##### 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
    June 30, 2007oro

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(Address of principal executive
    offices)

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




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##### 



TABLE OF
    CONTENTS
  PART I.


FINANCIAL
    INFORMATIONItem 1.


Financial
    StatementsCondensed
    Consolidated Statements of Operations and Comprehensive Income
    (Loss) (unaudited) May 16, 2007 Through June 30, 2007;
    April 1, 2007 Through May 15, 2007 and Three Months
    Ended June 30, 2006


2Condensed
    Consolidated Balance Sheets (unaudited) As of June 30, 2007
    and March 31, 2007


3Condensed
    Consolidated Statements of Cash Flows (unaudited) May 16,
    2007 Through June 30, 2007; April 1, 2007 Through
    May 15, 2007 and Three Months Ended June 30, 2006


4Condensed
    Consolidated Statement of Shareholders Equity (unaudited)
    April 1, 2007 Through May 15, 2007 and May 16,
    2007 Through June 30, 2007


5Notes to the
    Condensed Consolidated Financial Statements
    (unaudited)


6Item 2.


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


52Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


80Item 4.


Controls and
    Procedures


84PART II.


OTHER
    INFORMATIONItem 1.


Legal
    Proceedings


86Item 4.


Submission of
    Matters to a Vote of Security Holders


88Item 6.


Exhibits


89EX-31.1 SECTION 302 CERTIFICATION OF THE PEOEX-31.2 SECTION 302 CERTIFICATION OF THE PFOEX-32.1 SECTION 906 CERTIFICATION OF THE PEOEX-32.2 SECTION 906 CERTIFICATION OF THE PFO   1




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##### Table of Contents



PART I.
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  Novelis
    Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
    COMPREHENSIVE INCOME (LOSS) (unaudited)
    (in millions, except per share amounts)
  May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2006Successor



Predecessor


PredecessorNet sales

$
1,547



$
1,281


$
2,564Cost of goods sold (exclusive of
    depreciation and amortization shown below)


1,436




1,205



2,407Selling, general and
    administrative expenses


42




95



98Depreciation and amortization


53




28



59Research and development expenses


13




6



10Interest expense and amortization
    of debt issuance costs  net


25




26



49Gain on change in fair value of
    derivative instruments  net


(14
)



(20
)


(41
)Equity in net (income) loss of
    non-consolidated affiliates


1




(1
)


(4
)Sale transaction fees







32



Other (income)
    expenses  net


11




4



(4
)1,567




1,375



2,574Loss before provision (benefit)
    for taxes on loss and minority interests share


(20
)



(94
)


(10
)Provision (benefit) for taxes on
    loss


36




4



(20
)Income (loss) before minority
    interests share


(56
)



(98
)


10Minority interests share


2




1



(4
)Net income (loss)


(54
)



(97
)


6Other comprehensive income
    (loss)  net of taxCurrency translation adjustment


(2
)



35



57Change in fair value of effective
    portion of hedges  net


1




(1
)


(34
)Postretirement benefit plansAmortization of net actuarial loss







(1
)


Change in minimum pension liability











(3
)Other comprehensive income
    (loss)  net of tax


(1
)



33



20Comprehensive income
    (loss)

$
(55
)


$
(64
)

$
26Dividends per common
    share

$
0.00



$
0.00


$
0.09    2




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##### Table of Contents



Novelis
    Inc.
  CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
 (in
    millions, except number of shares)
  June 30,



March 31,2007



2007Successor



PredecessorASSETSCurrent assetsCash and cash equivalents

$
186



$
128Accounts receivable (net of
    allowances of $ 0   as of June 30,
    2007 and $29 as of March 31, 2007) third parties


1,428




1,350 related parties


26




25Inventories


1,504




1,483Prepaid expenses and other current
    assets


41




39Current portion of fair value of
    derivative instruments


71




92Deferred income tax assets


42




19Total current assets


3,298




3,136Property, plant and
    equipment  net


3,325




2,106Goodwill


2,340




239Intangible assets  net


863




20Investment in and advances to
    non-consolidated affiliates


758




153Fair value of derivative
    instruments  net of current portion


6




55Deferred income tax assets


94




102Other long-term assets third parties


90




105 related parties


49




54Total assets

$
10,823



$
5,970LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
141



$
143Short-term borrowings


390




245Accounts payable third parties


1,564




1,614 related parties


50




49Accrued expenses and other current
    liabilities


767




480Deferred income tax liabilities


67




73Total current
    liabilities


2,979




2,604Long-term debt  net of
    current portion


2,328




2,157Deferred income tax liabilities


786




103Accrued postretirement benefits


434




427Other long-term liabilities


705




3527,232




5,643Commitments and contingenciesMinority interests in equity of
    consolidated affiliates


149




152Shareholders
    equityCommon stock, no par value;
    unlimited number of shares authorized; 77,459,658 and
    75,357,660 shares issued and outstanding as of
    June 30, 2007 and March 31, 2007, respectively







Additional paid-in capital


3,497




428Accumulated deficit


(54
)



(263
)Accumulated other comprehensive
    income (loss)


(1
)



10Total shareholders
    equity


3,442




175Total liabilities and
    shareholders equity

$
10,823



$
5,970    3




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##### Table of Contents



Novelis
    Inc.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
    (in millions)
  May 16, 2007



April 1, 2007


ThreeThrough



Through


Months EndedJune 30, 2007



May 15, 2007


June 30, 2006Successor



Predecessor


PredecessorOPERATING ACTIVITIESNet income (loss)

$
(54
)


$
(97
)

$
6Adjustments to determine net cash
    used in operating activities:Depreciation and amortization


