##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, 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
    March 31, 2006oro

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

30326(Zip Code)(Address of principal executive
    offices)    Telephone:
    (404) 814-4200
 (Registrants telephone
    number, including area code)
  o þ
  Rule 12b-2
  o o þ
  Rule 12b-2 o þ




---



##### 



TABLE OF
    CONTENTS
  
  PART I.


FINANCIAL
    INFORMATIONItem 1.


Financial
    Statements


2Condensed
    Consolidated and Combined Statements of Income (Loss) and
    Comprehensive Income (Loss) (unaudited)
    Three Months Ended March 31, 2006 and March 31,
    2005


2Condensed
    Consolidated Balance Sheets
    As of March 31, 2006 (unaudited) and December 31,
    2005


3Condensed
    Consolidated and Combined Statements of Cash Flows
    (unaudited)
    Three Months Ended March 31, 2006 and March 31,
    2005


4Condensed
    Consolidated Statement of Shareholders Equity
    (unaudited)
    Three Months Ended March 31, 2006


6Notes to the
    Condensed Consolidated and Combined Financial Statements
    (unaudited)


7Item 2.


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


38Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


58Item 4.


Controls and
    Procedures


61PART II.


OTHER
    INFORMATIONItem 1.


Legal
    Proceedings


66Item 6.


Exhibits


66EX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32.1 SECTION 906 CERTIFICATION OF CEOEX-32.2 SECTION 906 CERTIFICATION OF CFO   1




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##### Table of Contents



PART I.
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  Novelis
    Inc.
  CONDENSED CONSOLIDATED AND COMBINED STATEMENTS
    OF INCOME (LOSS) AND
 COMPREHENSIVE INCOME (LOSS) (unaudited)
 (in millions, except per share amounts)
  Three Months EndedMarch 31,2006


2005Net sales

$
2,319


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


2,135



1,884Selling, general and
    administrative expenses


92



88Depreciation and amortization


58



59Research and development expenses


9



8Restructuring charges
    (recoveries)  net


1



(2
)Interest expense and amortization
    of debt issuance costs  net


48



54Equity in net income of
    non-consolidated affiliates


(3
)


(2
)Other income  net


(49
)


(34
)2,291



2,055Income before provision for taxes
    on income and minority interests share


28



57Provision for taxes on income


102



30Income (loss) before minority
    interests share


(74
)


27Minority interests share






(5
)Net income (loss)


(74
)


22Other comprehensive income
    (loss)  net of taxCurrency translation adjustment


37



(53
)Change in minimum pension liability






(13
)Change in cash flow currency hedge


(7
)


Other comprehensive income
    (loss)  net of tax


30



(66
)Comprehensive loss

$
(44
)

$
(44
)Earnings (loss) per
    share:Net income (loss) per
    share  basic

$
(1.00
)

$
0.30Net income (loss) per
    share  diluted

$
(1.00
)

$
0.30Dividends per common
    share

$
0.09


$
0.09Supplemental information for
    2005 only:Net income attributable to the
    consolidated and combined results of Novelis from January 6
    to March 31, 2005  increase to Retained earnings





$
51Net loss attributable to the
    combined results of Novelis from January 1 to January 5,
    2005  decrease to Owners net investment






(29
)Net income





$
22     2




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##### Table of Contents



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


December 31,2006


2005ASSETSCurrent assetsCash and cash equivalents

$
124


$
100Accounts receivable (net of
    allowances of $28 in 2006 and $26 in 2005) third parties


1,190



1,098 related parties


31



33Inventories


1,268



1,128Prepaid expenses and other current
    assets


81



66Current portion of fair value of
    derivative instruments


199



194Deferred income tax assets


5



8Total current assets


2,898



2,627Property and equipment 
    net


2,152



2,160Goodwill


217



211Intangible assets  net


20



21Investment in and advances to
    non-consolidated affiliates


148



144Fair value of derivative
    instruments  net of current portion


86



90Deferred income tax assets


22



21Other long-term assets third parties


132



131 related parties


68



71Total assets

$
5,743


$
5,476LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
4


$
3Short-term borrowings


32



27Accounts payable third parties


1,158



866 related parties


40



38Accrued expenses and other current
    liabilities


647



641Deferred income tax liabilities


30



26Total current
    liabilities


1,911



1,601Long-term debt  net of
    current portion


2,491



2,600Deferred income tax liabilities


268



186Accrued post-retirement benefits


318



305Other long-term liabilities


222



1925,210



4,884Commitments and contingenciesMinority interests in equity of
    consolidated affiliates


150



159Shareholders
    equityPreferred stock, no par value;
    unlimited number of first preferred and second preferred shares
    authorized; none issued and outstanding






Common stock, no par value;
    unlimited number of shares authorized; 74,005,649 shares
    issued and outstanding as of March 31, 2006






Additional paid-in capital


426



425Retained earnings


11



92Accumulated other comprehensive loss


(54
)


(84
)Total shareholders
    equity


383



433Total liabilities and
    shareholders equity

$
5,743


$
5,476     3




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##### Table of Contents



Novelis
    Inc.




CONDENSED CONSOLIDATED AND COMBINED STATEMENTS
    OF CASH FLOWS (unaudited)


(in millions)




|                                                                                           |  |                    |      |   |      |   |      |  
|------------------------------------------------------------------------------------------ |  | ------------------ | ---- | - | ---- | - | ---- | -
|                                                                                           |  | Three Months Ended |     
|                                                                                           |  | March 31,          |     
|                                                                                           |  | 2006               |      |   | 2005 |  
|                                                                                          
|OPERATING ACTIVITIES                                                                       |  |                    |      |   |      |   |      |  
|Net income (loss)                                                                          |  | $                  | (74  | ) |      | $ | 22   |  
|Adjustments to determine net cash
    provided by operating activities:                    |  |                    |      |   |      |   |      |  
|Depreciation and amortization                                                              |  |                    | 58   |   |      |   | 59   |  
|Net gains on change in fair market
    value of derivatives                                |  |                    | (54  | ) |      |   | (36  | )
|Deferred income taxes                                                                      |  |                    | 82   |   |      |   | (28  | )
|Amortization of debt issuance costs                                                        |  |                    | 2    |   |      |   | 13   |  
|Provision for uncollectible
    accounts                                                   |  |                    | 2    |   |      |   | 1    |  
|Equity in net income of
    non-consolidated affiliates                                    |  |                    | (3   | ) |      |   | (2   | )
|Minority interests share                                                                  |  |                    |     |   |      |   | 5    |  
|Stock-based compensation                                                                   |  |                    | 1    |   |      |   | 1    |  
|(Gains) losses on sales of
    businesses, investments and assets  net                    |  |                    | 14   |   |      |   | (1   | )
|Changes in assets and liabilities
    (net of effects from acquisitions and divestitures): |  |                    |      |   |      |   |      |  
|Accounts receivable                                                                        |  |                    |      |   |      |   |      |  
| third parties                                                                            |  |                    | (87  | ) |      |   | (156 | )
| related parties                                                                          |  |                    | (1   | ) |      |   | (1   | )
|Inventories                                                                                |  |                    | (140 | ) |      |   | 50   |  
|Prepaid expenses and other current
    assets                                              |  |                    | (15  | ) |      |   | 11   |  
|Other long-term assets                                                                     |  |                    | (1   | ) |      |   | 1    |  
|Accounts payable                                                                           |  |                    |      |   |      |   |      |  
| third parties                                                                            |  |                    | 284  |   |      |   | 59   |  
| related parties                                                                          |  |                    | 1    |   |      |   | (11  | )
|Accrued expenses and other current
    liabilities                                         |  |                    | 1    |   |      |   | 117  |  
|Accrued post-retirement benefits                                                           |  |                    | 13   |   |      |   | 14   |  
|Other long-term liabilities                                                                |  |                    | 12   |   |      |   | (8   | )
|                                                                                           |  |                    |      |   |      |   |      |  
|Net cash provided by operating
    activities                                              |  |                    | 95   |   |      |   | 110  |  
|                                                                                           |  |                    |      |   |      |   |      |  
|INVESTING ACTIVITIES                                                                       |  |                    |      |   |      |   |      |  
|Capital expenditures                                                                       |  |                    | (21  | ) |      |   | (25  | )
|Disposal of business 
    net                                                             |  |                    | (7   | ) |      |   |     |  
|Proceeds from sales of assets                                                              |  |                    | 2    |   |      |   | 1    |  
|Proceeds from loans
    receivable  net                                                   |  |                    |      |   |      |   |      |  
| third parties                                                                            |  |                    |     |   |      |   | 19   |  
| related parties                                                                          |  |                    | 7    |   |      |   | 360  |  
|Changes in investment in and
    advances to non-consolidated affiliates  net             |  |                    | 2    |   |      |   |     |  
|Premiums paid to purchase
    derivative instruments                                       |  |                    |     |   |      |   | (10  | )
|Net proceeds from settlement of
    derivative instruments                                 |  |                    | 71   |   |      |   | 19   |  
|                                                                                           |  |                    |      |   |      |   |      |  
|Net cash provided by investing
    activities                                              |  |                    | 54   |   |      |   | 364  |  
|                                                                                           |  |                    |      |   |      |   |      |  
|                                                                                          
|(Continued)                                                                               

4



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##### Table of Contents





Novelis
    Inc.
    CONDENSED CONSOLIDATED AND COMBINED STATEMENTS
    OF CASH FLOWS (unaudited)(Continued)
    (in millions)




|                                                                                                                                                                |  |                    |      |   |      |   |        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---- | - | ---- | - | ------ | -
|                                                                                                                                                                |  | Three Months Ended |     
|                                                                                                                                                                |  | March 31,          |     
|                                                                                                                                                                |  | 2006               |      |   | 2005 |  
|                                                                                                                                                               
|FINANCING ACTIVITIES                                                                                                                                            |  |                    |      |   |      |   |        |  
|Proceeds from issuance of debt                                                                                                                                  |  | $                  |     |   |      | $ | 2,750  |  
|Principal repayments                                                                                                                                            |  |                    |      |   |      |   |        |  
| third parties                                                                                                                                                 |  |                    | (112 | ) |      |   | (1,539 | )
| related parties                                                                                                                                               |  |                    |     |   |      |   | (1,180 | )
|Short-term borrowings 
    net                                                                                                                                 |  |                    |      |   |      |   |        |  
| third parties                                                                                                                                                 |  |                    | 6    |   |      |   | (149   | )
| related parties                                                                                                                                               |  |                    |     |   |      |   | (302   | )
|Dividends  common
    shareholders                                                                                                                             |  |                    | (7   | ) |      |   | (7     | )
|Dividends  minority
    interests                                                                                                                              |  |                    | (13  | ) |      |   | (6     | )
|Net receipts from Alcan                                                                                                                                         |  |                    |     |   |      |   | 79     |  
|Debt issuance costs                                                                                                                                             |  |                    | (1   | ) |      |   | (71    | )
|                                                                                                                                                                |  |                    |      |   |      |   |        |  
|Net cash used in financing
    activities                                                                                                                       |  |                    | (127 | ) |      |   | (425   | )
|                                                                                                                                                                |  |                    |      |   |      |   |        |  
|Net increase in cash and cash
    equivalents                                                                                                                   |  |                    | 22   |   |      |   | 49     |  
|Effect of exchange rate changes
    on cash balances held in foreign currencies                                                                                 |  |                    | 2    |   |      |   | (1     | )
|Cash and cash
    equivalents  beginning of period                                                                                                             |  |                    | 100  |   |      |   | 31     |  
|                                                                                                                                                                |  |                    |      |   |      |   |        |  
|Cash and cash
    equivalents  end of period                                                                                                                   |  | $                  | 124  |   |      | $ | 79     |  
|                                                                                                                                                                |  |                    |      |   |      |   |        |  
|Supplemental disclosures of
    cash flow information:                                                                                                          |  |                    |      |   |      |   |        |  
|Interest paid                                                                                                                                                   |  | $                  | 76   |   |      | $ | 20     |  
|Income taxes paid                                                                                                                                               |  |                    | 12   |   |      |   | 4      |  
|Principal payments on capital
    lease obligations (included above in principal
    repayments  third parties)                                                |  |                    | 1    |   |      |   |       |  
|                                                                                                                                                                |  |                    |      |   |      |   |        |  
|Supplemental schedule of
    non-cash investing and financing activities relating to the
    spin-off transaction and post-closing adjustments (2005
    only): |  |                    |      |   |      |   |        |  
|Other receivables                                                                                                                                               |  |                    |      |   |      | $ | 433    |  
|Short-term borrowings 
    related parties                                                                                                                     |  |                    |      |   |      |   | (57    | )
|Long-term debt  related
    parties                                                                                                                            |  |                    |      |   |      |   | 32     |  
|Capital lease obligation                                                                                                                                        |  |                    |      |   |      |   | 52     |  
|Additional paid-in capital                                                                                                                                      |  |                    |      |   |      |   | (97    | )









