruments, net(B)


62



(463
)


615



(664
)Adjustment to eliminate proportional consolidation


2



(174
)


(31
)


(210
)Impairment of goodwill






(1,340
)






(1,340
)Restructuring charges, net


(1
)


(15
)


(7
)


(14
)Other costs, net


2



(4
)


11



18Income (loss) before income taxes


129



(2,019
)


703



(2,230
)Income tax provision (benefit)


48



(196
)


247



(329
)Net income (loss)


81



(1,823
)


456



(1,901
)Net income attributable to noncontrolling interests


13



(9
)


50



(7
)Net income (loss) attributable to our common shareholder

$
68


$
(1,814
)

$
406


$
(1,894
)     (A)
    
    Corporate and other includes functions that are managed directly
    from our corporate office, which focuses on strategy development
    and oversees governance, policy, legal compliance, human
    resources and finance matters. These expenses have not been
    allocated to the regions. It also includes realized gains
    (losses) on corporate derivative instruments.(B)
    
    Unrealized gains (losses) on change in fair value of derivative
    instruments, net represents the portion of gains (losses) that
    were not settled in cash during the period. Total realized and
    unrealized gains (losses) are shown in the table below and are
    included in the aggregate each period in (Gain) loss on change
    in fair value of derivative instruments, net on our condensed
    consolidated statements of operations. 31




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
     Three Months Ended


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008Realized gains (losses) included in segment income

$
(22
)

$
63


$
(424
)

$
144Realized gains (losses) on corporate derivative instruments






4



1



4Unrealized gains (losses)


62



(463
)


615



(664
)Gains (losses) on change in fair value of derivative
    instruments, net

$
40


$
(396
)

$
192


$
(516
)   Information
    about Major Customers and Primary Supplier
    Three Months Ended

Nine Months EndedDecember 31,

December 31,2009

2008

2009

2008Rexam


16
%


18
%


17
%


16
%Anheuser-Busch


10
%


9
%


11
%


7
%     Three Months Ended

Nine Months EndedDecember 31,

December 31,2009

2008

2009

2008Purchases from Rio Tinto Alcan as a percentage of total metal
    purchases in (kt)


38
%


40
%


41
%


36
%   16.
    SUPPLEMENTAL
    INFORMATION    December 31,


March 31,2009


2009Currency translation adjustment

$
43


$
(62
)Fair value of effective portion of hedges


(20
)


(19
)Pension and other benefits


(59
)


(67
)Accumulated other comprehensive loss

$
(36
)

$
(148
)     Nine Months EndedDecember 31,2009

2008Interest paid

$
92


$
101Income taxes paid

$
24


$
87  32




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   17.
    SUPPLEMENTAL
    GUARANTOR INFORMATION  Rule 3-10(h)(1) Regulation S-X,
   33




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  NOVELIS
    INC.
    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS(In millions)
  Three Months Ended December 31, 2009Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
212


$
1,659


$
623


$
(382
)

$
2,112Cost of goods sold (exclusive of depreciation and amortization
    shown below)


191



1,431



548



(382
)


1,788Selling, general and administrative expenses


16



68



15







99Depreciation and amortization






71



22







93Research and development expenses


6



3



1







10Interest expense and amortization of debt issuance costs


29



30



2



(17
)


44Interest income


(15
)


(3
)


(1
)


17



(2
)(Gain) loss on change in fair value of derivative instruments,
    net


(2
)


(35
)


(3
)






(40
)Restructuring charges, net






1











1Equity in net (income) loss of non-consolidated affiliates


(75
)


(8
)






75



(8
)Other (income) expenses, net


(9
)


12



(5
)






(2
)141



1,570



579



(307
)


1,983Income (loss) before income taxes


71



89



44



(75
)


129Income tax provision (benefit)


3



39



6







48Net income (loss)


68



50



38



(75
)


81Net income (loss) attributable to noncontrolling interests










13







13Net income (loss) attributable to our common shareholder

$
68


$
50


$
25


$
(75
)

$
68   34




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  Three Months Ended December 31, 2008Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
254


$
1,751


$
601


$
(430
)

$
2,176Cost of goods sold (exclusive of depreciation and amortization
    shown below)


252



1,648



553



(430
)


2,023Selling, general and administrative expenses


(8
)


66



15







73Depreciation and amortization


6



80



21







107Research and development expenses


8



2



1







11Interest expense and amortization of debt issuance costs


29



34



5



(21
)


47Interest income


(20
)


(3
)


(1
)


21



(3
)(Gain) loss on change in fair value of derivative instruments,
    net


1



346



49







396Impairment of goodwill






1,340











1,340Restructuring charges, net


6



8



1







15Equity in net (income) loss of non-consolidated affiliates


1,807



166







(1,807
)


166Other (income) expenses, net


9



(18
)


29







202,090



3,669



673



(2,237
)


4,195Income (loss) before income taxes


(1,836
)


(1,918
)


(72
)


1,807



(2,019
)Income tax provision (benefit)


(22
)


(167
)


(7
)






(196
)Net income (loss)


(1,814
)


(1,751
)


(65
)


1,807



(1,823
)Net income (loss) attributable to noncontrolling interests










(9
)






(9
)Net income (loss) attributable to our common shareholder

$
(1,814
)

$
(1,751
)

$
(56
)

$
1,807


$
(1,814
)  35




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  NOVELIS
    INC.
    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS(In millions)
  Nine Months Ended December 31, 2009Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
598


$
4,936


$
1,780


$
(1,061
)

$
6,253Cost of goods sold (exclusive of depreciation and amortization
    shown below)