53




28



59Gain on change in fair value of
    derivative instruments  net


(14
)



(20
)


(41
)Deferred income taxes


23




(18
)


(31
)Amortization of debt issuance costs







1



2Write-off and amortization of fair
    value adjustments  net


(6
)







Provision for uncollectible
    accounts receivable











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


1




(1
)


(4
)Dividends from non-consolidated
    affiliates







4



4Minority interests share


(2
)



(1
)


4Share-based compensation











1Changes in assets and liabilities
    (net of effects from acquisitions and divestitures):Accounts receivable third parties


(59
)



(21
)


(106
) related parties











2Inventories


70




(76
)


(104
)Prepaid expenses and other current
    assets


5




(7
)


(2
)Other long-term assets


(1
)



(1
)


1Accounts payable third parties







(62
)


129 related parties


1








1Accrued expenses and other current
    liabilities


(78
)



42



37Accrued postretirement benefits


5




1



7Other long-term liabilities


12




(2
)


(2
)Net cash used in operating
    activities


(44
)



(230
)


(36
)INVESTING ACTIVITIESCapital expenditures


(22
)



(17
)


(34
)Proceeds from sales of assets


1








1Changes to investment in and
    advances to non-consolidated affiliates


1




1



1Proceeds from loans
    receivable  net  related parties


4








9Net proceeds from settlement of
    derivative instruments


29




18



86Net cash provided by investing
    activities


13




2



63FINANCING ACTIVITIESProceeds from issuance of common
    stock


92








Proceeds from issuance of debt







150



20Principal repayments


(46
)



(1
)


(97
)Short-term borrowings 
    net


83




60



28Dividends common shareholders











(7
) minority interests


(1
)



(7
)


(1
)Debt issuance costs


(13
)



(2
)


(3
)Proceeds from the exercise of stock
    options







1



Net cash provided by (used in)
    financing activities


115




201



(60
)Net increase (decrease) in cash and
    cash equivalents


84




(27
)


(33
)Effect of exchange rate changes
    on cash balances held in foreign currencies







1



2Cash and cash
    equivalents  beginning of period


102




128



124Cash and cash
    equivalents  end of period

$
186



$
102


$
93Supplemental disclosures of cash
    flow information:Interest paid

$
14



$
13


$
21Income taxes paid


12




9



7Supplemental schedule of
    non-cash investing and financing activities related to the
    Acquisition of Novelis Common Stock (Note 2):Property, plant and equipment

$
(1,244
)Goodwill


(2,097
)Intangible assets


(859
)Investment in and advances to
    affiliates


(610
)Long-term debt


66Additional paid-in capital


(422
)    4




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##### Table of Contents



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





OtherCommon Stock


Paid-in


Accumulated


ComprehensiveShares


Amount


Capital


Deficit


Income (Loss)


TotalPredecessor:Balance as of March 31,
    2007


75,357,660


$



$
428


$
(263
)

$
10


$
175Activity April 1, 2007
    through May 15, 2007:Net loss














(97
)






(97
)Issuance of common stock from the
    exercise of stock options


57,876







1











1Conversion of share-based
    compensation plans from equity-based plans to liability-based
    plans










(7
)










(7
)Currency translation adjustment


















35



35Change in fair value of effective
    portion of hedges  net


















(1
)


(1
)Postretirement benefit plansAmortization of net actuarial loss


















(1
)


(1
)Balance as of May 15,
    2007


75,415,536


$



$
422


$
(360
)

$
43


$
105Successor:Balance as of May 16,
    2007


75,415,536


$



$
3,405


$



$



$
3,405Activity May 16, 2007 through
    June 30, 2007:Net loss














(54
)






(54
)Issuance of additional common stock


2,044,122







92











92Currency translation adjustment


















(2
)


(2
)Change in fair value of effective
    portion of hedges  net


















1



1Balance as of June 30,
    2007


77,459,658


$



$
3,497


$
(54
)

$
(1
)

$
3,442    5




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##### Table of Contents



Novelis
    Inc.
  NOTES TO THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)
  1.
    Business
    and Summary of Significant Accounting Policies    Change
    in Fiscal Year End
  Form 10-Q Rule 13a-10
  Description
    of Business and Basis of Presentation
    Form 10-K Rule 10-01 Regulation S-X.
  Predecessor
    and Successor Reporting
  Push Down Basis of Accounting Required in Certain Limited
    Circumstances Business Combinations
 6




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Reclassifications
    and Revisions
  Restructuring charges  net Impairment charges on long-lived assets Other (income) expenses  net Gain on change in fair value of derivative
    instruments  net Sale transaction fees Other (income)
    expenses  net
    Recently
    Issued Accounting Standards
  FIN 39-1, Amendment of FASB Interpretation  No. 39 FIN 39-1). FIN 39-1 Offsetting of Amounts Related
    to Certain Contracts FIN 39-1 FIN 39-1
  The Fair Value Option for Financial Assets and Financial
    Liabilities Fair Value
    Measurements Disclosures about Fair
    Value of Financial Instruments
 7




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Fair Value Measurements
    2.
    Acquisition
    of Novelis Common Stock      Purchase
    Price Allocation and Goodwill
    Purchase of all outstanding
    75,415,536 shares at $44.93 per share

$
3,388Direct transaction costs incurred
    by Hindalco


17Total consideration

$
3,405    8




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
      Assets acquired:Current assets