5



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##### Table of Contents



Novelis
    Inc.
  CONDENSED CONSOLIDATED STATEMENT OF
    SHAREHOLDERS EQUITY (unaudited)
 (in millions, except number of common shares, which is in
    thousands)
  AccumulatedAdditional





OtherCommon Stock


Paid-in


Retained


ComprehensiveShares


Amount


Capital


Earnings


Loss


TotalBalance as of December 31,
    2005


74,006


$



$
425


$
92


$
(84
)

$
4332006 Activity:Net loss














(74
)






(74
)Stock-based compensation










1











1Currency translation adjustment


















37



37Change in cash flow currency hedge


















(7
)


(7
)Dividends on common shares ($0.09
    per share)














(7
)






(7
)Balance as of March 31,
    2006


74,006


$



$
426


$
11


$
(54
)

$
383     6




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##### Table of Contents



Novelis
    Inc.
  NOTES
    TO THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS (unaudited)
  1.
    Business
    and Summary of Significant Accounting Policies  Organization
    and Description of Business
      Form 10-K Rule 10-01 Regulation S-X.
    .
  Recently
    Issued Accounting Standards
  Accounting for
    Uncertainty in Income Taxes
   7




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   2.
    Restructuring
    Programs  Restructuring charges (recoveries)  net
  Novelis


NovelisEurope


North America


TotalOther Exit





Other Exit





Other ExitSeverance


Related


Severance


Related


Severance


RelatedBalance as of December 31,
    2005

$
9


$
19


$
1


$



$
10


$
19Provisions  net


1















1



Cash payments


(2
)


(1
)


(1
)






(3
)


(1
)Adjustments  other






1















1Balance as of March 31,
    2006

$
8


$
19


$



$



$
8


$
19       Subsequent
    Event
    3.
    Loss on
    Disposal of Business  Other income 
    net
 8




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   4.
    Inventories    March 31, 2006


December 31, 2005Finished goods

$
361


$
326Work in process


288



240Raw materials


567



500Supplies


123



1221,339



1,188Allowances


(71
)


(60
)$
1,268


$
1,128   Inventory Cost
  5.
    Property,
    Plant and Equipment    March 31, 2006


December 31, 2005Land and property rights

$
92


$
90Buildings


857



845Machinery and equipment


4,487



4,4075,436



5,342Accumulated depreciation and
    amortization


(3,404
)


(3,319
)2,032



2,023Construction in progress


120



137$
2,152


$
2,160   Subsequent
    Event
   9




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   6.  Investment
    in and Advances to Non-consolidated Affiliates and Related Party
    Transactions
    PercentageOwnership Structure

OwnershipAluminium Norf GmbH

Corporation

50%Consorcio Candonga

Unincorporated Joint Venture

50%Petrocoque S.A. Industria e
    Comercio

Corporation

25%EuroNorca Partners

General Partnership

50%Deutsche Aluminium Verpackung
    Recycling GmbH

Corporation

30%France Aluminium Recyclage
    S.A.

Public Limited Company

20%     Three Months EndedMarch 31,2006


2005Net sales

$
132


$
116Costs, expenses and provision for
    taxes on income


124



111Net income

$
8


$
5     Three Months EndedMarch 31,2006


2005Purchases of inventory, tolling
    services and electricityAluminium Norf GmbH (A)

$
52


$
51Consorcio Candonga (B)


3



2Petrocoque S.A. Industria e
    Comercio (C)


1



$
56


$
53     (A)
    
    Aluminium Norf GmbH provides tolling services to us.(B)
    
    Consorcio Candonga supplies electricity to Novelis South America.(C)
    
    Petrocoque S.A. Industria e Comercio supplies calcined-coke to
    our South America smelting operations. 10




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
     March 31, 2006


December 31, 2005Other receivables (A)

$
31


$
33Long-term receivables (A)

$
68


$
71Accounts payable (B)

$
40


$
38     (A)
    
    The balances represent current and non-current portions of a
    loan to Aluminium Norf GmbH.(B)
    
    We purchase tolling services from Aluminium Norf GmbH in the
    ordinary course of business.  7.
    Accrued
    Expenses and Other Current Liabilities    March 31, 2006


December 31, 2005Accrued payroll

$
122


$
152Accrued settlement of legal claim


71



71Accrued interest payable


24



51Accrued income taxes


68



55Current portion of fair value of
    derivative instruments


28



22Other current liabilities


334



290$
647


$
641  11




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   8.
    Long-Term
    Debt    Interest


March 31,


December 31,Rates(A)


2006


2005Novelis Inc.Floating rate Term Loan B, due 2012


6.44
%

$
312


$
3427.25% Senior Notes, due 2015


7.25
%(B)


1,400



1,400Novelis CorporationFloating rate Term Loan B, due 2012


6.44
%


543



593Novelis Switzerland
    S.A.Capital lease obligation, due 2020
    (Swiss francs (CHF) 59 million)


7.50
%


45



45Capital lease obligation, due 2011
    (CHF 5 million)


2.49
%


4



4Novelis Korea LimitedBank loan, due 2008


5.30
%


50



50Bank loan, due 2008 (Korean won
    (KRW) 30 billion)










30Bank loan, due 2007


4.55
%


70



70Bank loan, due 2007 (KRW
    40 billion)


4.80
%


41



40Bank loan, due 2007 (KRW
    25 billion)


4.45
%


26



25Bank loans, due 2008 through 2011
    (KRW 1 billion)


4.06
%(C)


1



1OtherOther debt, due 2006 through 2012


2.68
%(C)


3



3Total debt






2,495



2,603Less: current portion






(4
)


(3
)$
2,491


$
2,600     (A)
    
    Interest rates are as of March 31, 2006 and exclude the
    effects of any related interest rate swaps or amortization of
    debt issuance and other costs.(B)
    
    The interest rate for the Senior Notes does not include
    additional special interest discussed below.(C)
    
    Weighted average interest rate.  Floating
    Rate Term Loan B
    Other long-term assets
   12




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##### Table of Contents





Novelis
    Inc.




NOTES TO
    THE CONDENSED CONSOLIDATED AND


COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)














7.25% Senior
    Notes




Other long-term assets








90-day




Korean
    Bank Loans






13



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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
      Interest
    Rate Swaps
  3-month fixed-to-variable
  Impact of
    Late SEC Filings on our Debt Agreements
  Form 10-Q Form 10-K Form 10-Q
  Form 10-Q Form 10-Q Form 10-Q Form 10-Q Form 10-Q Form 10-Q Form 10-Q Interest expense and amortization of debt issuance
    costs  net Other long-term assets
   14




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
    Form 10-Q Form 10-Q
  Form 10-Q Form 10-Q Form 10-Q Form 10-Q Form 10-Q, Form 10-Q Form 10-Q
    Form 10-Q
     15




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
  out-of-the-money
  Form 10-Q
  Lines of
    Credit and Short Term Borrowings
      9.
    Other
    Comprehensive Income (Loss)  Accumulated other comprehensive income (loss)
  March 31, 2006


December 31, 2005Foreign currency translation
    adjustments

$
2


$
(35
)Minimum pension liability


(49
)


(49
)Cash flow currency hedge


(7
)


$
(54
)

$
(84
)  16




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
     Three Months EndedMarch 31,2006


2005Net change in foreign currency
    translation adjustments

$
41


$
(53
)Net change in minimum pension
    liability






(19
)Net change in cash flow currency
    hedge


(7
)


Net other comprehensive income
    (loss) adjustments, before income tax (expense) benefit


34



(72
)Income tax (expense) benefit


(4
)


6Other comprehensive income
    (loss)

$
30


$
(66
)   10.
    Stock-Based
    Compensation  Share-Based Payment Accounting for Stock-Based
    Compensation.
    Selling, general and
    administrative expenses.
    Stock
    Options
   17




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
       WeightedAverageWeighted


RemainingAverage


Contractual


AggregateNumber


Exercise


Term


Intrinsicof Options


Price


(In Years)


ValueOptions outstanding as of
    December 31, 2005


2,704,790


$
21.60Granted






Exercised






Forfeited






Expired/Cancelled


(18,190
)

$
21.27Options outstanding as of
    March 31, 2006


2,686,600


$
21.60



7.3


$
(2,774,673
)Options exercisable as of
    March 31, 2006


892,049


$
21.24



6.9


$
(599,312
)     March 31,


December 31,2006


2005Dividend yield


1.56%



1.56%Expected volatility


30.30%



30.30%Risk-free interest rate


3.73%



3.73%Expected life


5.47 years



5.47 years   Selling, general and administrative expenses.
  Compensation
    to be Settled in Cash
    Accounting for Stock Issued
    to Employees Accounting for Stock Appreciation Rights and Other Variable
    Stock Option or Award Plans.
 18




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##### Table of Contents





Novelis
    Inc.