540



4,053



1,517



(1,061
)


5,049Selling, general and administrative expenses


35



183



42







260Depreciation and amortization


2



216



67







285Research and development expenses


17



8



2







27Interest expense and amortization of debt issuance costs


84



89



7



(49
)


131Interest income


(47
)


(8
)


(2
)


49



(8
)(Gain) loss on change in fair value of derivative instruments,
    net


(5
)


(167
)


(20
)






(192
)Restructuring charges, net






5



2







7Equity in net (income) loss of non-consolidated affiliates


(380
)


12







380



12Other (income) expenses, net


(24
)


36



(33
)






(21
)222



4,427



1,582



(681
)


5,550Income (loss) before income taxes


376



509



198



(380
)


703Income tax provision (benefit)


(30
)


243



34







247Net income (loss)


406



266



164



(380
)


456Net income (loss) attributable to noncontrolling interests










50







50Net income (loss) attributable to our common shareholder

$
406


$
266


$
114


$
(380
)

$
406   36




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  Nine Months Ended December 31, 2008Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
1,038


$
6,815


$
2,204


$
(1,819
)

$
8,238Cost of goods sold (exclusive of depreciation and amortization
    shown below)


1,023



6,389



2,052



(1,819
)


7,645Selling, general and administrative expenses


(2
)


190



58







246Depreciation and amortization


18



246



66







330Research and development expenses


23



8



2







33Interest expense and amortization of debt issuance costs


86



105



20



(73
)


138Interest income


(63
)


(14
)


(9
)


73



(13
)(Gain) loss on change in fair value of derivative instruments,
    net


4



479



33







516Impairment of goodwill






1,340











1,340Restructuring charges, net


5



8



1







14Equity in net (income) loss of non-consolidated affiliates


1,857



166







(1,857
)


166Other (income) expenses, net


1



(25
)


77







532,952



8,892



2,300



(3,676
)


10,648Income (loss) before income taxes


(1,914
)


(2,077
)


(96
)


1,857



(2,230
)Income tax provision (benefit)


(20
)


(298
)


(11
)






(329
)Net income (loss)


(1,894
)


(1,779
)


(85
)


1,857



(1,901
)Net income (loss) attributable to noncontrolling interests










(7
)






(7
)Net income (loss) attributable to our common shareholder

$
(1,894
)

$
(1,779
)

$
(78
)

$
1,857


$
(1,894
)  37




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  NOVELIS
    INC.
    CONDENSED CONSOLIDATING BALANCE SHEET(In millions)
  December 31, 2009Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assetsCash and cash equivalents

$
26


$
151


$
75


$



$
252Accounts receivable, net of allowances third parties


22



655



321







998 related parties


660



207



30



(886
)


11Inventories


44



741



274







1,059Prepaid expenses and other current assets


4



29



12







45Fair value of derivative instruments


4



202



42



(13
)


235Deferred income tax assets






12



5







17Total current assets


760



1,997



759



(899
)


2,617Property, plant and equipment, net


140



2,049



525







2,714Goodwill






600



11







611Intangible assets, net






760



8







768Investments in and advances to non-consolidated affiliates


2,024



757







(2,024
)


757Fair value of derivative instruments, net of current portion


1



11



3



(3
)


12Deferred income tax assets


1



2



1







4Other long-term assets


1,022



208



77



(1,188
)


119Total assets

$
3,948


$
6,384


$
1,384


$
(4,114
)

$
7,602LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
3


$
3


$
143


$



$
149Short-term borrowings third parties






48



13







61 related parties


13



462



19



(494
)


Accounts payable third parties


36



498



284







818 related parties


51



272



112



(391
)


44Fair value of derivative instruments


8



96



21



(13
)


112Accrued expenses and other current liabilities


72



266



88



(1
)


425Deferred income tax liabilities






39











39Total current liabilities


183



1,684



680



(899
)


1,648Long-term debt, net of current portion third parties


1,636



856



1







2,493 related parties


118



970



100



(1,188
)


Deferred income tax liabilities






487



14







501Accrued postretirement benefits


32



372



118







522Other long-term liabilities


42



314



5



(3
)


358Total liabilities


2,011



4,683



918



(2,090
)


5,522Commitments and contingenciesShareholders equityCommon stock


















Additional paid-in capital


3,497















3,497Retained earnings/(accumulated deficit)/owners net
    investment


(1,524
)


1,731



425



(2,156
)


(1,524
)Accumulated other comprehensive income (loss)


(36
)


(30
)


(102
)


132



(36
)Total Novelis shareholders equity


1,937



1,701



323



(2,024
)


1,937Noncontrolling interests










143







143Total equity


1,937



1,701



466



(2,024
)


2,080Total liabilities and shareholders equity

$
3,948


$
6,384


$
1,384


$
(4,114
)

$
7,602  38




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  NOVELIS
    INC.
    CONDENSED CONSOLIDATING BALANCE SHEET(In millions)
  March 31, 2009Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assetsCash and cash equivalents

$
3


$
175


$
70


$



$
248Accounts receivable, net of allowances third parties


21



761



267







1,049 related parties


411



183



32



(601
)


25Inventories


31



523



239







793Prepaid expenses and other current assets


4



31



16







51Fair value of derivative instruments






145



7



(33
)


119Deferred income tax assets






192



24







216Total current assets


470



2,010



655



(634
)


2,501Property, plant and equipment, net


162



2,146



491







2,799Goodwill






570



12







582Intangible assets, net






787











787Investments in and advances to non-consolidated affiliates


1,647



719







(1,647
)