$
3,210Property, plant and equipment


3,350Goodwill


2,341Intangible assets


879Investment in and advances to
    non-consolidated affiliates


762Fair value of derivative
    instruments  net of current portion


3Deferred income tax assets


117Other long-term assets


110Total assets acquired


10,772Liabilities assumed:Accounts payable


(1,612
)Accrued expenses and other current
    liabilities


(738
)Long-term debt, including current
    portion and short-term borrowings


(2,824
)Deferred income tax liabilities,
    including current portion


(874
)Accrued postretirement benefits


(430
)Other long-term liabilities


(736
)Minority interests in equity of
    consolidated affiliates


(153
)Total liabilities assumed


(7,367
)Total consideration

$
3,405   Research and development expenses
  Other long-term liabilities Accrued expenses and other liabilities
   9




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
      Sale transaction fees
  Unaudited
    Condensed Consolidated Pro Forma Results
    (Predecessor)
    April 1, 2007


Three MonthsThrough


EndedMay 15,


June 30,2007


2006Predecessor


PredecessorNet sales

$
1,327


$
2,652Loss before provision for taxes
    and minority interests share

$
(113
)

$
(19
)Net loss

$
(118
)

$
(4
)   3.
    Restructuring
    Programs   10




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Other (income) expenses  net
  EuropeOther Exit


TotalSeverance


Related


RestructuringReserves


Reserves


ReservesBalance as of March 31,
    2007

$
18


$
18


$
36April 1, 2007 through
    May 15, 2007 Activity (Predecessor):Provisions  net


1







1Cash payments






(1
)


(1
)Adjustments  other






1



1Balance as of May 15,
    2007


19



18



37May 16, 2007 through
    June 30, 2007 Activity (Successor):Provisions  net


1







1Cash payments


(2
)


(1
)


(3
)Balance as of June 30,
    2007

$
18


$
17


$
35   4.
    Inventories    June 30, 2007



March 31, 2007Successor



PredecessorFinished goods

$
366



$
369Work in process


344




359Raw materials


722




684Supplies


73




1201,505




1,532Allowances


(1
)



(49
)Inventories

$
1,504



$
1,483  11




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  5.  Property,
    Plant and Equipment
    June 30, 2007



March 31, 2007Successor



PredecessorLand and property rights

$
251



$
97Buildings


691




895Machinery and equipment


2,341




4,6993,283




5,691Accumulated depreciation and
    amortization


(48
)



(3,674
)3,235




2,017Construction in progress


90




89Property, plant and
    equipment  net

$
3,325



$
2,106   6.
    Goodwill
    and Intangible Assets  Goodwill
    Successor



PredecessorBalance





Balance



Balance





Balanceas of


Cumulative


as of



as of


Cumulative


as ofMay 16,


Translation


June 30,



March 31,


Translation


May 15,Operating Segment

2007


Adjustment


2007



2007


Adjustment


2007North America

$
1,527


$



$
1,527



$



$



$
Europe


389



(1
)


388




239



5



244Asia


162







162












South America


263







263












$
2,341


$
(1
)

$
2,340



$
239


$
5


$
244  12




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Intangible
    Assets
    June 30, 2007



March 31, 2007Successor



PredecessorGross





Net


Weighted



Gross





Net


WeightedCarrying


Accumulated


Carrying


Average



Carrying


Accumulated


Carrying


AverageAmount


Amortization


Amount


Life



Amount


Amortization


Amount


LifeTradenames

$
81


$



$
81



20 years



$
14


$
(6
)

$
8


15 yearsTechnology


170



(1
)


169



15 years




20



(8
)


12


15 yearsCustomer relationships


480



(3
)


477



20 years












Favorable energy supply contract


124



(2
)


122



9.5 years












Other favorable contracts


15



(1
)


14



3.3 years












$
870


$
(7
)

$
863



17.2 years



$
34


$
(14
)

$
20


15 years     Cost
    of goods sold
    Fiscal Year Ending March 31,2008 (remaining)

$
462009


592010


572011


532012


52  13




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  7.
    Investment
    in and Advances to Non-Consolidated Affiliates and Related Party
    Transactions    OwnershipAffiliate Name

Ownership Structure

PercentageAluminium Norf GmbH

Corporation


50
%Consorcio Candonga

Unincorporated Joint Venture


50
%EuroNorca Partners

General Partnership


50
%MiniMRF LLC

Limited Liability Company


50
%Deutsche Aluminium Verpackung
    Recycling GmbH

Corporation


30
%France Aluminium Recyclage
    S.A.

Public Limited Company


20
%         May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2006Successor



Predecessor


PredecessorNet sales

$
85



$
45


$
144Costs, expenses and provisions for
    taxes on income


81




43



137Net income

$
4



$
2


$
7     May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2006Successor



Predecessor


PredecessorPurchases of tolling services
    and electricityAluminium Norf GmbH(A)

$
41



$
21


$
58Consorcio Candonga(B)


2




1



4     (A)
    
    We purchase tolling services (the conversion of customer-owned
    metal) from Aluminium Norf GmbH.(B)
    
    We purchase electricity from Consorcio Candonga for our
    operations in South America. 14




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
     June 30, 2007



March 31, 2007Successor



PredecessorAccounts receivable(A)

$
26



$
25Other long-term receivables(A)


49




54Accounts payable(B)


50




49     (A)
    
    The balances represent current and non-current portions of a
    loan due from Aluminium Norf GmbH.(B)
    
    We purchase tolling services from Aluminium Norf GmbH and
    electricity from Consorcio Candonga.  8.
    Accrued
    Expenses and Other Current Liabilities    June 30, 2007



March 31, 2007Successor



PredecessorAccrued compensation and benefits

$
110



$
138Accrued settlement of legal claim


39




39Accrued interest payable


50




24Accrued income taxes


17




9Current portion of unfavorable
    sales contracts


302




Current portion of fair value of
    derivative instruments


31




33Other current liabilities


218




237Accrued expenses and other current
    liabilities

$
767



$
480  15




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  9.
    Long-Term
    Debt    June 30, 2007