NOTES TO
    THE CONDENSED CONSOLIDATED AND


COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)






Stock
    Price Appreciation Unit Plan












|                                              |  |           |         |  |                |   |       |             |  |  |           |  |  |   |          |  
|--------------------------------------------- |  | --------- | ------- |  | -------------- | - | ----- | ----------- |  |  | --------- |  |  | - | -------- | -
|                                              |  |           |         |  |                |   |       | Weighted    |  |  |           | 
|                                              |  |           |         |  |                |   |       | Average     |  |  |           | 
|                                              |  |           |         |  |                |   |       | Remaining   |  |  |           | 
|                                              |  |           |         |  | Weighted       |   |       | Contractual |  |  | Aggregate | 
|                                              |  | Number of |         |  | Average        |   |       | Term        |  |  | Intrinsic | 
|                                              |  | SPAUs     |         |  | Exercise Price |   |       | (In Years)  |  |  | Value     | 
|                                             
|SPAUs outstanding as of
    December 31, 2005 |  |           | 418,777 |  |                | $ | 22.04 |             |  |  |           |  |  |   |          |  
|Granted                                       |  |           |        |  |                |   |      |             |  |  |           |  |  |   |          |  
|Exercised                                     |  |           |        |  |                |   |      |             |  |  |           |  |  |   |          |  
|Forfeited                                     |  |           |        |  |                |   |      |             |  |  |           |  |  |   |          |  
|Expired/Cancelled                             |  |           |        |  |                |   |      |             |  |  |           |  |  |   |          |  
|                                              |  |           |         |  |                |   |       |             |  |  |           |  |  |   |          |  
|SPAUs outstanding as of
    March 31, 2006    |  |           | 418,777 |  |                | $ | 22.04 |             |  |  | 7.8       |  |  | $ | (613,946 | )
|                                              |  |           |         |  |                |   |       |             |  |  |           |  |  |   |          |  
|SPAUs exercisable as of
    March 31, 2006    |  |           | 115,419 |  |                | $ | 21.53 |             |  |  | 7.7       |  |  | $ | (110,744 | )
|                                              |  |           |         |  |                |   |       |             |  |  |           |  |  |   |          |  









|                        |  |                          |  |            
|----------------------- |  | ------------------------ |  | -----------
|                        |  |                          |  | 2006       
|                        |  | 2006                     |  | Weighted   
|                        |  | Range of                 |  | Average    
|                        |  | Assumptions              |  | Assumptions
|                       
|Dividend yield          |  | 0.17% to 0.32%           |  | 0.20%      
|Expected volatility     |  | 39.90% to 44.60%         |  | 43.63%     
|Risk-free interest rate |  | 4.80% to 4.83%           |  | 4.81%      
|Expected life           |  | 2.74 years to 5.12 years |  | 4.56 years 





Total
    Shareholder Returns Performance Plan






19



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##### Table of Contents





Novelis
    Inc.




NOTES TO
    THE CONDENSED CONSOLIDATED AND


COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)












|                                                     |  |           |         |  |            |   |       |           |  |   |           | 
|---------------------------------------------------- |  | --------- | ------- |  | ---------- | - | ----- | --------- |  | - | --------- | 
|                                                     |  |           |         |  |            |   |       | Aggregate | 
|                                                     |  | Number of |         |  | Redemption |   |       | Intrinsic | 
|                                                     |  | RSUs      |         |  | Price      |   |       | Value     | 
|                                                    
|RSUs outstanding as of
    December 31, 2005         |  |           | 119,842 |  |            | $ | 20.89 |           |  |   |           | 
|Granted                                              |  |           | 531     |  |            |   |      |           |  |   |           | 
|Exercised                                            |  |           |        |  |            |   |      |           |  |   |           | 
|Forfeited                                            |  |           |        |  |            |   |      |           |  |   |           | 
|Expired/Cancelled                                    |  |           |        |  |            |   |      |           |  |   |           | 
|                                                     |  |           |         |  |            |   |       |           |  |   |           | 
|RSUs outstanding as of
    March 31, 2006            |  |           | 120,373 |  |            | $ | 20.57 |           |  | $ | 2,514,592 | 
|                                                     |  |           |         |  |            |   |       |           |  |   |           | 
|RSUs vested and exercisable as of
    March 31, 2006 |  |           |        |  |            |   |       |           |  | $ |          | 
|                                                     |  |           |         |  |            |   |       |           |  |   |           | 





Deferred
    Share Unit Plan For Non-Executive Directors








and/or


20



---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
     AggregateNumber of


Redemption


IntrinsicDDSUs


Price


ValueDDSUs outstanding as of
    December 31, 2005


41,862


$
20.94Granted


15,445



Exercised






Forfeited






Expired/Cancelled






DDSUs outstanding as of
    March 31, 2006


57,307


$
20.42


$
1,170,209DDSUs vested and exercisable as of
    March 31, 2006


57,307


$
20.42


$
1,170,209   Novelis
    Founders Performance Awards
      Weighted Average Expected Stock
    Price Volatility


40.00
%Annual Expected Dividend Yield


1.73
%Risk-Free Interest Rate


4.84
%   at-the-money 2-year
   21




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   Compensation
    Cost
  Selling,
    general and administrative expenses.
  11.
    Post-Retirement
    Benefit Plans    OtherPost-EmploymentPension Benefits


BenefitsThree Months Ended


Three Months EndedMarch 31,


March 31,2006


2005


2006


2005Service cost

$
10


$
4


$
1


$
1Interest cost


10



8



2



3Expected return on assets


(9
)


(6
)






Amortization actuarial losses


1



2







 prior service
    cost


1



1







Curtailment/settlement gains














Net periodic benefit cost

$
13


$
9


$
3


$
4     Employer
    Contributions to Pension Plans
     22




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   12.
    Currency
    Gains and Losses  Other
    income  net
  Three Months EndedMarch 31,2006


2005Net gains (losses) on change in
    fair market value of currency derivatives

$
(16
)

$
30Net gains on translation of
    monetary assets and liabilities


5



12$
(11
)

$
42   Accumulated other comprehensive income (loss)
  Three Months EndedMarch 31,2006


2005Cumulative translation
    adjustment  beginning of period

$
(35
)

$
120Effect of changes in exchange rates


37



(53
)Cumulative translation
    adjustment  end of period

$
2


$
67   13.
    Financial
    Instruments and Commodity Contracts      Accumulated other
    comprehensive loss Shareholders equity
  Interest expense and amortization of debt issuance
    costs  net. Accumulated
    other comprehensive loss.
 23




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
     As of March 31, 2006Maturity







Net FairDates

Assets


Liabilities


ValueForward foreign exchange contracts

2006 through 2011

$
12


$
(11
)

$
1Interest rate swaps

2006 through 2008


5







5Cross-currency interest swaps

2006 through 2015


1



(43
)


(42
)Aluminum forward contracts

2006 through 2009


107



(10
)


97Aluminum call options

Matures in 2006


98







98Fixed price electricity contract

Matures in 2016


62







62285



(64
)


221Less: current portion (A)




199



(28
)


171$
86


$
(36
)

$
50     (A)
    
    Current portion of assets are presented on our condensed
    consolidated balance sheet. Current portion of liabilities are
    included in Accrued expenses and other current liabilitieson our condensed consolidated balance sheet. Remaining
    long-term portions of fair values under assets are presented on
    our condensed consolidated balance sheet. Remaining long-term
    portions of fair values under liabilities are included in
    Other long-term liabilitieson our condensed consolidated
    balance sheet.    As of December 31, 2005Maturity







Net FairDates

Assets


Liabilities


ValueForward foreign exchange contracts

2006 through 2011

$
15


$
(9
)

$
6Interest rate swaps

2006 through 2008


5







5Cross-currency interest swaps

2006 through 2015






(24
)


(24
)Aluminum forward contracts

2006 through 2009


87



(7
)


80Aluminum call options

Matures in 2006


109







109Fixed price electricity contract

Matures in 2016


68







68284



(40
)


244Less: current portion (A)




194



(22
)


172$
90


$
(18
)

$
72     (A)
    
    Current portion of assets are presented on our condensed
    consolidated balance sheet. Current portion of liabilities are
    included in Accrued expenses and other current liabilitieson our condensed consolidated balance sheet. Remaining
    long-term portions of fair values under assets are presented on
    our condensed consolidated balance sheet. Remaining long-term
    portions of fair values under liabilities are included in
    Other long-term liabilitieson our condensed consolidated
    balance sheet. 24




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   14.
    Other
    Income  Net  Other
    income  net
  Three Months EndedMarch 31,2006


2005Net gains on change in fair market
    value of derivative instruments

$
(54
)

$
(24
)Loss on disposal of business


15



Exchange gains  net


(5
)


(12
)Gain on disposals of fixed
    assets  net


(1
)


(1
)Other  net


(4
)


3$
(49
)

$
(34
)   15.
    Income
    Taxes  Accounting for
    Income Taxes. Interim Financial Reporting, Accounting for Income Taxes in Interim
    Periods
 25




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
     Three Months EndedMarch 31,2006


2005Pre-tax income before equity in
    net income of non-consolidated affiliates and minority
    interests share

$
25


$
55Canadian statutory tax rate


33
%


33
%Income taxes at the Canadian
    statutory tax rate

$
8


$
18Increase (decrease) in tax rate
    resulting from:Exchange translation items


10



(11
)Exchange remeasurement of deferred
    income taxes


3



Change in valuation allowances


33



11Expense/income items with no tax
    effect


3



7Tax rate differences on foreign
    earnings


44



1Withholding tax in connection with
    the spin-off






6Out-of-period
    adjustments






(7
)Other  net


1



5Provision for taxes on income

$
102


$
30Effective tax rate


408
%


55
%    26




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   16.
    Earnings
    Per Share    Three Months EndedMarch 31,2006


2005Numerator:Net income (loss)

$
(74
)

$
22Denominators:Weighted average number of
    outstanding shares (basic)


74.01



73.99Effect of dilutive shares






.22Adjusted number of outstanding
    shares (diluted)


74.01



74.21Earnings (loss) per
    share:Net income (loss) per
    share  basic

$
(1.00
)

$
0.30Net income (loss) per
    share  diluted

$
(1.00
)

$
0.30         17.
    Commitments
    and Contingencies   27




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   Legal
    Proceedings
  Reynolds Boat Case.
    Accrued expenses and other current liabilities Prepaid expenses and other
    current assets
      Environmental
    Matters
  Oswego North Ponds.
 28




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
      Indirect
    Guarantees of the Indebtedness of Others
    
    wholly-owned subsidiaries;
    variable interest entities consolidated under FASB
    Interpretation No. 46 (Revised), Consolidation of
    Variable Interest Entities; and
    Aluminium Norf GmbH, which is a fifty percent (50%) owned joint
    venture which does not meet the consolidation tests under FASB
    Interpretation No. 46 (Revised).        Maximum Potential

Liability Carrying

Assets Held forType of Entity

Future Payment

Value

CollateralWholly-Owned Subsidiaries

$
21


$
9


$
Aluminium Norf GmbH


12







   18.
    Segment,
    Geographical Area and Major Customer Information    Disclosure About the Segments of
    an Enterprise and Related Information.
 29




---



##### Table of Contents





Novelis
    Inc.




NOTES TO
    THE CONDENSED CONSOLIDATED AND


COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)








Other
    Income  net.