719Fair value of derivative instruments, net of current portion






46



28



(2
)


72Deferred income tax assets


1



3











4Other long-term assets


1,028



207



96



(1,228
)


103Total assets

$
3,308


$
6,488


$
1,282


$
(3,511
)

$
7,567LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
3


$
4


$
44


$



$
51Short-term borrowings third parties






231



33







264 related parties


7



330



22



(359
)


Accounts payable third parties


33



458



234







725 related parties


41



157



90



(240
)


48Fair value of derivative instruments


7



540



126



(33
)


640Accrued expenses and other current liabilities


34



395



90



(3
)


516Deferred income tax liabilities


















Total current liabilities


125



2,115



639



(635
)


2,244Long-term debt, net of current portion third parties


1,464



852



101







2,417 related parties


223



976



120



(1,228
)


91Deferred income tax liabilities






459



10







469Accrued postretirement benefits


27



346



122







495Other long-term liabilities


50



288



5



(1
)


342Total liabilities


1,889



5,036



997



(1,864
)


6,058Commitments and contingenciesShareholders equityCommon stock


















Additional paid-in capital


3,497















3,497Retained earnings/(accumulated deficit)/owners net
    investment


(1,930
)


1,533



325



(1,858
)


(1,930
)Accumulated other comprehensive income (loss)


(148
)


(81
)


(130
)


211



(148
)Total Novelis shareholders equity


1,419



1,452



195



(1,647
)


1,419Noncontrolling interests










90







90Total equity


1,419



1,452



285



(1,647
)


1,509Total liabilities and shareholders equity

$
3,308


$
6,488


$
1,282


$
(3,511
)

$
7,567  39




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  NOVELIS
    INC.
    CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS(In millions)
  Nine Months Ended December 31, 2009Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedOPERATING ACTIVITIESNet cash provided by (used in) operating activities

$
9


$
449


$
172


$



$
630INVESTING ACTIVITIESCapital expenditures


(3
)


(52
)


(19
)






(74
)Proceeds from sales of property, plant and equipment










4







4Changes to investment in and advances to non-consolidated
    affiliates






3











3Proceeds from loans receivable, net  related parties






15











15Net proceeds from settlement of derivative instruments


(2
)


(327
)


(103
)






(432
)Net cash provided by (used in) investing activities


(5
)


(361
)


(118
)






(484
)FINANCING ACTIVITIESProceeds from issuance of debt  third party


177















177Proceeds from issuance of debt  related party


4















4Principal payments third parties


(2
)


(10
)


(8
)






(20
) related parties


(165
)


(51
)


(13
)


134



(95
)Short-term borrowings, net third parties






(188
)


(23
)






(211
) related parties


6



132



(4
)


(134
)


Debt issuance costs


(1
)














(1
)Dividends  noncontrolling interests










(13
)






(13
)Net cash provided by (used in) financing activities


19



(117
)


(61
)






(159
)Net increase (decrease) in cash and cash equivalents


23



(29
)


(7
)






(13
)Effect of exchange rate changes on cash balances held in
    foreign currencies






5



12







17Cash and cash equivalents  beginning of period


3



175



70







248Cash and cash equivalents  end of period

$
26


$
151


$
75


$



$
252  40




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  NOVELIS
    INC.
    CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS(In millions)
  Nine Months Ended December 31, 2008Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedOPERATING ACTIVITIESNet cash provided by (used in) operating activities

$
(12
)

$
(388
)

$
146


$
(160
)

$
(414
)INVESTING ACTIVITIESCapital expenditures


(5
)


(74
)


(28
)






(107
)Proceeds from sales of property, plant and equipment


2



1



1







4Changes to investment in and advances to non-consolidated
    affiliates






17











17Proceeds from loans receivable, net  related parties






18











18Net proceeds from settlement of derivative instruments


4



84



72







160Net cash provided by (used in) investing activities


1



46



45







92FINANCING ACTIVITIESProceeds from issuance of new debt










8







8Principal payments third parties


(2
)


(8
)


(1
)






(11
) related parties






(89
)


(243
)


332



Short-term borrowings, net third parties






180



13







193 related parties


4



174



(6
)


(172
)


Dividends  noncontrolling interests










(5
)






(5
)Net cash provided by (used in) financing activities


2



257



(234
)


160



185Net increase (decrease) in cash and cash equivalents


(9
)


(85
)


(43
)






(137
)Effect of exchange rate changes on cash balances held in
    foreign currencies






(2
)


(11
)






(13
)Cash and cash equivalents  beginning of period


12



177



137







326Cash and cash equivalents  end of period

$
3


$
90


$
83


$



$
176  41




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  FORWARD
    LOOKING STATEMENTS
  The following information should be read together with our
    unaudited condensed consolidated financial statements and
    accompanying notes included elsewhere in this quarterly report
    for a more complete understanding of our financial condition and
    results of operations. The following discussion contains
    forward-looking statements that reflect our plans, estimates and
    beliefs. Our actual results could differ materially from those
    discussed in these forward-looking statements. Factors that
    could cause or contribute to these differences include, but are
    not limited to, those discussed below, particularly in
    SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND
    MARKET DATA.
  OVERVIEW
    AND REFERENCES
        Form 10-K Form 10-K Form 8-K
    HIGHLIGHTS
    
    We reported pre-tax income of $129 million for the three
    months ended December 31, 2009, as compared to pre-tax loss
    of $2.02 billion for the three months ended
    December 31, 2008. The prior year includes non-cash
    impairment charges of $1.5 billion, unrealized losses on
    derivative instruments of $463 million and restructuring
    charges of $15 million. The current quarter results include
    $62 million of unrealized gains on derivatives and
    $1 million in restructuring charges. 42