March 31, 2007Successor



PredecessorInterest





UnamortizedRates





Fair Value


Carrying(A)


Principal


Adjustments(B)


Value



PrincipalNovelis Inc.Floating rate Term Loan B, due 2012


7.61
%(C)

$
252


$



$
252



$
2597.25% Senior Notes, due 2015


7.25
%


1,400



73



1,473




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


7.59
%(C)


560







560




449Novelis Switzerland
    S.A.Capital lease obligation, due 2020
    (Swiss francs (CHF) 56 million)


7.50
%


45



(4
)


41




46Capital lease obligation, due 2011
    (CHF 4 million)


2.49
%


3







3




4Novelis Korea LimitedBank loan, due 2007


4.55
%


70



(1
)


69




70Bank loan, due 2007 (Korean won
    (KRW) 40 billion)


4.80
%


43



(1
)


42




42Bank loan, due 2007
    (KRW 25 billion)


4.45
%


27



(1
)


26




27Bank loans, due 2008 through 2011
    (KRW 1 billion)


3.97
%(D)


1







1




1OtherOther debt, due 2007 through 2012


2.30
%(D)


2







2




2Total debt






2,403



66



2,469




2,300Less: current portion






(144
)


3



(141
)



(143
)Long-term debt  net
    of current portion





$
2,259


$
69


$
2,328



$
2,157     (A)
    
    Interest rates are as of June 30, 2007 and exclude the
    effects of accretion/amortization of fair value adjustments as a
    result of the Arrangement.(B)
    
    Debt was recorded at fair value as a result of the Arrangement
    (see Note 2  Acquisition of Novelis Common
    Stock).(C)
    
    The interest rate for the Floating rate Term Loan B includes an
    increased applicable margin in effect through March 31,
    2008. The Floating rate Term Loan B was refinanced on
    July 6, 2007.(D)
    
    Weighted average interest rate.  Senior
    Secured Credit Facilities
   16




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
            share-based
    Other long-term
    assets  third parties Interest expense
    and amortization of debt issuance costs  net
 17




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    New
    Senior Secured Credit Facilities
    Other
    long-term assets  third parties
         18




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
        Other long-term assets 
    third parties Interest expense and amortization of
    debt issuance costs  net
  7.25% Senior
    Notes
  Other
    long-term assets  third parties Interest
    expense and amortization of debt issuance costs  net
  Interest expense and
    amortization of debt issuance costs  net
     19




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Tender
    Offer and Consent Solicitation for 7.25% Senior
    Notes
    Korean
    Bank Loans
          Other
    Agreements
  deposit-and-guarantee
  Interest
    Rate Swaps
  3-month
  Capital
    Lease Obligations
     20




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Short
    Term Borrowings and Lines of Credit
      10.
    Accumulated
    Other Comprehensive Income (Loss)    May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2006Successor



Predecessor


PredecessorNet change in foreign currency
    translation adjustments

$
(13
)


$
31


$
57Net change in fair value of
    effective portion of hedges


2




(1
)


(34
)Postretirement benefit plans:Amortization of net actuarial loss







(1
)


Net change in minimum pension
    liability











(3
)Net other comprehensive income
    adjustments, before income tax effect


(11
)



29



20Income tax effect


10




4



Other comprehensive income (loss)

$
(1
)


$
33


$
20     June 30, 2007



March 31, 2007Successor



PredecessorForeign currency translation
    adjustments

$
(2
)


$
144Fair value of effective portion of
    hedges  net


1




(43
)Net actuarial loss







(82
)Net prior service cost







(8
)Net transition obligation







(1
)Accumulated other comprehensive
    income (loss)

$
(1
)


$
10   11.
    Share-Based
    Compensation  Effect of
    Acquisition by Hindalco
   21




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Shares/Units


Cash PaymentsSettled


(In millions)Novelis 2006 Incentive Plan (stock
    options)


825,850


$
16Novelis 2006 Incentive Plan (stock
    appreciation rights)


378,360



7Novelis Conversion Plan of 2005


1,238,183



29Stock Price Appreciation Unit Plan


299,873



7Deferred Share Unit Plan for
    Non-Executive Directors


109,911



5Novelis Founders Performance Awards


180,400



8$
72   Selling, general and administrative expenses Additional
    paid-in capital
    2006
    Stock Options
   22




---



##### Table of Contents



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


RemainingAverage


Contractual


AggregateNumber of


Exercise


Term


IntrinsicOptions


Price


(In Years)


ValueOptions outstanding as of
    March 31, 2007


825,850


$
25.53Granted






Exercised






Forfeited/Cancelled






Expired






Settled as a result of the
    Arrangement


(825,850
)

$
25.53Options outstanding as of
    May 15, 2007





$







$
Options exercisable as of
    May 15, 2007





$







$
     Share-Based
    Payment
 23




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    April 1, 2007ThroughMay 15, 2007PredecessorExpected volatility

42.20 to 46.40%Weighted average volatility

44.30%Dividend yield

0.16%Risk-free interest rate

4.68 to 4.71%Expected life

1.00 to 4.75 years     Novelis
    Conversion Plan of 2005
      WeightedAverageWeighted


RemainingAverage


Contractual


AggregateNumber of


Exercise


Term


IntrinsicOptions


Price


(In Years)


ValueOptions outstanding as of
    March 31, 2007


1,296,952


$
21.74Granted






Exercised


(57,876
)

$
20.00Forfeited/Cancelled


(893
)

$
23.74Expired






Settled as a result of the
    Arrangement


(1,238,183
)