Selected
    Segment Financial Information








|                              |  |         |       |  |         |   |       |         |  |   |         |  |  |              |     |  |           |   |     |       |  |   |     |   |  |   |       | 
|----------------------------- |  | ------- | ----- |  | ------- | - | ----- | ------- |  | - | ------- |  |  | ------------ | --- |  | --------- | - | --- | ----- |  | - | --- | - |  | - | ----- | 
|                              |  |         |       |  |         |   |       |         |  |   |         |  |  | Proportional |     |  |           |   |     |       | 
|                              |  |         |       |  |         |   |       |         |  |   |         |  |  | Share to     |     |  |           |   |     |       | 
|                              |  | Novelis |       |  |         |   |       |         |  |   | Novelis |  |  | Equity       |     |  |           |   |     |       | 
|As of and for the Three       |  | North   |       |  | Novelis |   |       | Novelis |  |   | South   |  |  | Accounting   |     |  | Corporate |   |     |       | 
|Months Ended March 31, 2006   |  | America |       |  | Europe  |   |       | Asia    |  |   | America |  |  | Adjustments  |     |  | and Other |   |     | Total | 
|                             
|Net sales (to third parties)  |  | $       | 895   |  |         | $ | 826   |         |  | $ | 394     |  |  | $            | 209 |  |           | $ | (5  | )     |  | $ |    |   |  | $ | 2,319 | 
|Intersegment sales            |  |         |      |  |         |   |      |         |  |   | 3       |  |  |              | 7   |  |           |   |    |       |  |   | (10 | ) |  |   |      | 
|Regional Income               |  |         | 58    |  |         |   | 57    |         |  |   | 25      |  |  |              | 41  |  |           |   |    |       |  |   |    |   |  |   | 181   | 
|Depreciation and amortization |  |         | 18    |  |         |   | 23    |         |  |   | 14      |  |  |              | 11  |  |           |   | (9  | )     |  |   | 1   |   |  |   | 58    | 
|Capital expenditures          |  |         | 8     |  |         |   | 9     |         |  |   | 1       |  |  |              | 4   |  |           |   | (3  | )     |  |   | 2   |   |  |   | 21    | 
|Total assets                  |  |         | 1,600 |  |         |   | 2,296 |         |  |   | 1,038   |  |  |              | 798 |  |           |   | (87 | )     |  |   | 98  |   |  |   | 5,743 | 





|                              |  |         |       |  |         |   |       |         |  |   |         |  |  |              |     |  |           |   |     |       |  |   |     |   |  |   |       | 
|----------------------------- |  | ------- | ----- |  | ------- | - | ----- | ------- |  | - | ------- |  |  | ------------ | --- |  | --------- | - | --- | ----- |  | - | --- | - |  | - | ----- | 
|                              |  |         |       |  |         |   |       |         |  |   |         |  |  | Proportional |     |  |           |   |     |       | 
|                              |  |         |       |  |         |   |       |         |  |   |         |  |  | Share to     |     |  |           |   |     |       | 
|                              |  | Novelis |       |  |         |   |       |         |  |   | Novelis |  |  | Equity       |     |  |           |   |     |       | 
|As of and for the Three       |  | North   |       |  | Novelis |   |       | Novelis |  |   | South   |  |  | Accounting   |     |  | Corporate |   |     |       | 
|Months Ended March 31, 2005   |  | America |       |  | Europe  |   |       | Asia    |  |   | America |  |  | Adjustments  |     |  | and Other |   |     | Total | 
|                             
|Net sales (to third parties)  |  | $       | 823   |  |         | $ | 806   |         |  | $ | 338     |  |  | $            | 148 |  |           | $ | (3  | )     |  | $ |    |   |  | $ | 2,112 | 
|Intersegment sales            |  |         | 1     |  |         |   | 19    |         |  |   | 3       |  |  |              | 16  |  |           |   |    |       |  |   | (39 | ) |  |   |      | 
|Regional Income               |  |         | 52    |  |         |   | 54    |         |  |   | 30      |  |  |              | 38  |  |           |   |    |       |  |   |    |   |  |   | 174   | 
|Depreciation and amortization |  |         | 18    |  |         |   | 26    |         |  |   | 13      |  |  |              | 11  |  |           |   | (9  | )     |  |   |    |   |  |   | 59    | 
|Capital expenditures          |  |         | 8     |  |         |   | 7     |         |  |   | 3       |  |  |              | 3   |  |           |   | 1   |       |  |   | 3   |   |  |   | 25    | 
|Total assets                  |  |         | 1,438 |  |         |   | 2,440 |         |  |   | 986     |  |  |              | 767 |  |           |   | (84 | )     |  |   | 54  |   |  |   | 5,601 | 



30



---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
     Segment
    Reconciliation from Total Regional Income to Net income
    (loss)
  Three Months EndedMarch 31,2006


2005Total Regional Income

$
181


$
174Interest expense and amortization
    of debt issuance costs


(51
)


(56
)Unrealized gains due to changes in
    the fair market value of derivative instruments


1



19Depreciation and amortization


(58
)


(59
)Minority interests share






(5
)Adjustment to eliminate
    proportional consolidation (A)


(8
)


(10
)Restructuring (charges)
    recoveries  net


(1
)


2Gains (losses) on disposals of
    fixed assets and businesses  net


(14
)


1Corporate selling, general and
    administrative expenses (B)


(26
)


(16
)Gains on corporate derivative
    instruments and exchange items (B)


4



2Provision for taxes on income


(102
)


(30
)Net income (loss)

$
(74
)

$
22     (A)
    
    Our financial information for our segments (including Regional
    Income) includes the results of our non-consolidated affiliates
    on a proportionately consolidated basis, which is consistent
    with the way we manage our business segments. However, under
    GAAP, these non-consolidated affiliates are accounted for using
    the equity method of accounting. Therefore, in order to
    reconcile Total Regional Income to Net income, the proportional
    Regional Income of these non-consolidated affiliates is removed
    from Total Regional Income, net of our share of their net
    after-tax results, which is reported as Equity in net income
    of non-consolidated affiliateson our consolidated and
    combined statements of income. See Note 6 
    Investment in and Advances to Non-Consolidated Affiliates and
    Related Party Transactions to our condensed consolidated and
    combined financial statements for further information about
    these non-consolidated affiliates.(B)
    
    These items are managed by our corporate office, which focuses
    on strategy development and oversees governance, policy, legal
    compliance, human resources and finance matters.  Information
    about Major Customers
    Three Months EndedMarch 31,2006

2005Net sales to Rexam (in millions)

$
332


$
252Percentage of total net sales


14.3
%


11.9
%  31




---



##### Table of Contents





Novelis
    Inc.




NOTES TO
    THE CONDENSED CONSOLIDATED AND


COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)






|    |                                       
|--- | --------------------------------------
|19. | Supplemental
    Guarantor Information











Novelis
    Inc.




Condensed
    Consolidating Statement of Income (Loss)


(in millions)




|                                                                                               |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|---------------------------------------------------------------------------------------------- |  | --------------------------------- | --- | - | ---------- | - | ----- | ---------- |  | - | ------------ | - |  | ------------ | ---- | - |  | - | ----- | -
|                                                                                               |  | Three Months Ended March 31, 2006 |    
|                                                                                               |  |                                   |     |   |            |   |       | Non-       |  |   |              |   |  |              |     
|                                                                                               |  | Parent                            |     |   | Guarantors |   |       | Guarantors |  |   | Eliminations |   |  | Consolidated |     
|                                                                                              
|Net sales                                                                                      |  | $                                 | 370 |   |            | $ | 1,960 |            |  | $ | 673          |   |  | $            | (684 | ) |  | $ | 2,319 |  
|                                                                                               |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|Cost of goods sold (exclusive of
    depreciation and amortization shown below)                |  |                                   | 355 |   |            |   | 1,822 |            |  |   | 635          |   |  |              | (677 | ) |  |   | 2,135 |  
|Selling, general and
    administrative expenses                                               |  |                                   | 13  |   |            |   | 63    |            |  |   | 16           |   |  |              |     |   |  |   | 92    |  
|Depreciation and amortization                                                                  |  |                                   | 4   |   |            |   | 38    |            |  |   | 16           |   |  |              |     |   |  |   | 58    |  
|Research and development expenses                                                              |  |                                   | 6   |   |            |   | 3     |            |  |   |             |   |  |              |     |   |  |   | 9     |  
|Restructuring charges
    (recoveries)  net                                                   |  |                                   |    |   |            |   |      |            |  |   | 1            |   |  |              |     |   |  |   | 1     |  
|Interest expense and amortization
    of debt issuance costs  net                             |  |                                   | 11  |   |            |   | 32    |            |  |   | 5            |   |  |              |     |   |  |   | 48    |  
|Equity in net (income) loss of
    affiliates                                                  |  |                                   | 31  |   |            |   | (3    | )          |  |   |             |   |  |              | (31  | ) |  |   | (3    | )
|Other (income) expense 
    net                                                               |  |                                   | 17  |   |            |   | (68   | )          |  |   | 2            |   |  |              |     |   |  |   | (49   | )
|                                                                                               |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|                                                                                               |  |                                   | 437 |   |            |   | 1,887 |            |  |   | 675          |   |  |              | (708 | ) |  |   | 2,291 |  
|                                                                                               |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|Income (loss) before provision
    (benefit) for taxes on income and minority interests share |  |                                   | (67 | ) |            |   | 73    |            |  |   | (2           | ) |  |              | 24   |   |  |   | 28    |  
|Provision (benefit) for taxes on
    income                                                    |  |                                   | 7   |   |            |   | 70    |            |  |   | 25           |   |  |              |     |   |  |   | 102   |  
|                                                                                               |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|Income (loss) before minority
    interests share                                             |  |                                   | (74 | ) |            |   | 3     |            |  |   | (27          | ) |  |              | 24   |   |  |   | (74   | )
|Minority interests share                                                                      |  |                                   |    |   |            |   |      |            |  |   |             |   |  |              |     |   |  |   |      |  
|                                                                                               |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|Net income (loss)                                                                              |  | $                                 | (74 | ) |            | $ | 3     |            |  | $ | (27          | ) |  | $            | 24   |   |  | $ | (74   | )
|                                                                                               |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  



32



---



##### Table of Contents





Novelis
    Inc.




NOTES TO
    THE CONDENSED CONSOLIDATED AND


COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)






Novelis
    Inc.




Condensed
    Consolidating and Combining Statement of Income


(in millions)




|                                                                                        |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|--------------------------------------------------------------------------------------- |  | --------------------------------- | --- | - | ---------- | - | ----- | ---------- |  | - | ------------ | - |  | ------------ | ---- | - |  | - | ----- | -
|                                                                                        |  | Three Months Ended March 31, 2005 |    
|                                                                                        |  |                                   |     |   |            |   |       |            |  |   |              |   |  | Consolidated |     
|                                                                                        |  |                                   |     |   |            |   |       | Non-       |  |   |              |   |  | and          |     
|                                                                                        |  | Parent                            |     |   | Guarantors |   |       | Guarantors |  |   | Eliminations |   |  | Combined     |     
|                                                                                       
|Net sales                                                                               |  | $                                 | 315 |   |            | $ | 1,743 |            |  | $ | 628          |   |  | $            | (574 | ) |  | $ | 2,112 |  
|                                                                                        |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|Cost of goods sold (exclusive of
    depreciation and amortization shown below)         |  |                                   | 309 |   |            |   | 1,571 |            |  |   | 578          |   |  |              | (574 | ) |  |   | 1,884 |  
|Selling, general and
    administrative expenses                                        |  |                                   | 17  |   |            |   | 54    |            |  |   | 17           |   |  |              |     |   |  |   | 88    |  
|Depreciation and amortization                                                           |  |                                   | 3   |   |            |   | 40    |            |  |   | 16           |   |  |              |     |   |  |   | 59    |  
|Research and development expenses                                                       |  |                                   | 4   |   |            |   | 4     |            |  |   |             |   |  |              |     |   |  |   | 8     |  
|Restructuring charges
    (recoveries)  net                                            |  |                                   |    |   |            |   | (2    | )          |  |   |             |   |  |              |     |   |  |   | (2    | )
|Interest expense and amortization
    of debt issuance costs  net                      |  |                                   | 24  |   |            |   | 25    |            |  |   | 5            |   |  |              |     |   |  |   | 54    |  
|Equity in net income of affiliates                                                      |  |                                   | (56 | ) |            |   | (2    | )          |  |   |             |   |  |              | 56   |   |  |   | (2    | )
|Other (income) expense 
    net                                                        |  |                                   | (5  | ) |            |   | (32   | )          |  |   | 3            |   |  |              |     |   |  |   | (34   | )
|                                                                                        |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|                                                                                        |  |                                   | 296 |   |            |   | 1,658 |            |  |   | 619          |   |  |              | (518 | ) |  |   | 2,055 |  
|                                                                                        |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|Income before provision (benefit)
    for taxes on income and minority interests share |  |                                   | 19  |   |            |   | 85    |            |  |   | 9            |   |  |              | (56  | ) |  |   | 57    |  
|Provision (benefit) for taxes on
    income                                             |  |                                   | (3  | ) |            |   | 31    |            |  |   | 2            |   |  |              |     |   |  |   | 30    |  
|                                                                                        |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|Income before minority
    interests share                                             |  |                                   | 22  |   |            |   | 54    |            |  |   | 7            |   |  |              | (56  | ) |  |   | 27    |  
|Minority interests share                                                               |  |                                   |    |   |            |   |      |            |  |   | (5           | ) |  |              |     |   |  |   | (5    | )
|                                                                                        |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  
|Net income                                                                              |  | $                                 | 22  |   |            | $ | 54    |            |  | $ | 2            |   |  | $            | (56  | ) |  | $ | 22    |  
|                                                                                        |  |                                   |     |   |            |   |       |            |  |   |              |   |  |              |      |   |  |   |       |  