---



##### Table of Contents




    We reported pre-tax income of $703 million for the nine
    months ended December 31, 2009, as compared to pre-tax loss
    of $2.23 billion million for the nine months ended
    December 31, 2008. As noted above, the prior year includes
    $1.5 billion of impairment charges. Current year results
    include $615 million of unrealized gains on derivatives
    reflecting gains in metal and currency derivatives as compared
    to $664 million of losses in the prior year. The
    $615 million of unrealized gains includes a
    $489 million reversal of previously recognized losses upon
    settlement of derivatives and $126 million of unrealized
    gains relating to mark to market adjustments. The results for
    the nine months ended December 31, 2008 also include a
    $26 million gain on the reversal of a legal claim and
    $14 million in restructuring charges, while the nine months
    ended December 31, 2009 includes $9 million in gains
    related to the reversal of accrued tax and legal claims and
    $7 million in restructuring charges.
    For the first time this year, overall shipments were higher than
    the comparable three month period a year ago due to strong
    demand in Asia. However, shipments are down 8% from the
    comparable nine month period due to more favorable conditions in
    the first half of fiscal 2009. Shipments are down 6% from the
    second quarter of fiscal year 2010 as our third quarter activity
    traditionally reflects market seasonality in the can business,
    holiday shutdowns and scheduled maintenance.  BUSINESS
    AND INDUSTRY CLIMATE
   43




---



##### Table of Contents



Key
    Sales and Shipment Trends
  Three Months Ended


Year Ended


Three Months EndedJune 30,


September 30,


December 31,


March 31,


March 31,


June 30,


September 30,


December 31,2008


2008


2008


2009


2009


2009


2009


2009(In millions, excepts shipments which are in kt)Net sales

$
3,103


$
2,959


$
2,176


$
1,939


$
10,177


$
1,960


$
2,181


$
2,112Percentage increase (decrease) in net sales versus comparable
    previous year period


10
%


5
%


(20
)%


(32
)%


(10
)%


(37
)%


(26
)%


(3
)%Rolled product shipments:North America


286



293



242



246



1,067



254



258



243Europe


271



254



197



188



910



185



203



188Asia


133



122



106



86



447



130



139



134South America


87



87



87



85



346



81



93



84Total


777



756



632



605



2,770



650



693



649Beverage and food cans


417



416



363



361



1,557



395



407



372All other rolled products


360



340



269



244



1,213



255



286



277Total


777



756



632



605



2,770



650



693



649Percentage increase (decrease)
    in rolled products shipments versus
    comparable previous year period:North America


3
%


5
%


(10
)%


(11
)%


(3
)%


(11
)%


(12
)%



%Europe


(5
)%


(8
)%


(19
)%


(30
)%


(15
)%


(32
)%


(20
)%


(5
)%Asia


13
%


5
%


(21
)%


(30
)%


(9
)%


(2
)%


14
%


26
%South America


16
%


13
%


5
%


(2
)%


7
%


(7
)%


7
%


(3
)%Total


3
%


1
%


(13
)%


(20
)%


(7
)%


(16
)%


(8
)%


3
%Beverage and food cans


11
%


9
%


(6
)%


(7
)%


2
%


(5
)%


(2
)%


2
%All other rolled products


(5
)%


(7
)%


(22
)%


(33
)%


(17
)%


(29
)%


(16
)%


3
%Total


3
%


1
%


(13
)%


(20
)%


(7
)%


(16
)%


(8
)%


3
%       Business
    Model and Key Concepts
   44




---



##### Table of Contents



Three Months Ended





Nine Months EndedDecember 31,


Percent


December 31,


Percent2009


2008


Change


2009


2008


ChangeLondon Metal Exchange PricesAluminum (per metric tonne, and presented in U.S. dollars):Closing cash price as of beginning of period

$
1,850


$
2,395



(23
)%

$
1,365


$
2,935



(53
)%Average cash price during the period

$
2,000


$
1,830



9
%

$
1,769


$
2,520



(30
)%Closing cash price as of end of period

$
2,206


$
1,455



52
%

$
2,206


$
1,455



52
%       
    Our products have a price structure based upon the LME price.
    Increases or decreases in the LME price have a direct impact on
    net sales, cost of goods sold (exclusive of depreciation and
    amortization) and working capital, albeit on a lag basis.
    We pay cash to brokers to settle derivative contracts in advance
    of billing and collecting cash from our customers, which
    negatively impacts our liquidity position. The lag between
    derivative settlement and customer collection typically ranges
    from 30 to 60 days, which temporarily reduces our liquidity
    in periods following declines in LME. During the nine months
    ended December 31, 2009, we had net outflows of
    $432 million for payments related to the settlement of
    derivatives.    Metal
    Price Lag
   45




---



##### Table of Contents



Metal
    Price Ceilings
          Foreign
    Exchange Impact
    Exchange Rate as of


Average Exchange RateDecember 31,


March 31,


Three Months Ended


Nine Months Ended2009


2009


December 31, 2009


December 31, 2009U.S. dollar per Euro


1.435



1.328



1.470



1.429Brazilian real per U.S. dollar


1.743



2.301



1.774



1.874South Korean won per U.S. dollar


1,168



1,377



1,179



1,235Canadian dollar per U.S. dollar


1.048



1.258



1.060



1.098   Exchange Rate as of


Average Exchange RateDecember 31,


March 31,


Three Months Ended


Nine Months Ended,2008


2008


December 31, 2008


December 31, 2008U.S. dollar per Euro


1.392



1.581



1.310



1.450Brazilian real per U.S. dollar


2.313



1.744



2.248



1.865South Korean won per U.S. dollar


1,262



989



1,336



1,155Canadian dollar per U.S. dollar


1.224



1.028



1.225



1.094  46




---



##### Table of Contents



RESULTS
    OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2009
    COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 2008
        Segment
    Review
     47