$
21.82Options outstanding as of
    May 15, 2007





$







$
Options exercisable as of
    May 15, 2007





$







$
    24




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
      April 1, 2007ThroughMay 15, 2007PredecessorExpected volatility

30.30%Weighted-average volatility

30.30%Dividend yield

1.56%Risk-free interest rate

2.88 to 3.73%Expected life

0.70 to 5.70 years       Recognition
    Awards
      Share-Based Payment
   25




---



##### Table of Contents



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


Average


AwardRecognition


Fair Value at


RedemptionAwards


Grant Date


PricePredecessor:Recognition Awards as of
    March 31, 2007


145,800


$
23.15Granted


Vested


Forfeited/Cancelled


Recognition Awards as of
    May 15, 2007


145,800






$
44.93Successor:Granted


Vested


Forfeited/Cancelled


Recognition Awards as of
    June 30, 2007


145,800






$
44.93     Stock
    Appreciation Rights
   26




---



##### Table of Contents



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


Contractual


AggregateNumber of


Average


Term


IntrinsicSARs


Exercise Price


(In Years)


ValueSARs outstanding as of
    March 31, 2007


380,000


$
25.53Granted






Exercised






Forfeited/Cancelled


(1,640
)

$
25.53Expired






Settled as a result of the
    Arrangement


(378,360
)

$
25.53SARs outstanding as of
    May 15, 2007





$







$
SARs exercisable as of
    May 15, 2007





$







$
         Stock
    Price Appreciation Unit Plan
   27




---



##### Table of Contents



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


Contractual


AggregateNumber of


Average


Term


IntrinsicSPAUs


Exercise Price


(In Years)


ValueSPAUs outstanding as of
    March 31, 2007


300,617


$
21.94Granted






Exercised






Forfeited/Cancelled


(744
)

$
21.49Expired






Settled as a result of the
    Arrangement


(299,873
)

$
21.94SPAUs outstanding as of
    May 15, 2007





$







$
SPAUs exercisable as of
    May 15, 2007





$







$
       Deferred
    Share Unit Plan for Non-Executive Directors
    and/or
 28




---



##### Table of Contents



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


Redemption


IntrinsicDDSUs


Price


ValueDDSUs outstanding as of
    March 31, 2007


106,578


$
44.09Granted


3,333Exercised (paid out)


Forfeited


Expired/Cancelled


Settled as a result of the
    Arrangement


(109,911
)

$
44.93DDSUs outstanding as of
    May 15, 2007





$



$
     Novelis
    Founders Performance Awards
         29




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Share-Based
    Compensation Expense
  Selling, general
    and administrative expenses
  May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2006Successor



Predecessor


PredecessorRecognition Awards

$
0.4



$
1.5


$
Novelis 2006 Incentive Plan (stock
    options)


n.a.




14.5



Novelis 2006 Incentive Plan (stock
    appreciation rights)


n.a.




5.6



Novelis Conversion Plan of 2005


n.a.




23.8



0.8Stock Price Appreciation Unit Plan


n.a.




(0.5
)


0.3Total Shareholder Returns
    Performance Plan


n.a.








0.4Deferred Share Unit Plan for
    Non-Executive Directors


n.a.




0.2



0.4Novelis Founders Performance Awards


n.a.




0.1



0.2Total Share-Based Compensation
    Expense

$
0.4



$
45.2


$
2.1       12.
    Postretirement
    Benefit Plans    Pension Benefits


Other Postretirement BenefitsApril 1, 2007












Three MonthsMay 16, 2007



Through


Three Month


May 16, 2007



April 1, 2007


EndedThrough



May 15,


Ended


Through



Through


June 30,June 30, 2007



2007


June 30, 2006


June 30, 2007



May 15, 2007


2006Successor



Predecessor


Predecessor


Successor



Predecessor


PredecessorService cost

$
6



$
6


$
10


$
1



$
1


$
1Interest cost


6




6



11



1




1



2Expected return on assets


(5
)



(5
)


(10
)











Amortization  actuarial
    losses











2












 prior service cost
























Net periodic benefit cost

$
7



$
7


$
13


$
2



$
2


$
3    30




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Employer
    Contributions to Plans
    Three MonthsMay 16, 2007



April 1, 2007


EndedThrough



Through


June 30,June 30, 2007



May 15, 2007


2006Successor



Predecessor


PredecessorFunded pension plans

$
4



$
4


$
5Unfunded pension plans


2




2



3Savings and defined contribution
    pension plans


2




2



2Total contributions

$
8



$
8


$
10     13.
    Currency
    Losses (Gains)    May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2006Successor



Predecessor


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

$
(16
)


$
(10
)

$
8Net loss (gain) on translation of
    monetary assets and liabilities(B)


7




4



(5
)Net currency losses (gains)

$
(9
)


$
(6
)

$
3     (A)
    
    Included in Gain on change in fair value of derivative
    instruments  net.(B)
    
    Included in Other (income) expenses  net.  Accumulated other comprehensive income (loss)
  May 16, 2007



January 1, 2007Through



ThroughJune 30, 2007



March 31, 2007Successor



PredecessorCumulative currency translation
    adjustment  beginning of period

$




$
133Effect of changes in exchange rates


(2
)



11Cumulative currency translation
    adjustment  end of period

$
(2
)


$
144  31




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  14.
    Financial
    Instruments and Commodity Contracts    Accumulated other comprehensive
    income (loss)
  Prior to
    Completion of the Arrangement
      Impact of
    the Arrangement and Purchase Accounting
  Accumulated other
    comprehensive income (loss)
  Subsequent
    to Completion of the Arrangement
  Gain on
    change in fair value of derivative instruments  net
   32