33



---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   Novelis
    Inc.
  Condensed
    Consolidating Balance Sheet
 (in millions)
  As of March 31, 2006Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assetsCash and cash equivalents

$
29


$
55


$
40


$



$
124Accounts receivable third parties


64



767



359







1,190 related parties


423



310



35



(737
)


31Inventories


56



876



343



(7
)


1,268Prepaid expenses and other current
    assets


3



69



9







81Current portion of fair value of
    derivative instruments






192



7







199Deferred income tax assets






1



4







5Total current assets


575



2,270



797



(744
)


2,898Property and equipment 
    net


120



1,280



752







2,152Goodwill






25



192







217Intangible assets  net






17



3







20Investments in and advances to
    affiliates


622



148







(622
)


148Fair value of derivative
    instruments  net of current portion






86











86Deferred income tax assets


15



6



1







22Other long-term assets


1,128



174



142



(1,244
)


200Total assets

$
2,460


$
4,006


$
1,887


$
(2,610
)

$
5,743LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$



$
3


$
1


$



$
4Short-term borrowings third parties






29



3







32 related parties


49



397



14



(460
)


Accounts payable third parties


102



624



432







1,158 related parties


78



177



62



(277
)


40Accrued expenses and other current
    liabilities


74



454



119







647Deferred income tax liabilities






27



3







30Total current
    liabilities


303



1,711



634



(737
)


1,911Long-term debt  net of
    current portion third parties


1,712



589



190







2,491 related parties






1,020



224



(1,244
)


Deferred income tax liabilities


18



231



19







268Accrued post-retirement benefits


9



223



86







318Other long-term liabilities


35



171



16







2222,077



3,945



1,169



(1,981
)


5,210Commitments and contingenciesMinority interests in equity of
    consolidated affiliates










150







150Shareholders
    equityPreferred stock


















Common stock


















Additional paid-in capital


426















426Retained earnings


11















11Accumulated other comprehensive
    income (loss)


(54
)


154



(5
)


(149
)


(54
)Owners net investment






(93
)


573



(480
)


Total shareholders
    equity


383



61



568



(629
)


383Total liabilities and
    shareholders equity

$
2,460


$
4,006


$
1,887


$
(2,610
)

$
5,743  34




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   Novelis
    Inc.
  Condensed
    Consolidating Balance Sheet
 (in millions)
  As of December 31, 2005Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assetsCash and cash equivalents

$
2


$
34


$
64


$



$
100Accounts receivable third parties


67



689



342







1,098 related parties


381



318



22



(688
)


33Inventories


49



769



310







1,128Prepaid expenses and other current
    assets


2



55



9







66Current portion of fair value of
    derivative instruments






186



8







194Deferred income tax assets










8







8Total current assets


501



2,051



763



(688
)


2,627Property and equipment 
    net


121



1,297



742







2,160Goodwill






25



186







211Intangible assets  net






18



3







21Investments in and advances to
    affiliates


729



144







(729
)


144Fair value of derivative
    instruments  net of current portion






90











90Deferred income tax assets


8



5



8







21Other long-term assets


1,129



173



143



(1,243
)


202Total assets

$
2,488


$
3,803


$
1,845


$
(2,660
)

$
5,476LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$



$
2


$
1


$



$
3Short-term borrowings third parties






23



4







27 related parties


45



409



17



(471
)


Accounts payable third parties


76



442



348







866 related parties


62



152



41



(217
)


38Accrued expenses and other current
    liabilities


105



411



125







641Deferred income tax liabilities






26











26Total current
    liabilities


288



1,465



536



(688
)


1,601Long-term debt  net of
    current portion third parties


1,742



640



218







2,600 related parties






1,017



226



(1,243
)


Deferred income tax liabilities






176



10







186Accrued post-retirement benefits


9



213



83







305Other long-term liabilities


16



163



13







1922,055



3,674



1,086



(1,931
)


4,884Commitments and contingenciesMinority interests in equity of
    consolidated affiliates










159







159Shareholders
    equityPreferred stock


















Common stock


















Additional paid-in capital


425















425Retained earnings


92















92Accumulated other comprehensive
    income (loss)


(84
)


131



(21
)


(110
)


(84
)Owners net investment






(2
)


621



(619
)


Total shareholders
    equity


433



129



600



(729
)


433Total liabilities and
    shareholders equity

$
2,488


$
3,803


$
1,845


$
(2,660
)

$
5,476  35




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   Novelis
    Inc.
  Condensed
    Consolidating Statement of Cash Flows
 (in
    millions)
  Three Months Ended March 31, 2006Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedOPERATING ACTIVITIESNet cash provided by operating
    activities

$
14


$
145


$
48


$
(112
)

$
95INVESTING ACTIVITIESCapital expenditures


(3
)


(13
)


(5
)






(21
)Disposal of business 
    net


(7
)














(7
)Proceeds from sales of assets






2











2Proceeds from loans
    receivable  net


60



7







(60
)


7Changes in investment in and
    advances to non-consolidated affiliates  net






2











2Net proceeds from settlement of
    derivative instruments






77



(6
)






71Net cash provided by (used in)
    investing activities


50



75



(11
)


(60
)


54FINANCING ACTIVITIESPrincipal repayments third parties


(29
)


(51
)


(32
)






(112
) related parties






(60
)






60



Short-term borrowings 
    net third parties






6











6 related parties






3



(3
)






Dividends  preference
    shares






(12
)






12



Dividends  common
    shareholders


(7
)


(85
)


(15
)


100



(7
)Dividends  minority
    interests










(13
)






(13
)Debt issuance costs


(1
)














(1
)Net cash used in financing
    activities


(37
)


(199
)


(63
)


172



(127
)Net increase (decrease) in cash
    and cash equivalents


27



21



(26
)






22Effect of exchange rate changes
    on cash balances held in foreign currencies










2







2Cash and cash
    equivalents  beginning of period


2



34



64







100Cash and cash
    equivalents  end of period

$
29


$
55


$
40


$



$
124  36




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED AND
 COMBINED
    FINANCIAL STATEMENTS
    (unaudited)  (Continued)
   Novelis
    Inc.
  Condensed
    Consolidating and Combined Statement of Cash Flows
 (in millions)
  Three Months Ended March 31, 2005ConsolidatedNon-





andParent


Guarantors


Guarantors


Eliminations


CombinedOPERATING ACTIVITIESNet cash provided by (used in)
    operating activities

$
46


$
107


$
(24
)

$
(19
)

$
110INVESTING ACTIVITIESCapital expenditures


(4
)


(14
)


(7
)






(25
)Proceeds from sales of assets


1















1Proceeds from (advances on) loans
    receivable  net third parties






4



15







19 related parties


(990
)


(72
)


(119
)


1,541



360Share repurchase 
    intercompany


400











(400
)


Premiums paid to purchase
    derivative instruments






(10
)










(10
)Net proceeds from settlement of
    derivative instruments






17



2







19Net cash provided by (used in)
    investing activities


(593
)


(75
)


(109
)


1,141



364FINANCING ACTIVITIESProceeds from issuance of debt third parties


1,875



825



50







2,750 related parties






1,288



253



(1,541
)


Principal repayments


(1,243
)


(1,385
)


(91
)






(2,719
)Short-term borrowings 
    net third parties


2



(55
)


(96
)






(149
) related parties


(126
)


(186
)


10







(302
)Share repurchase 
    intercompany






(400
)






400



Issuance of preference shares










32



(32
)


Dividends  common
    shareholders


(7
)


(44
)


(7
)


51



(7
)Dividends  minority
    interests










(6
)






(6
)Net receipts from (payments to)
    Alcan


100



(21
)










79Debt issuance costs


(49
)


(22
)










(71
)Net cash provided by (used in)
    financing activities


552







145



(1,122
)


(425
)Net increase in cash and cash
    equivalents


5



32



12







49Effect of exchange rate changes
    on cash balances held in foreign currencies






(1
)










(1
)Cash and cash
    equivalents  beginning of period






12



19







31Cash and cash
    equivalents  end of period

$
5


$
43


$
31


$



$
79  37




---



##### 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 and combined 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.
    GENERAL
    HIGHLIGHTS
    
    We had net sales of $2.3 billion and a net loss of
    $74 million, or $(1.00) per share for our quarter ended
    March 31, 2006, compared to net sales of $2.1 billion
    and net income of $22 million, or $0.30 per share for
    the first quarter of 2005.
    Total rolled product shipments increased from 713 kilotonnes
    (kt) in the first quarter of 2005 to 741 kt in the first quarter
    of 2006, while ingot products shipments declined from 57 kt to
    41 kt in those same periods.
    London Metal Exchange (LME) pricing for aluminum (metal) was an
    average of 27% higher during the first quarter of 2006 than
    during the same period for 2005. This trend continued through
    the first six months of 2006, during which time LME aluminum
    pricing was an average of 39% higher than during the same period
    for 2005.
    Net sales for the first quarter of 2006 increased 10% compared
    to 2005 due mainly to the rise in LME prices. However, the
    benefit of higher LME prices on our net sales was limited by
    metal price ceilings in sales contracts representing
    approximately 20% of our business. During the first quarter of
    2006, we were unable to pass through approximately
    $95 million of metal price increases associated with sales
    under these contracts. The metal price ceilings are discussed in
    more detail below.
    Through strong operating cash flows, we reduced our total debt
    by $103 million during the first quarter of 2006, which was
    in excess of our required principal payment obligations.
    During the first and second quarters of 2006, we incurred
    expenses of approximately $10 million and $13 million,
    respectively, associated with the restatement of our first and
    second quarters of 2005 (re-filed on May 16, 2006), our
    review process and as a result of our delayed filings. In
    addition, we had 38




---



##### Table of Contents



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | previously incurred approximately $7 million during the
    fourth quarter of 2005 for a total of $30 million in
    expenses through June 30, 2006, and we expect to continue
    to incur these expenses until we are current with our filings
    with the United States Securities and Exchange Commission (SEC).
    The restatement and review process and delayed filings are
    discussed in more detail below.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | During the first quarter of 2006, we recognized pre-tax income
    of $54 million related to changes in fair value of
    derivative instruments. These derivative instruments and the
    related accounting are discussed in more detail below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | We recognized $102 million of tax expense during the first
    quarter of 2006 for an effective tax rate of 408%. Our effective
    tax rate is greater than the Canadian statutory rate of 33% due
    to (1) a $33 million increase in valuation allowances
    primarily related to tax losses in certain jurisdictions where
    we believe it is more likely than not that we will not be able
    to utilize those losses, (2) $13 million of exchange
    translation and remeasurement items, and (3) a
    $44 million difference between the Canadian statutory and
    foreign effective tax rates resulting from the application of an
    annual effective tax rate to profit and loss entities in
    different jurisdictions. Of the $102 million of tax expense
    during the first quarter, approximately $10 million is
    current tax expense. Cash taxes paid during the first quarter of
    2006 were $12 million.



| |  |                                                                                                                                                                                                                                               
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We estimate that we will incur a net loss for the year, and this
    is described in more detail in our Business Outlook below. Based
    on our estimated pre-tax loss for the year, we expect income tax
    expense to decline by year-end.