---



##### Table of Contents



Selected Operating Results

North








SouthThree Months Ended December 31, 2009

America


Europe


Asia


America


Eliminations


TotalNet sales

$
786


$
725


$
390


$
235


$
(24
)

$
2,112Shipments (kt)Rolled products


243



188



134



84







649Ingot products


11



16







7







34Total shipments


254



204



134



91







683   Selected Operating Results

North








SouthThree Months Ended December 31, 2008

America


Europe


Asia


America


Eliminations


TotalNet sales

$
898


$
733


$
344


$
205


$
(4
)

$
2,176Shipments (kt)Rolled products


242



197



106



87







632Ingot products


8



13



1



4







26Total shipments


250



210



107



91







658     North








SouthChanges in Segment income

America


Europe


Asia


AmericaSegment income  three months ended December 31,
    2008

$
1


$
48


$
55


$
35Volume:Rolled products


(4
)


(11
)


11



(2
)Other


2



4



(1
)


Conversion premium and product mix


24



9



12



18Conversion costs(A)


22



6



11



2Metal price lag


33



4



(33
)


2Foreign exchange


11



(16
)


(10
)


(13
)Other changes(B)


10



16



(6
)


(16
)Segment income  three months ended December 31,
    2009

$
99


$
60


$
39


$
26     (A)
    
    Conversion costs include expenses incurred in production such
    as direct and indirect labor, energy, freight, scrap usage,
    alloys and hardeners, coatings, alumina and melt loss.
    Fluctuations in this component reflect cost efficiencies during
    the period as well as cost inflation (deflation).(B)
    
    Other changes include selling, general &
    administrative costs and research and development for all
    segments and certain other items which impact one or more
    regions, including such items as the impact of purchase
    accounting and metal price ceiling contracts. Significant
    fluctuations in these items are discussed below.  North
    America
     48




---



##### Table of Contents



Europe
        Asia
       49




---



##### Table of Contents



South
    America
        Reconciliation
    of segment results to Net income
    Three MonthsEndedDecember 31,2009


2008North America

$
99


$
1Europe


60



48Asia


39



55South America


26



35Corporate and other


(25
)


(11
)Depreciation and amortization


(93
)


(107
)Interest expense and amortization of debt issuance costs


(44
)


(47
)Interest income


2



3Unrealized gains (losses) on change in fair value of derivative
    instruments, net


62



(463
)Adjustment to eliminate proportional consolidation


2



(174
)Impairment of goodwill






(1,340
)Restructuring charges, net


(1
)


(15
)Other costs, net


2



(4
)Income (loss) before income taxes


129



(2,019
)Income tax provision (benefit)


48



(196
)Net income (loss)


81



(1,823
)Net income (loss) attributable to noncontrolling interests


13



(9
)Net income (loss) attributable to our common shareholder

$
68


$
(1,814
)  50




---



##### Table of Contents




    Our functional currency in Canada and Brazil is the
    U.S. dollar and the company holds significant
    U.S. dollar denominated debt in these locations. As the
    value of the local currencies strengthens and weakens against
    the U.S. dollar, unrealized gains or losses are created in
    those locations for tax purposes, while the underlying gains or
    losses are not recorded in our income statement.    
    We have significant net deferred tax liabilities in Brazil that
    are remeasured to account for currency fluctuations as the taxes
    are payable in local currency.
    Our income is taxed at various statutory tax rates in varying
    jurisdictions. Applying the corresponding amounts of income and
    loss to the various tax rates results in differences when
    compared to our Canadian statutory tax rate.   51




---



##### Table of Contents



RESULTS
    OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2009
    COMPARED TO THE NINE MONTHS ENDED DECEMBER 31, 2008
        Segment
    Review
    Selected Operating Results

North








SouthNine Months Ended December 31, 2009

America


Europe


Asia


America


Eliminations


TotalNet sales

$
2,375


$
2,125


$
1,098


$
691


$
(36
)

$
6,253Shipments (kt)Rolled products


755



576



403



258







1,992Ingot products


26



58



1



21







106Total shipments


781



634



404



279







2,098   52




---



##### Table of Contents



Selected Operating Results

North








SouthNine Months Ended December 31, 2008

America


Europe


Asia


America


Eliminations


TotalNet sales

$
3,092


$
3,048


$
1,312


$
800


$
(14
)

$
8,238Shipments (kt)Rolled products


821



722



361



261







2,165Ingot products


31



68



12



15







126Total shipments


852



790



373



276







2,291     North








SouthChanges in Segment income

America


Europe


Asia


AmericaSegment income  nine months ended December 31,
    2008

$
45


$
221


$
83


$
130Volume:Rolled products


(46
)


(142
)


14



(5
)Other


2



2



(2
)


2Conversion premium and product mix


52



77



33



43Conversion costs(A)


66



35



38



8Metal price lag


85



(68
)


(75
)


(5
)Foreign exchange


23



19



32



(22
)Other changes(B)


4



9



2



(78
)Segment income  nine months ended December 31,
    2009

$
231


$
153


$
125


$
73     (A)
    