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    As of June 30, 2007SuccessorNet FairMaturity Dates

Assets


Liabilities


ValueForeign exchange forward contracts

2007 through 2011

$
25


$
(17
)

$
8Interest rate swaps

2007 through 2008


2







2Cross-currency swaps

2007 through 2015


6



(95
)


(89
)Aluminum forward contracts

2007 through 2009


40



(6
)


34Electricity swap

2016


3







3Embedded derivative instruments

2007


1



(1
)


Natural gas swaps

2007






(1
)


(1
)Total fair value




77



(120
)


(43
)Less: current portion (A)




71



(31
)


40Noncurrent portion (A)



$
6


$
(89
)

$
(83
)   As of March 31, 2007PredecessorNet FairMaturity Dates

Assets


Liabilities


ValueForeign exchange forward contracts

2007 through 2011

$
16


$
(20
)

$
(4
)Interest rate swaps

2007 through 2008


2







2Cross-currency swaps

2007 through 2015


6



(90
)


(84
)Aluminum forward contracts

2007 through 2009


60



(8
)


52Aluminum options

2007


1







1Electricity swap

2016


60







60Embedded derivative instruments

2007


1







1Natural gas swaps

2007


1







1Total fair value




147



(118
)


29Less: current portion (A)




92



(33
)


59Noncurrent portion (A)



$
55


$
(85
)

$
(30
)     (A)
    
    The amounts of the current and long-term portions of fair values
    under assets are each presented in the accompanying condensed
    consolidated balance sheets. The amounts of the current and
    noncurrent portions of fair values under liabilities are
    included in Accrued expenses and other current liabilitiesand Other long-term liabilities, respectively, in the
    accompanying condensed consolidated balance sheets. 33




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
   15.
    Other
    (Income) Expenses  Net    May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2006Successor



Predecessor


PredecessorRestructuring charges 
    net

$
1



$
1


$
2Exchange (gains)
    losses  net


7




4



(5
)Other  net


3




(1
)


(1
)Other (income)
    expenses  net

$
11



$
4


$
(4
)   16.
    Income
    Taxes  Accounting for
    Income Interim Financial Reporting Accounting for Income Taxes in Interim
    Periods
      Three MonthsMay 16, 2007



April 1, 2007


EndedThrough



Through


June 30,June 30, 2007



May 15, 2007


2006Successor



Predecessor


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

$
(19
)


$
(95
)

$
(14
)Canadian statutory tax rate


33
%



33
%


33
%Income taxes (benefit) at the
    Canadian statutory rate

$
(6
)


$
(31
)

$
(4
)Increase (decrease) in tax rate
    resulting from:Exchange translation items


20




23



24Exchange remeasurement of deferred
    income taxes


3




3



Change in valuation allowances


21




13



(3
)Expense/income items with no tax
    effect  net


(6
)



(9
)


(8
)Tax rate differences on foreign
    earnings


2




2



(29
)Other  net


2




3



Provision (benefit) for taxes on
    loss

$
36



$
4


$
(20
)Effective tax rate


(189
)%



(4
)%


143
%  34




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
      Adoption
    of FASB Interpretation No. 48
  Accounting for Uncertainty in Income Taxes. Accumulated deficit
  1999-2003.
  ther long-term assets  third parties
    Provision (benefit) for taxes on income (loss) Provision (benefit) for taxes on loss
 35




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  17.
    Commitments
    and Contingencies  Primary
    Supplier
    Legal
    Proceedings
  Reynolds Boat Case.
    Form 10-K Accrued expenses and
    other current liabilities Prepaid expenses and
    other current assets
  Accrued expenses
    and other current liabilities
   36




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Coca-Cola
    Lawsuits. Coca-Cola Coca-Cola Coca-Cola Coca-Cola
  Coca-Cola Coca-Cola
    Anheuser-Busch Litigation.
        ARCO Aluminum Complaint.
 37




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
          Environmental
    Matters
  Oswego North Ponds.
   38




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Brazil
    Tax Matters
  Other long-term
    assets  third parties Other long-term
    liabilities
  Guarantees
    of Indebtedness
    
    certain of our wholly-owned and majority-owned
    subsidiaries; and
    Aluminium Norf GmbH, which is a fifty percent (50%) owned joint
    venture that does not meet the requirements for consolidation
    under FASB Interpretation No. 46 (Revised),
    Consolidation of Variable Interest Entities.        Maximum Potential


Liability CarryingType of Entity

Future Payment


ValueWholly-owned subsidiaries

$
76


$
45Majority-owned subsidiaries


3



Aluminium Norf GmbH


13



   18.
    Segment
    and Major Customer Information   39




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Disclosure About the Segments of
    an Enterprise and Related Information.
  Form 10-K
  Gain on
    change in fair value of derivative instruments 
    net.
    Selected
    Segment Financial Information
  Adjustment toEliminateNorth








South


Proportional


CorporateTotal Assets

America


Europe


Asia


America


Consolidation


and Other


TotalJune 30, 2007
    (Successor)

$
4,524


$
3,696


$
1,323


$
1,321


$
(106
)

$
65


$
10,823March 31, 2007
    (Predecessor)

$
1,566


$
2,543


$
1,110


$
821


$
(114
)

$
44


$
5,970   40




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Adjustment toEliminateSelected Operating Results

North








South


Proportional


CorporateMay 16, 2007 Through June 30, 2007

America


Europe


Asia


America


Consolidation


and Other


Total(Successor)Net sales (to third parties)

$
574


$
593


$
246


$
134


$



$



$
1,547Intersegment sales


1







3



16







(20
)