METAL
    PRICE CEILINGS
















and/or


39



---



##### Table of Contents



Accounting for Derivative Instruments and Hedging
    Activities.
    METAL
    PRICE LAG
    RESTATEMENT
    AND REVIEW
      LATE
    FILINGS
  Form 10-Q Form 10-Q
  Form 10-Q Form 10-Q Form 10-Q
  BUSINESS
    OUTLOOK
   40




---



##### Table of Contents




    the effects of unfavorable movements in metal prices and foreign
    currency exchange rates beyond our ability to mitigate such
    exposures;
    changes in the fair market value of our derivatives; and
    the substantial expenses we incurred and will continue to incur
    in connection with our restatement and remediation efforts (as
    described in Item 4. Controls and Procedures),
    including substantial waiver and consent fees paid to certain of
    our lenders as well as additional special interest on our Senior
    Notes.    INTERNAL
    CONTROLS
    SPIN-OFF
    FROM ALCAN
    Post-Transaction
    Adjustments
    Agreements
    between Novelis and Alcan
   41




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##### Table of Contents



OPERATIONS
    AND SEGMENT REVIEW
      First Quarter


Percent2006


2005


ChangeShipments  in
    kilotonnes (A)Rolled products, including tolling
    (the conversion of customer-owned metal)


741



713



4
%Ingot products, including primary
    and secondary ingot and recyclable aluminum (B)


41



57



(28
%)Total shipments


782



770



2
%     (A)
    
    One kilotonne (kt) is 1,000 metric tonnes. One metric tonne is
    equivalent to 2,204.6 pounds.(B)
    
    Ingot products shipments include primary ingot in Brazil,
    foundry products sold in Korea and Europe, secondary ingot in
    Europe and other miscellaneous recyclable aluminum sales made
    for logistical purposes.  First Quarter


Percent2006


2005


Change($ in millions)Operating ResultsNet sales

$
2,319


$
2,112



10
%Cost and expensesCost of goods sold (exclusive of
    depreciation and amortization shown below)


2,135



1,884



13
%Selling, general and
    administrative expenses


92



88



5
%Depreciation and amortization


58



59



(2
)%Research and development expenses


9



8



13
%Restructuring charges
    (recoveries)  net


1



(2
)


150
%Interest expense and amortization
    of debt issuance costs  net


48



54



(11
)%Equity in net income of
    non-consolidated affiliates


(3
)


(2
)


50
%Other income  net


(49
)


(34
)


44
%2,291



2,055



11
%Income before provision for taxes
    on income and minority interests share


28



57



(51
)%Provision for taxes on income


102



30



240
%Income (loss) before minority
    interests share


(74
)


27



(374
)%Minority interests share






(5
)


(100
)%Net income (loss)

$
(74
)

$
22



(436
)%   42




---



##### Table of Contents



First Quarter


Percent2006


2005


ChangeLondon Metal Exchange
    Prices Aluminum (per
    tonne, and presented in dollars)Closing cash price as of
    March 31,

$
2,513


$
1,973



27
%Average cash price for the
    quarters ended March 31,

$
2,420


$
1,900



27
%   DollarFirst Quarter


Strengthen/2006


2005


(Weaken)Federal Reserve Bank of New
    York Exchange RatesAverage of the month end rates for
    first quarterU.S. dollar per Euro


1.207



1.310



8
%Brazilian real per U.S. dollar


2.166



2.621



(17
)%South Korean won (000s) per
    U.S. dollar


967



1,014



(5
)%Canadian dollar per
    U.S. dollar


1.150



1.226



(6
)%   First Quarter


Percent2006


2005


ChangeNew York Mercantile
    Exchange  Energy QuotationsLight Sweet CrudeAverage settlement price (per
    barrel)

$
62.48


$
44.56



40
%Natural GasAverage Henry Hub contract
    settlement price (per MMBTU) (A)

$
8.97


$
6.27



43
%     (A)
    
    An MMBTU is the equivalent of one decatherm, or one million BTUs
    (British Thermal Units).  RESULTS
    OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2006 COMPARED
    TO THE QUARTER ENDED MARCH 31, 2005
  Shipments
      Net
    sales
   43




---



##### Table of Contents



Costs and
    expenses
    First Quarter2006


2005% of





% of$ in millions


Net Sales


$ in millions


Net SalesCost of goods sold (exclusive of
    depreciation and amortization shown below)

$
2,135



92.1
%

$
1,884



89.2
%Selling, general and
    administrative expenses


92



4.0
%


88



4.2
%Depreciation and amortization


58



2.5
%


59



2.7
%Research and development expenses


9



0.4
%


8



0.4
%Restructuring charges
    (recoveries)  net


1







(2
)


(0.1
)%Interest expense and amortization
    of debt issuance costs  net


48



2.0
%


54



2.6
%Equity in net income of
    non-consolidated affiliates


(3
)


(0.1
)%


(2
)


(0.1
)%Other income  net


(49
)


(2.1
)%


(34
)


(1.6
)%$
2,291



98.8
%

$
2,055



97.3
%   Cost of goods sold.
  Selling, general and administrative expenses
    (SG&A). start-up
  Interest expense and amortization of debt issuance
    costs  net.
  Other income  net.
  OtherIncome  NetOther income  net
    for the quarter ended March 31, 2005

$
(34
)Elements comprising the difference
    in Other income  net:Gains of $54 million on the
    change in fair market value of derivatives in 2006, compared to
    $24 million in 2005


(30
)Loss on disposal of business in
    2006 of $15 million


15Exchange gains of $5 million
    in 2006 compared to gains of $12 million in 2005


7Other  net


(7
)Total elements comprising the
    difference in Other income  net


(15
)Other income  net
    for the quarter ended March 31, 2006

$
(49
)  44




---



##### Table of Contents



Provision
    for Taxes on Income
    Net
    Income
  mark-to-market
  OPERATING
    SEGMENT REVIEW FOR THE QUARTER ENDED MARCH 31, 2006
    COMPARED TO THE QUARTER ENDED MARCH 31, 2005
  Regional
    Income
      Disclosure About the Segments of
    an Enterprise and Related Information.
   45




---



##### Table of Contents



Reconciliation
    First Quarter2006


2005Regional IncomeNovelis North America

$
58


$
52Novelis Europe


57



54Novelis Asia


25



30Novelis South America


41



38Total Regional Income


181



174Interest expense and amortization
    of debt issuance costs


(51
)


(56
)Unrealized gains due to changes in
    the fair market value of derivative instruments


1



19Depreciation and amortization


(58
)


(59
)Minority interests share






(5
)Adjustment to eliminate
    proportional consolidation (A)


(8
)


(10
)Restructuring (charges)
    recoveries  net


(1
)


2Gains (losses) on disposals of
    fixed assets and businesses


(14
)


1Corporate selling, general and
    administrative expenses (B)


(26
)


(16
)Gains on corporate derivative
    instruments and exchange items (B)


4



2Provision for taxes on income


(102
)


(30
)Net income (loss)

$
(74
)

$
22     (A)
    
    Our financial information for our segments (including Regional
    Income) includes the results of our non-consolidated affiliates
    on a proportionately consolidated basis, which is consistent
    with the way we manage our business segments. However, under
    GAAP, these non-consolidated affiliates are accounted for using
    the equity method of accounting. Therefore, in order to
    reconcile Total Regional Income to Net income (loss), the
    proportional Regional Income of these non-consolidated
    affiliates is removed from Total Regional Income, net of our
    share of their net after-tax results, which is reported as
    Equity in net income of non-consolidated affiliateson
    our consolidated and combined statements of income (loss). See
    Note 6  Investment in and Advances to
    Non-Consolidated Affiliates and Related Party Transactions to
    our condensed consolidated and combined financial statements for
    further information about these non-consolidated affiliates.(B)
    
    These items are managed by our corporate office, which focuses
    on strategy development and oversees governance, policy, legal
    compliance, human resources and finance matters.  OPERATING
    SEGMENT RESULTS
  Novelis
    North America
   46




---



##### Table of Contents



First Quarter


Percent2006


2005


Change($ in millions)Shipments (kt)Rolled products


289



284



1.8
%Ingot products


17



19



(10.5
)%Total shipments


306



303



1.0
%Net sales

$
895


$
823



8.7
%Regional Income


58



52



11.5
%Total assets


1,600



1,438



11.3
%   Shipments
    Net
    sales
    Regional
    Income
    Total
    assets
    Novelis
    Europe
   47




---



##### Table of Contents



First Quarter


Percent2006


2005


Change($ in millions)Total Shipments (kt)Rolled products


266



253



5.1
%Ingot products


8



20



(60.0
)%Total shipments


274



273



0.4
%Net sales

$
826


$
806



2.5
%Regional Income


57



54



5.6
%Total assets


2,296



2,440



(5.9
)%   Shipments
    Net
    sales
    Regional
    Income
    Novelis
    Asia
   48




---



##### Table of Contents



First Quarter


Percent2006


2005


Change($ in millions)Shipments (kt)Rolled products


118



114



3.5
%Ingot products


10



11



(9.1
)%Total shipments


128



125



2.4
%Net sales

$
394


$
338



16.6
%Regional Income


25



30



(16.7
)%Total assets


1,038



986



5.3
%   Shipments
    Net
    sales
    Regional
    Income
    Novelis
    South America
      First Quarter


Percent2006


2005


Change($ in millions)Shipments (kt)Rolled products


68



62



9.7
%Ingot products


6



7



(14.3
)%Total shipments


74



69



7.2
%Net sales

$
209


$
148



41.2
%Regional Income


41



38



7.9
%Total assets


798



767



4.0
%  49




---



##### Table of Contents



Shipments
    Net
    sales
    Regional
    Income
    LIQUIDITY
    AND CAPITAL RESOURCES
    Operating
    Activities
      First Quarter2006


2005


ChangeNet cash provided by operating
    activities

$
95


$
110


$
(15
)Dividends


(7
)


(7
)


Capital expenditures


(21
)


(25
)


4Premiums paid to purchase
    derivative instruments






(10
)