    Conversion costs include expenses incurred in production such
    as direct and indirect labor, energy, freight, scrap usage,
    alloys and hardeners, coatings, alumina and melt loss.
    Fluctuations in this component reflect cost efficiencies during
    the period as well as cost inflation (deflation).(B)
    
    Other changes include selling, general &
    administrative costs and research and development for all
    segments and certain other items which impact one or more
    regions, including such items as the impact of purchase
    accounting and metal price ceiling contracts. Significant
    fluctuations in these items are discussed below.  North
    America
      Europe
   53




---



##### Table of Contents



Asia
      South
    America
     54




---



##### Table of Contents



Reconciliation
    of segment results to Net income
    Nine Months EndedDecember 31,2009


2008North America

$
231


$
45Europe


153



221Asia


125



83South America


73



130Corporate and other


(59
)


(44
)Depreciation and amortization


(285
)


(330
)Interest expense and amortization of debt issuance costs


(131
)


(138
)Interest income


8



13Unrealized gains (losses) on change in fair value of derivative
    instruments, net


615



(664
)Adjustment to eliminate proportional consolidation


(31
)


(210
)Impairment of goodwill






(1,340
)Restructuring charges, net


(7
)


(14
)Other costs, net


11



18Income (loss) before income taxes


703



(2,230
)Income tax provision (benefit)


247



(329
)Net income (loss)


456



(1,901
)Net income (loss) attributable to noncontrolling interests


50



(7
)Net income (loss) attributable to our common shareholder

$
406


$
(1,894
)            55




---



##### Table of Contents



LIQUIDITY
    AND CAPITAL RESOURCES
       56




---



##### Table of Contents



Available
    Liquidity
    December 31,


March 31,2009


2009Cash and cash equivalents

$
252


$
248Overdrafts


(13
)


(11
)Gross availability under the ABL facility


475



233Borrowing availability limitation due to fixed charge coverage
    ratio


(80
)


(80
)Total estimated liquidity

$
634


$
390       Operating
    Activities
   57




---



##### Table of Contents



Nine Months EndedDecember 31,2009


2008


ChangeNet cash provided by (used in) operating activities

$
630


$
(414
)

$
1,044Net cash provided by (used in) investing activities


(484
)


92



(576
)Less: Proceeds from sales of assets


(4
)


(4
)


Free cash flow

$
142


$
(326
)

$
468Ending cash and cash equivalents

$
252


$
176


$
76       Investing
    Activities
    Nine Months EndedDecember 31,2009


2008


ChangeCapital expenditures

$
(74
)

$
(107
)

$
33Net proceeds (outflow) from settlement of derivative instruments


(432
)


160



(592
)Proceeds from sales of assets


4



4



Changes to investment in and advances to non-consolidated
    affiliates


3



17



(14
)Proceeds from related parties loans receivable, net


15



18



(3
)Net cash provided by (used in) investing activities

$
(484
)

$
92


$
(576
)      58




---



##### Table of Contents



Financing
    Activities
    Nine Months EndedDecember 31,2009


2008


ChangeProceeds from issuance of debt, third parties

$
177


$
8


$
169Proceeds from issuance of debt, related parties


4







4Principal payments, third parties


(20
)


(11
)


(9
)Principal payments, related parties


(95
)






(95
)Short-term borrowings, net


(211
)


193



(404
)Dividends, noncontrolling interest


(13
)


(5
)


(8
)Debt issuance costs


(1
)






(1
)Net cash provided by (used in) financing activities

$
(159
)

$
185


$
(344
)            59




---



##### Table of Contents



OFF-BALANCE
    SHEET ARRANGEMENTS
    
    any obligation under certain derivative instruments;
    any obligation under certain guarantees or contracts;
    a retained or contingent interest in assets transferred to an
    unconsolidated entity or similar entity or similar arrangement
    that serves as credit, liquidity or market risk support to that
    entity for such assets; and
    any obligation under a material variable interest held by the
    registrant in an unconsolidated entity that provides financing,
    liquidity, market risk or credit risk support to the registrant,
    or engages in leasing, hedging or research and development
    services with the registrant.    Derivative
    Instruments
    December 31, 2009Assets


Liabilities


Net Fair ValueCurrent


Noncurrent


Current


Noncurrent(A)


Assets/(Liabilities)Derivatives designated as hedging instruments:Currency exchange contracts

$



$



$
(1
)

$
(26
)

$
(27
)Interest rate swaps






1



(9
)






(8
)Electricity swap










(5
)


(18
)


(23
)Total derivatives designated as hedging instruments






1



(15
)


(44
)


(58
)Derivatives not designated as hedging instruments:Aluminum contracts


184



9



(80
)


(1
)


112Currency exchange contracts


51



2



(16
)


(2
)


35Energy contracts










(1
)






(1
)Total derivatives not designated as hedging instruments


235



11



(97
)


(3
)


146Total derivative fair value

$
235


$
12


$
(112
)

$
(47
)

$
88   60




---



##### Table of Contents



March 31, 2009Assets


Liabilities


Net Fair ValueCurrent


Noncurrent


Current


Noncurrent(A)


Assets/(Liabilities)Derivatives designated as hedging instruments:Currency exchange contracts

$



$



$



$
(11
)

$
(11
)Interest rate swaps










(13
)






(13
)Electricity swap










(6
)


(12
)


(18
)Total derivatives designated as hedging instruments










(19
)


(23
)


(42
)Derivatives not designated as hedging instruments:Aluminum contracts


99



41



(532
)


(13
)


(405
)Currency exchange contracts


20



31



(77
)


(12
)


(38
)Energy contracts










(12
)