Segment Income (Loss)


23



43



(2
)


20











84Depreciation and amortization


21



22



8



7



(5
)






53Capital expenditures


5



12



4



3



(3
)


1



22   Adjustment toEliminateSelected Operating Results

North








South


Proportional


CorporateApril 1, 2007 Through May 15, 2007

America


Europe


Asia


America


Consolidation


and Other


Total(Predecessor)Net sales (to third parties)

$
446


$
510


$
216


$
109


$



$



$
1,281Intersegment sales










1



7







(8
)


Segment Income (Loss)


(24
)


32



6



19











33Depreciation and amortization


7



11



7



5



(3
)


1



28Capital expenditures


4



6



5



2



(1
)


1



17   Adjustment toEliminateSelected Operating Results

North








South


Proportional


CorporateThree Months Ended June 30, 2006

America


Europe


Asia


America


Consolidation


and Other


Total(Predecessor)Net sales (to third parties)

$
992


$
922


$
453


$
201


$
(4
)

$



$
2,564Intersegment sales


1







5



11







(17
)


Segment Income


23



80



26



44











173Depreciation and amortization


18



24



13



11



(8
)


1



59Capital expenditures


10



9



8



8



(2
)


1



34  41




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2006Successor



Predecessor


PredecessorTotal Segment Income

$
84



$
33


$
173Interest expense and amortization
    of debt issuance costs  net


(25
)



(26
)


(49
)Unrealized gains (losses) on
    change in fair value of derivative instruments  net
    (A)


(15
)



5



(37
)Realized gains (losses) on
    corporate derivative instruments  net


8




(3
)


Depreciation and amortization


(53
)



(28
)


(59
)Minority interests share


2




1



(4
)Adjustment to eliminate
    proportional consolidation (B)


(9
)



(7
)


(9
)Restructuring charges 
    net


(1
)



(1
)


(2
)Corporate selling, general and
    administrative expenses


(8
)



(35
)


(29
)Other corporate costs 
    net


(1
)







2Sale transaction fees







(32
)


Benefit (provision) for taxes on
    loss


(36
)



(4
)


20Net income (loss)

$
(54
)


$
(97
)

$
6     (A)
    
    Unrealized gains (losses) on change in fair value of derivative
    instruments  net represents the portion of gains
    (losses) that were not settled in cash during the period.
    Realized and unrealized gains (losses) are shown in the table
    below and are included in the aggregate each period in Gain
    on change in fair value of derivative instruments 
    neton our condensed consolidated statements of operations.  May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2006Successor



Predecessor


PredecessorGains (losses) on change in fair
    value of derivative instruments  net:Realized and included in Segment
    Income

$
21



$
18


$
78Realized on corporate derivative
    instruments


8




(3
)


Unrealized


(15
)



5



(37
)Gain on change in fair value of
    derivative instruments  net

$
14



$
20


$
41    (B)
    
    Our financial information for our segments (including Segment
    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 Segment Income to Net income (loss), the
    proportional Segment Income of these non-consolidated affiliates
    is removed from Total Segment Income, net of our share of their
    net after-tax results, which is reported as Equity in net
    (income) loss of non-consolidated affiliateson our
    condensed consolidated statements of operations. See
    Note 7  42




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Investment in and Advances to Non-Consolidated Affiliates and
    Related Party Transactions for further information about these
    non-consolidated affiliates.  Information
    about Major Customers
    19.
    Supplemental
    Guarantor Information     43




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Consolidating
    Statement of Operations
 (In
    millions)
  May 16, 2007 Through June 30, 2007
    (Successor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
245


$
1,347


$
419


$
(464
)

$
1,547Cost of goods sold (exclusive of
    depreciation and amortization shown below)


246



1,251



402



(463
)


1,436Selling, general and
    administrative expenses


5



25



12







42Depreciation and amortization


3



38



12







53Research and development expenses


2



7



4







13Interest expense and amortization
    of debt issuance costs  net


3



20



2







25Gain on change in fair value of
    derivative instruments  net


(13
)


(4
)


3







(14
)Equity in net loss of affiliates


35



1







(35
)


1Other (income)
    expenses  net


(4
)


14



1







11277



1,352



436



(498
)


1,567Loss before provision for taxes on
    loss and minority interests share


(32
)


(5
)


(17
)


34



(20
)Provision for taxes on loss


22



14











36Loss before minority
    interests share


(54
)


(19
)


(17
)


34



(56
)Minority interests share










2







2Net loss

$
(54
)

$
(19
)

$
(15
)

$
34


$
(54
)  44




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Consolidating
    Statement of Operations
 (In
    millions)
  April 1, 2007 Through May 15, 2007(Predecessor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
129


$
1,020


$
359


$
(227
)

$
1,281Cost of goods sold (exclusive of
    depreciation and amortization shown below)


131



961



340



(227
)


1,205Selling, general and
    administrative expenses


29



51



15







95Depreciation and amortization


2



18



8







28Research and development expenses


5



1











6Interest expense and amortization
    of debt issuance costs  net


3



20



3







26(Gain) loss on change in fair
    value of derivative instruments  net


(2
)


(19
)


1







(20
)Equity in net (income) loss of
    affiliates


29



(1
)






(29
)


(1
)Sale transaction fees


32















32Other (income)
    expenses  net


(3
)


9



(2
)






4226



1,040



365



(256
)


1,375Loss before provision for taxes on
    loss and minority interests share


(97
)


(20
)


(6
)


29



(94
)Provision for taxes on loss






3



1







4Loss before minority
    interests share


(97
)


(23
)


(7
)


29



(98
)Minority interests share










1







1Net loss

$
(97
)