10Net proceeds from settlement of
    derivative instruments


71



19



52Free cash flow

$
138


$
87


$
51   50




---



##### Table of Contents



March 31,

December 31,2006

2005

ChangeCash and cash equivalents

$
124


$
100


$
24         Financing
    Activities
         51




---



##### Table of Contents



3-month fixed-to-variable
      Investing
    Activities
    First Quarter2006


2005


Change($ in millions)Proceeds from loans
    receivable  net

$
7


$
379


$
(372
)Proceeds from settlement of
    derivatives, less premiums paid to purchase derivatives


71



9



62Capital expenditures


(21
)


(25
)


4Payments related to disposal of
    business


(7
)






(7
)Investment in and advances to
    non-consolidated affiliates


2







2Proceeds from sales of assets


2



1



1Net cash provided by investing
    activities

$
54


$
364


$
(310
)         First Quarter2006


2005


Change($ in millions)Capital expenditures

$
21


$
25


$
(4
)Depreciation and amortization


58



59



(1
)Reinvestment rate


36
%


42
%  52




---



##### Table of Contents



Impact
    of Late SEC Filings on our Debt Agreements
  Form 10-Q Form 10-K Form 10-Q
  Senior
    Secured Credit Facility
  Form 10-Q Form 10-Q Form 10-Q Form 10-Q Form 10-Q Form 10-Q Form 10-Q
    Form 10-Q Form 10-Q
  Senior
    Notes
  Form 10-Q Form 10-Q Form 10-Q Form 10-Q Form 10-Q, Form 10-Q Form 10-Q
 53




---



##### Table of Contents



Commitment
    Letter
    Form 10-Q
    Refinancing
    and Amendment Risks
    out-of-the-money
  Form 10-Q
  OFF-BALANCE
    SHEET ARRANGEMENTS
  Derivative
    Instruments
   54




---



##### Table of Contents



As of March 31, 2006Maturity








Net FairDates


Assets


Liabilities


ValueForward foreign exchange contracts


2006 through 2011


$
12


$
(11
)

$
1Interest rate swaps


2006 through 2008



5







5Cross-currency interest swaps


2006 through 2015



1



(43
)


(42
)Aluminum forward contracts


2006 through 2009



107



(10
)


97Aluminum call options


Matures in 2006



98







98Fixed price electricity contract


Matures in 2016



62







62285



(64
)


221Less: current portion






199



(28
)


171$
86


$
(36
)

$
50   Indirect
    Guarantees of Indebtedness
    Maximum

Liability

AssetsPotential Future

Carrying

Held forType of Entity

Payment

Value

CollateralWholly-Owned Subsidiaries

$
21


$
9


$
Aluminium Norf GmbH


12







   deposit-and-guarantee
    Other
    Arrangements
   55




---



##### Table of Contents



CONTRACTUAL
    OBLIGATIONS
  Form 10-K
  DIVIDENDS
    Declaration Date

Record Date

Dividend/Share


Payment DateFebruary 23, 2006

March 8, 2006

$
0.09


March 23, 2006April 27, 2006

May 20, 2006

$
0.09


June 20, 2006August 28, 2006

September 7, 2006

$
0.01


September 25, 2006     CRITICAL
    ACCOUNTING POLICIES AND ESTIMATES
  Form 10-K
  RECENT
    ACCOUNTING STANDARDS
  Accounting for Uncertainty in Income Taxes,
    SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS AND MARKET
    DATA
  Form 10-Q Form 10-Q
 56




---



##### Table of Contents




    the level of our indebtedness and our ability to generate cash;
    relationships with, and financial and operating conditions of,
    our customers and suppliers;
    changes in the prices and availability of aluminum (or premiums
    associated with such prices) or other materials and raw
    materials we use;
    the effect of metal price ceilings in certain of our sales
    contracts;
    our ability to successfully negotiate with our customers to
    remove or limit metal price ceilings in our contracts;
    the effectiveness of our metal hedging activities, including our
    internal used beverage can (UBC) and smelter hedges;
    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 Alcan, Inc.;
    changes in the relative values of various currencies;
    factors affecting our operations, such as litigation, labor
    relations and negotiations, breakdown of equipment and other
    events;
    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;
    our ability to improve and maintain effective internal control
    over financial reporting and disclosure controls and procedures
    in the future;
    changes in the fair market value of derivatives;
    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; 57




---



##### Table of Contents




    the continued cooperation of debt holders and regulatory
    authorities with respect to extensions of our 2006 SEC filing
    deadlines, the payment of special interest due to our failure to
    timely file our SEC reports and the payment of fees in
    connection with any related waivers or amendments of covenants
    in our principal debt agreements; and
    our ability to refinance our outstanding debt, if necessary.  Form 10-K
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk    marked-to-market
      Commodity
    Price Risks
    Aluminum
       58




---



##### Table of Contents



Sensitivities
    Change in

Change inRate/Price

Fair Value(In millions)Aluminum Call Options


10
%

$
38.9Aluminum Forward Contracts


10
%


49.7   Electricity
    and Natural Gas
         59




---



##### Table of Contents



Sensitivities
    Change in

Change inRate/Price

Fair Value(In millions)Electricity


10
%

$
13.5Natural Gas


10
%


   Foreign
    Currency Exchange Risks
    Form 10-K Form 10-Q.
  non-U.S. dollar
    Sensitivities
    Change in


Change inRate


Fair Value(In millions)Currency measured against the
    U.S. dollarEuro


10
%

$
40.9Korean won


10
%


26.9Brazilian real


10
%


  60




---



##### Table of Contents



Change in

Change inRate

Fair Value(In millions)Currency measured against the
    U.S. dollarEuro


10
%

$
83.9   Interest
    Rate Risks
      Form 10-Q
  Sensitivities
    Change in

Change inRate

Fair Value(In millions)Interest Rate Swap
    contractsNorth America


10
%

$
1.3Asia


10
%


0.5   Item 4.
    Controls
    and Procedures  Form 10-K Form 10-Q
   61




---



##### Table of Contents



Evaluation
    of disclosure controls and procedures
  Form 10-Q Rule 13a-15(e) 15d-15(e)
  Material
    weaknesses
    Internal Control-Integrated Framework
    
    Lack of sufficient resources in our accounting and finance
    organization.  We lacked a sufficient complement
    of personnel with a level of financial reporting expertise
    commensurate with our financial reporting requirements, which
    resulted in our not maintaining effective controls over the
    financial statement close and reporting process. Specifically,
    as a result of our separation from Alcan, which involved a
    series of complex transactions, including corporate
    restructurings and refinancing activities, we lacked sufficient
    resources to properly perform the quarterly and annual financial
    statement close processes, including the review of certain
    account reconciliations and financial statement preparation and
    disclosures. Further, we did not maintain an effective internal
    audit function. Following our separation from Alcan, there was a
    lack of leadership of the internal audit function and lack of
    independence of internal audit personnel from the finance and
    accounting function due to the lines of reporting, which
    impacted the effectiveness of the monitoring of our internal
    control over financial reporting. This control deficiency
    contributed to the material weaknesses discussed below.
    Inadequate monitoring of non-routine and non-systematic
    transactions.  We did not have effective controls
    in place to monitor and accurately record non-routine and
    non-systematic transactions. Specifically, the accounting for
    the spin-related capital and debt transactions required to
    form Novelis was not adequately monitored to ensure that
    these transactions were appropriately accounted for in
    accordance with GAAP. This control deficiency primarily affected
    Additional paid-in capital, Currency translation adjustment and
    Provision for taxes on income.
    Accounting for accrued expenses.  We did not
    maintain effective controls over the completeness and accuracy
    of certain of our accrued liabilities and related expense
    accounts, in particular, the ongoing monitoring of developments
    affecting our accrued liabilities. Specifically, lines of
    communication between our internal legal department and external
    counsel in Brazil were inadequate to timely identify and 62




---



##### Table of Contents



accurately report new developments in legal proceedings to
    ensure they were accounted for in accordance with GAAP. In
    addition, we did not maintain effective controls to ensure that
    liabilities related to Brazilian labor claims were accurately
    presented and appropriately reviewed to ensure recognition in
    the proper period in accordance with GAAP. These matters
    primarily affected Accrued expenses and other current
    liabilities, Other long-term liabilities, Cost of goods sold and
    Other income  net.  
    Accounting for Income Taxes.  We did not
    maintain effective controls over the completeness, accuracy,
    presentation and disclosure of our accounting for income taxes,
    including the determination of income tax expense, income taxes
    payable and deferred income tax assets and liabilities.
    Specifically, we did not maintain effective controls to
    (1) timely record additional income taxes related to the
    deemed disposal of goodwill, (2) account for income taxes
    on the currency translations related to intercompany loans to
    our European subsidiaries, (3) ensure that proper
    allocation of currency gains/losses between capital and
    operating were used in calculating the quarterly effective tax
    rate, and (4) account for certain Brazilian tax loss
    carryforwards. This control deficiency affected Provision for
    taxes on income, Accrued income taxes, Deferred income tax
    liabilities and Accumulated other comprehensive loss.
    Accounting for derivative transactions.  We did
    not maintain effective controls over the evaluation,
    documentation and accounting for derivative transactions,
    including transactions that we attempted to qualify for hedge
    accounting, in compliance with GAAP, which affected the
    accounting for Fair value of derivative contracts, Cost of goods
    sold, Other income  net, and Other comprehensive loss.  Form 10-K Form 10-Q. Form 10-Q
  Form 10-Q
  Remediation
    efforts
    Efforts to strengthen accounting and finance
    department through additional professional
    staff.
  Hiring of chief internal auditor.
 63




---



##### Table of Contents



Use of outside consultants and
    advisors.
  Increased communication internally and with outside
    advisors.
  Enhanced efforts to identify non-routine
    transactions.
  Disclosure controls and procedures
    improvements.
  Corporate level review.
      Changes
    in internal control over financial reporting and related
    matters
   64




---



##### Table of Contents



65




---



##### Table of Contents



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Reynolds Boat Case.
    Accrued expenses and other current liabilities Prepaid expenses and other
    current assets
      Item 6.
    Exhibits  ExhibitNo.

Description3
.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

By-law No. 1 of Novelis Inc.
    (incorporated by reference to Exhibit 3.2 to the
    Form 10 filed by Novelis Inc. on November 17, 2004
    (File
    No. 001-32312))4
.1

Shareholder Rights Agreement
    between Novelis and CIBC Mellon Trust Company (incorporated by
    reference to Exhibit 4.1 to the
    Form 10-K
    filed by Novelis Inc. on March 30, 2005 (File No.
    001-32312))4
.2

Specimen Certificate of Novelis
    Inc. Common Shares (incorporated by reference to
    Exhibit 4.2 to the Form 10 filed by Novelis Inc. on
    December 27, 2004 (File
    No. 001-32312)) 66




---



##### Table of Contents



ExhibitNo.