(12
)Total derivatives not designated as hedging instruments


119



72



(621
)


(25
)


(455
)Total derivative fair value

$
119


$
72


$
(640
)

$
(48
)

$
(497
)     (A)
    
    The noncurrent portions of derivative liabilities are included
    in Other long-term liabilities in the accompanying condensed
    consolidated balance sheets.  Net
    Investment Hedges
      Cash Flow
    Hedges
     61




---



##### Table of Contents



Three Month Comparison:
  Amount of Gain or (Loss)Amount of Gain or (Loss)

Recognized in Income onAmount of Gain or (Loss)

Reclassified from Accumulated

Derivative (Ineffective PortionRecognized in OCI on Derivative

OCI into Income

and Amount Excluded from(Effective Portion)

(Effective Portion)

Effectiveness Testing)Three Months

Three Months

Three Months

Three Months

Three Months

Three MonthsEnded

Ended

Ended

Ended

Ended

EndedDecember 31,

December 31,

December 31,

December 31,

December 31,

December 31,2009

2008

2009

2008

2009

2008Electricity swap

$



$
(16
)

$
1


$
2


$



$
2Interest rate swaps

$
4


$
(9
)

$



$



$



$
   Nine
    Month Comparison:
  Amount of Gain or (Loss)Amount of Gain or (Loss)

Recognized in Income onAmount of Gain or (Loss)

Reclassified from Accumulated

Derivative (Ineffective PortionRecognized in OCI on Derivative

OCI into Income

and Amount Excluded from(Effective Portion)

(Effective Portion)

Effectiveness Testing)Nine Months

Nine Months

Nine Months

Nine Months

Nine Months

Nine MonthsEnded

Ended

Ended

Ended

Ended

EndedDecember 31,

December 31,

December 31,

December 31,

December 31,

December 31,2009

2008

2009

2008

2009

2008Electricity swap

$
(3
)

$
(16
)

$
3


$
10


$
2


$
2Interest rate swaps

$
5


$
2


$



$



$



$
   Derivative
    Instruments Not Designated as Hedges
     62




---



##### Table of Contents



Three Months Ended


Nine Months EndedDecember 31,


December 31,2009


2008


2009


2008Derivative Instruments Not Designated as HedgesAluminum contracts

$
26


$
(340
)

$
123


$
(495
)Currency exchange contracts


15



(48
)


66



(13
)Energy contracts


(2
)


(12
)


(2
)


(21
)Gain (loss) recognized


39



(400
)


187



(529
)Derivative Instruments Designated as Cash Flow HedgesElectricity swap


1



4



5



13Gain (loss) on change in fair value of derivative instruments,
    net

$
40


$
(396
)

$
192


$
(516
)   Guarantees
    of Indebtedness
    
    certain of our wholly-owned and majority-owned
    subsidiaries; and
    Aluminium Norf GmbH, which is a fifty percent (50%) owned joint
    venture that does not meet the requirements for consolidation.     63




---



##### Table of Contents



Maximum

LiabilityPotential Future

CarryingType of Entity

Payment

ValueWholly-owned subsidiaries

$
43


$
6Aluminium Norf GmbH

$
14


$
     Other
    CONTRACTUAL
    OBLIGATIONS
  Form 10-K
  DIVIDENDS
    CRITICAL
    ACCOUNTING POLICIES AND ESTIMATES
  Form 10-K
  RECENT
    ACCOUNTING STANDARDS
  Recently
    Adopted Accounting Standards
    Measuring Liabilities at Fair
    Value Fair Value
    Measurements
 64




---



##### Table of Contents



Subsequent
    Events Subsequent Events
  Consolidation Noncontrolling Interests in
    Consolidated Financial Statements
  Intangibles  Goodwill and Other No. FAS 142-3, Determination of Useful Life of Intangible Assets
  Fair Value
    Measurements and Disclosures No. 107-1 28-1, Interim Disclosures about Fair Value of Financial
    Instruments; No. 157-4, Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly
  Business
    Combinations Business Combinations; Accounting for
    Assets Acquired and Liabilities Assumed in a Business
    Combination That Arise from Contingencies
 65




---



##### Table of Contents



Investments  Equity Method and Joint Ventures No. 08-06, Equity Method Investment Accounting Considerations)
  Recently
    Issued Accounting Standards
    Amendments to FASB Interpretation No. 46(R) Accounting for Transfers of Financial Assets
  Compensation  Retirement Benefits Employers Disclosures about Postretirement Benefit Plan
    Assets
    SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS AND MARKET
    DATA
   66




---



##### Table of Contents



Form 10-Q
    
    the level of our indebtedness and our ability to generate cash;
    changes in the prices and availability of aluminum (or premiums
    associated with such prices) or other materials and raw
    materials we use;
    the capacity and effectiveness of our metal hedging activities,
    including our internal used beverage cans (UBCs) and smelter
    hedges;
    relationships with, and financial and operating conditions of,
    our customers, suppliers and other stakeholders;
    fluctuations in the supply of, and prices for, energy in the
    areas in which we maintain production facilities;
    our ability to access financing for future capital requirements;
    continuing obligations and other relationships resulting from
    our spin-off from Rio Tinto Alcan;
    changes in the relative values of various currencies and the
    effectiveness of our currency hedging activities;
    factors affecting our operations, such as litigation,
    environmental remediation and
    clean-up
    costs, labor relations and negotiations, breakdown of equipment
    and other events;
    the impact of restructuring efforts in the future;
    economic, regulatory and political factors within the countries
    in which we operate or sell our products, including changes in
    duties or tariffs;
    competition from other aluminum rolled products producers as
    well as from substitute materials such as steel, glass, plastic
    and composite materials;
    changes in general economic conditions including further
    deterioration in the global economy, particularly sectors in
    which our customers operate;
    our ability to improve and maintain effective internal control
    over financial reporting and disclosure controls and procedures
    in the future;
    changes in the fair value of derivative instruments; 67




---



##### Table of Contents




    cyclical demand and pricing within the principal markets for our
    products as well as seasonality in certain of our
    customers industries;
    changes in government regulations, particularly those affecting
    taxes, environmental, health or safety compliance;
    changes in interest rates that have the effect of increasing the
    amounts we pay under our principal credit agreement and other
    financing agreements; and
    the effect of taxes and changes in tax rates.  Form 10-Q Form 10-Q Form 10-K
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  marked-to-market
      Commodity
    Price Risks
    Aluminum
       68




---



##### Table of Contents



Sensitivities
    Energy
            Sensitivities
    Change in

Change inPrice

Fair ValueElectricity


(10
)%

$
(2
)Natural Gas


(10
)%


(2
)Heating Oil


(10
)%


   Foreign
    Currency Exchange Risks
   69




---



##### Table of Contents



non-U.S. dollar
      Sensitivities
    Change in

Change inExchange Rate

Fair ValueCurrency measured against the U.S. dollarBrazilian real


(10
)%

$
(31
)Euro


10
%


(23
)Korean won


10
%


(4
)Canadian dollar


(10
)%


(1
)British pound


10
%


1Swiss franc


10
%


(8
)       Interest
    Rate Risks
     70




---



##### Table of Contents



Sensitivities
    Change in

Change inRate

Fair ValueInterest Rate ContractsNorth America


(10
)%

$
8Asia


(10
)%


   Item 4.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Form 10-Q Rule 13a-15(e)
  Changes
    in Internal Control Over Financial Reporting
    Rule 13a-15(f)
 71




---



##### Table of Contents



Material
    Weakness Existing as of December 31, 2009 and Remediation
    Plan
  Form 10-K/A Forms 10-Q Forms 10-K
             72




---



##### Table of Contents



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Coca-Cola
    Lawsuit. Coca-Cola Coca-Cola Coca-Cola
  Item 6.
    Exhibits  ExhibitNo.

Description2
.1

Arrangement Agreement by and among Hindalco Industries Limited,
    AV Aluminum Inc. and Novelis Inc., dated as of February 10,
    2007 (incorporated by reference to Exhibit 2.1 to our
    Current Report on
    Form 8-K
    filed on February 13, 2007) (File
    No. 001-32312))3
.1

Restated Certificate and Articles of Incorporation of Novelis
    Inc. (incorporated by reference to Exhibit 3.1 to the
    Form 8-K
    filed by Novelis Inc. on January 7, 2005 (File
    No. 001-32312))3
.2

Amended and Restated Bylaws, adopted as of July 24, 2008
    (incorporated by reference to Exhibit 3.2 to the
    Form 8-K
    filed by Novelis Inc. on July 25, 2008 (File
    No. 001-32312))4
.1

Indenture, relating to the
    111/2% Senior
    Notes due 2015, dated as of August 11, 2009, between
    Novelis Inc., the guarantors named on the signature pages
    thereto and The Bank of New York Mellon Trust Company,
    N.A., as trustee (incorporated by reference to Exhibit 4.1
    to our Current Report on
    Form 8-K
    filed on August 17, 2009).4
.2

Form of
    111/2% Senior
    Notes due 2015 (included in Exhibit 4.1).31
.1

Section 302 Certification of Principal Executive Officer31
.2

Section 302 Certification of Principal Financial Officer32
.1

Section 906 Certification of Principal Executive Officer32
.2

Section 906 Certification of Principal Financial Officer  73




---



##### Table of Contents



SIGNATURES
      By:
    /s/  Steven
    Fisher       By
    /s/  Robert
    P. Nelson       74




---



##### Table of Contents



EXHIBIT INDEX
  ExhibitNo.

Description2
.1

Arrangement Agreement by and among Hindalco Industries Limited,
    AV Aluminum Inc. and Novelis Inc., dated as of February 10,
    2007 (incorporated by reference to Exhibit 2.1 to our
    Current Report on
    Form 8-K
    filed on February 13, 2007) (File
    No. 001-32312))3
.1

Restated Certificate and Articles of Incorporation of Novelis
    Inc. (incorporated by reference to Exhibit 3.1 to the
    Form 8-K
    filed by Novelis Inc. on January 7, 2005 (File
    No. 001-32312))3
.2

Amended and Restated Bylaws, adopted as of July 24, 2008
    (incorporated by reference to Exhibit 3.2 to the
    Form 8-K
    filed by Novelis Inc. on July 25, 2008 (File
    No. 001-32312))4
.1

Indenture, relating to the
    111/2% Senior
    Notes due 2015, dated as of August 11, 2009, between
    Novelis Inc., the guarantors named on the signature pages
    thereto and The Bank of New York Mellon Trust Company,
    N.A., as trustee (incorporated by reference to Exhibit 4.1
    to our Current Report on
    Form 8-K
    filed on August 17, 2009).4
.2

Form of
    111/2% Senior
    Notes due 2015 (included in Exhibit 4.1).31
.1

Section 302 Certification of Principal Executive Officer31
.2

Section 302 Certification of Principal Financial Officer32
.1

Section 906 Certification of Principal Executive Officer32
.2

Section 906 Certification of Principal Financial Officer  75