Description4
.3

Indenture, relating to the Notes,
    dated as of February 3, 2005, between the Company, the
    guarantors named on the signature pages thereto and The Bank of
    New York Trust Company, N.A., as trustee (incorporated by
    reference to Exhibit 4.1 to our Current Report on
    Form 8-K
    filed on February 3, 2005 (File
    No. 001-32312))4
.4

Registration Rights Agreement,
    dated as of February 3, 2005, among the Company, the
    guarantors named on the signature pages thereto, Citigroup
    Global Markets Inc., Morgan Stanley & Co. Incorporated
    and UBS Securities LLC, as Representatives of the Initial
    Purchasers (incorporated by reference to Exhibit 4.2 to our
    Current Report on
    Form 8-K
    filed on February 3, 2005 (File
    No. 001-32312))4
.5

Form of Note for
    71/4% Senior
    Notes due 2015 (incorporated by reference to Exhibit 4.1 to
    the
    Form S-4
    filed by Novelis Inc. on August 3, 2005 (File
    No. 331-127139))10
.1

Second Waiver, dated as of
    February 9, 2006, under the Credit Agreement dated
    January 7, 2005 among Novelis Inc., Novelis Corporation,
    Novelis Deutschland GmbH, Novelis UK Ltd., Novelis AG, Citigroup
    North America, Inc. and the issuers and lenders a party thereto
    (incorporated by reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on February 14, 2006 (File
    No. 001-32312))10
.2

Novelis Founders Performance Award
    Notification for Brian Sturgell dated March 31, 2005, as
    amended and restated as of March 14, 2006 (incorporated by
    reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File No.
    001-32312))10
.3

Novelis Founders Performance Award
    Notification for Martha Brooks dated March 31, 2005
    (incorporated by reference to Exhibit 10.2 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.4

Novelis Founders Performance Award
    Notification for Chris Bark-Jones dated March 31, 2005
    (incorporated by reference to Exhibit 10.3 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.5

Novelis Founders Performance Award
    Notification for Jack Morrison dated March 31,
    2005(incorporated by reference to Exhibit 10.4 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.6

Novelis Founders Performance Award
    Notification for Pierre Arseneault dated March 31, 2005
    (incorporated by reference to Exhibit 10.5 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.7

Novelis Founders Performance Award
    Notification for Geoff Batt dated March 31, 2005
    (incorporated by reference to Exhibit 10.6 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.8

Novelis Founders Performance
    Awards Plan, as amended and restated as of March 14, 2006
    (incorporated by reference to Exhibit 10.7 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.9

Description of Retention Payment
    for Geoff Batt (incorporated by reference to Exhibit 10.8
    to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.10

Employment Agreement of Arnaud de
    Weert (incorporated by reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on April 3, 2006 (File
    No. 001-32312))10
.11

Agreement Concerning Transition
    from Employment between Novelis and Geoff Batt dated
    March 31, 2006 (incorporated by reference to
    Exhibit 10.1 to the
    Form 8-K
    filed by Novelis on April 6, 2006 (File
    No. 001-32312))10
.12

Third Waiver, dated as of
    April 12, 2006, under the Credit Agreement dated
    January 7, 2005 among Novelis Inc., Novelis Corporation,
    Novelis Deutschland GmbH, Novelis UK Ltd., Novelis AG, Citigroup
    North America, Inc. and the issuers and lenders a party thereto
    (incorporated by reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on April 18, 2006 (File
    No. 001-32312))10
.13

Fourth Waiver, dated as of
    May 10, 2006, under the Credit Agreement dated
    January 7, 2005 among Novelis Inc., Novelis Corporation,
    Novelis Deutschland GmbH, Novelis UK Ltd., Novelis AG, Citigroup
    North America, Inc. and the issuers and lenders a party thereto
    (incorporated by reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on May 16, 2006 (File
    No. 001-32312)) 67




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##### Table of Contents



ExhibitNo.

Description10
.14

Transition Agreement, dated
    June 15, 2006, by and between Jo-Ann Longworth and Novelis
    Inc. (incorporated by reference to Exhibit 10.45 to the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.15

Separation and Release Agreement,
    dated June 15, 2006, by and between Jo-Ann Longworth and
    Novelis Corp. (incorporated by reference to Exhibit 10.46
    to the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.16

Transition Agreement, dated
    June 27, 2006, by and between Geoff Batt and Novelis Inc.
    (incorporated by reference to Exhibit 10.47 to the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.17

Separation and Release Agreement,
    dated June 27, 2006, by and between Geoff Batt and Novelis
    Corp. (incorporated by reference to Exhibit 10.48 to the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.18

Offer Letter, dated
    February 24, 2006, by and between Robert M. Patterson and
    Novelis Inc. (incorporated by reference to Exhibit 10.49 to
    the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.19

Offer Letter, dated June 20,
    2006, by and between Rick Dobson and Novelis Inc. (incorporated
    by reference to Exhibit 10.50 to the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.20

Addendum to Rick Dobson Offer
    Letter, dated June 20, 2006, by and between Rick Dobson and
    Novelis Inc. (incorporated by reference to Exhibit 10.51 to
    the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.21

Fifth Waiver, dated as of
    August 11, 2006, under the Credit Agreement dated
    January 7, 2005 among Novelis Inc., Novelis Corporation,
    Novelis Deutschland GmbH, Novelis UK Ltd., Novelis AG, Citigroup
    North America, Inc. and the issuers and lenders a party thereto
    (incorporated by reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on August 17, 2006 (File
    No. 001-32312))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  68




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##### Table of Contents



SIGNATURES
       By:
    /s/  Rick
    Dobson         By:
    /s/  Robert
    M. Patterson         69




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNo.

Description3
.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

By-law No. 1 of Novelis Inc.
    (incorporated by reference to Exhibit 3.2 to the
    Form 10 filed by Novelis Inc. on November 17, 2004
    (File
    No. 001-32312))4
.1

Shareholder Rights Agreement
    between Novelis and CIBC Mellon Trust Company (incorporated by
    reference to Exhibit 4.1 to the
    Form 10-K
    filed by Novelis Inc. on March 30, 2005 (File No.
    001-32312))4
.2

Specimen Certificate of Novelis
    Inc. Common Shares (incorporated by reference to
    Exhibit 4.2 to the Form 10 filed by Novelis Inc. on
    December 27, 2004 (File
    No. 001-32312))4
.3

Indenture, relating to the Notes,
    dated as of February 3, 2005, between the Company, the
    guarantors named on the signature pages thereto and The Bank of
    New York Trust Company, N.A., as trustee (incorporated by
    reference to Exhibit 4.1 to our Current Report on
    Form 8-K
    filed on February 3, 2005 (File
    No. 001-32312))4
.4

Registration Rights Agreement,
    dated as of February 3, 2005, among the Company, the
    guarantors named on the signature pages thereto, Citigroup
    Global Markets Inc., Morgan Stanley & Co. Incorporated
    and UBS Securities LLC, as Representatives of the Initial
    Purchasers (incorporated by reference to Exhibit 4.2 to our
    Current Report on
    Form 8-K
    filed on February 3, 2005 (File
    No. 001-32312))4
.5

Form of Note for
    71/4% Senior
    Notes due 2015 (incorporated by reference to Exhibit 4.1 to
    the
    Form S-4
    filed by Novelis Inc. on August 3, 2005 (File
    No. 331-127139))10
.1

Second Waiver, dated as of
    February 9, 2006, under the Credit Agreement dated
    January 7, 2005 among Novelis Inc., Novelis Corporation,
    Novelis Deutschland GmbH, Novelis UK Ltd., Novelis AG, Citigroup
    North America, Inc. and the issuers and lenders a party thereto
    (incorporated by reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on February 14, 2006 (File
    No. 001-32312))10
.2

Novelis Founders Performance Award
    Notification for Brian Sturgell dated March 31, 2005, as
    amended and restated as of March 14, 2006 (incorporated by
    reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File No.
    001-32312))10
.3

Novelis Founders Performance Award
    Notification for Martha Brooks dated March 31, 2005
    (incorporated by reference to Exhibit 10.2 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.4

Novelis Founders Performance Award
    Notification for Chris Bark-Jones dated March 31, 2005
    (incorporated by reference to Exhibit 10.3 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.5

Novelis Founders Performance Award
    Notification for Jack Morrison dated March 31,
    2005(incorporated by reference to Exhibit 10.4 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.6

Novelis Founders Performance Award
    Notification for Pierre Arseneault dated March 31, 2005
    (incorporated by reference to Exhibit 10.5 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.7

Novelis Founders Performance Award
    Notification for Geoff Batt dated March 31, 2005
    (incorporated by reference to Exhibit 10.6 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.8

Novelis Founders Performance
    Awards Plan, as amended and restated as of March 14, 2006
    (incorporated by reference to Exhibit 10.7 to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.9

Description of Retention Payment
    for Geoff Batt (incorporated by reference to Exhibit 10.8
    to the
    Form 8-K
    filed by Novelis Inc. on March 20, 2006 (File
    No. 001-32312))10
.10

Employment Agreement of Arnaud de
    Weert (incorporated by reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on April 3, 2006 (File
    No. 001-32312)) 70




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##### Table of Contents



ExhibitNo.

Description10
.11

Agreement Concerning Transition
    from Employment between Novelis and Geoff Batt dated
    March 31, 2006 (incorporated by reference to
    Exhibit 10.1 to the
    Form 8-K
    filed by Novelis on April 6, 2006 (File
    No. 001-32312))10
.12

Third Waiver, dated as of
    April 12, 2006, under the Credit Agreement dated
    January 7, 2005 among Novelis Inc., Novelis Corporation,
    Novelis Deutschland GmbH, Novelis UK Ltd., Novelis AG, Citigroup
    North America, Inc. and the issuers and lenders a party thereto
    (incorporated by reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on April 18, 2006 (File
    No. 001-32312))10
.13

Fourth Waiver, dated as of
    May 10, 2006, under the Credit Agreement dated
    January 7, 2005 among Novelis Inc., Novelis Corporation,
    Novelis Deutschland GmbH, Novelis UK Ltd., Novelis AG, Citigroup
    North America, Inc. and the issuers and lenders a party thereto
    (incorporated by reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on May 16, 2006 (File
    No. 001-32312))10
.14

Transition Agreement, dated
    June 15, 2006, by and between Jo-Ann Longworth and Novelis
    Inc. (incorporated by reference to Exhibit 10.45 to the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.15

Separation and Release Agreement,
    dated June 15, 2006, by and between Jo-Ann Longworth and
    Novelis Corp. (incorporated by reference to Exhibit 10.46
    to the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.16

Transition Agreement, dated
    June 27, 2006, by and between Geoff Batt and Novelis Inc.
    (incorporated by reference to Exhibit 10.47 to the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.17

Separation and Release Agreement,
    dated June 27, 2006, by and between Geoff Batt and Novelis
    Corp. (incorporated by reference to Exhibit 10.48 to the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.18

Offer Letter, dated
    February 24, 2006, by and between Robert M. Patterson and
    Novelis Inc. (incorporated by reference to Exhibit 10.49 to
    the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.19

Offer Letter, dated June 20,
    2006, by and between Rick Dobson and Novelis Inc. (incorporated
    by reference to Exhibit 10.50 to the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.20

Addendum to Rick Dobson Offer
    Letter, dated June 20, 2006, by and between Rick Dobson and
    Novelis Inc. (incorporated by reference to Exhibit 10.51 to
    the
    Form 10-K
    filed by Novelis Inc. on August 25, 2006 (File
    No. 001-32312))10
.21

Fifth Waiver, dated as of
    August 11, 2006, under the Credit Agreement dated
    January 7, 2005 among Novelis Inc., Novelis Corporation,
    Novelis Deutschland GmbH, Novelis UK Ltd., Novelis AG, Citigroup
    North America, Inc. and the issuers and lenders a party thereto
    (incorporated by reference to Exhibit 10.1 to the
    Form 8-K
    filed by Novelis Inc. on August 17, 2006 (File
    No. 001-32312))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  71