$
(23
)

$
(6
)

$
29


$
(97
)  45




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Consolidating
    Statement of Operations
 (In
    millions)
  Three Months Ended June 30, 2006 (Predecessor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
419


$
2,173


$
756


$
(784
)

$
2,564Cost of goods sold (exclusive of
    depreciation and amortization shown below)


405



2,074



709



(781
)


2,407Selling, general and
    administrative expenses


21



60



17







98Depreciation and amortization


3



39



17







59Research and development expenses


7



3











10Interest expense and amortization
    of debt issuance costs  net


10



35



4







49Gain on change in fair value of
    derivative instruments  net






(42
)


1







(41
)Equity in net income of affiliates


(26
)


(4
)






26



(4
)Other (income)
    expenses  net


(8
)


7



(3
)






(4
)412



2,172



745



(755
)


2,574Income (loss) before provision
    (benefit) for taxes on income (loss) and minority
    interests share


7



1



11



(29
)


(10
)Provision (benefit) for taxes on
    income (loss)


1



(7
)


(14
)






(20
)Income before minority
    interests share


6



8



25



(29
)


10Minority interests share










(4
)






(4
)Net income

$
6


$
8


$
21


$
(29
)

$
6  46




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Consolidating
    Balance Sheet
 (In
    millions)
  As of June 30, 2007 (Successor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assetsCash and cash equivalents

$
29


$
141


$
16


$



$
186Accounts receivable  net
    of allowances third parties


40



979



409







1,428 related parties


395



443



26



(838
)


26Inventories


60



1,047



398



(1
)


1,504Prepaid expenses and other current
    assets


3



26



12







41Current portion of fair value of
    derivative instruments


3



67



1







71Deferred income tax assets






38



4







42Total current assets


530



2,741



866



(839
)


3,298Property, plant and
    equipment  net


113



2,419



793







3,325Goodwill






1,977



363







2,340Intangible assets  net






784



79







863Investments


3,653



1,307







(4,202
)


758Fair value of derivative
    instruments  net of current portion






6











6Deferred income tax assets


1



57



36







94Other long-term assets


1,317



146



132



(1,456
)


139Total assets

$
5,614


$
9,437


$
2,269


$
(6,497
)

$
10,823LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$



$
3


$
138


$



$
141Short-term borrowings third parties


35



323



32







390 related parties


12



475



44



(531
)


Accounts payable third parties


125



951



488







1,564 related parties


66



219



72



(307
)


50Accrued expenses and other current
    liabilities


70



608



89







767Deferred income tax liabilities






67











67Total current
    liabilities


308



2,646



863



(838
)


2,979Long-term debt  net of
    current portion third parties


1,724



602



2







2,328 related parties






1,204



252



(1,456
)


Deferred income tax liabilities


1



731



54







786Accrued postretirement benefits


21



299



114







434Other long-term liabilities


118



567



20







7052,172



6,049



1,305



(2,294
)


7,232Commitments and contingenciesMinority interests in equity of
    consolidated affiliates










149







149Shareholders
    equityCommon stock


















Additional paid-in capital


3,497















3,497(Accumulated deficit)/retained
    earnings/owners net investment


(54
)


3,352



852



(4,204
)


(54
)Accumulated other comprehensive
    income (loss)


(1
)


36



(37
)


1



(1
)Total shareholders
    equity


3,442



3,388



815



(4,203
)


3,442Total liabilities and
    shareholders equity

$
5,614


$
9,437


$
2,269


$
(6,497
)

$
10,823  47




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Consolidating
    Balance Sheet
 (In
    millions)
  As of March 31, 2007 (Predecessor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assetsCash and cash equivalents

$
6


$
71


$
51


$



$
128Accounts receivable  net
    of allowances third parties


36



903



411







1,350 related parties


416



500



58



(949
)


25Inventories


65



1,004



417



(3
)


1,483Prepaid expenses and other current
    assets


3



26



10







39Current portion of fair value of
    derivative instruments






88



4







92Deferred income tax assets


3



12



4







19Total current assets


529



2,604



955



(952
)


3,136Property, plant and
    equipment  net


112



1,229



765







2,106Goodwill






29



210







239Intangible assets  net






18



2







20Investments


362



153







(362
)


153Fair value of derivative
    instruments  net of current portion






55











55Deferred income tax assets


1



66



35







102Other long-term assets


1,231



160



132



(1,364
)


159Total assets

$
2,235


$
4,314


$
2,099


$
(2,678
)

$
5,970LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$



$
3


$
140


$



$
143Short-term borrowings third parties






241



4







245 related parties


15



529



61



(605
)


Accounts payable third parties


116



938



560







1,614 related parties


69



240



84



(344
)


49Accrued expenses and other current
    liabilities


63



317



100







480Deferred income tax liabilities






73











73Total current
    liabilities


263



2,341



949



(949
)


2,604Long-term debt  net of
    current portion third parties


1,659



496



2







2,157 related parties






1,116



248



(1,364
)


Deferred income tax liabilities






89



14







103Accrued postretirement benefits


19



293



115







427Other long-term liabilities


119



214



19







3522,060



4,549



1,347



(2,313
)


5,643Commitments and contingenciesMinority interests in equity of
    consolidated affiliates










152







152Shareholders
    equityCommon stock


















Additional paid-in capital


428















428(Accumulated deficit)/retained
    earnings/owners net investment


(263
)


(458
)


575



(117
)


(263
)Accumulated other comprehensive
    income


10



223



25



(248
)


10Total shareholders
    equity


175



(235
)


600



(365
)


175Total liabilities and
    shareholders equity

$
2,235


$
4,314


$
2,099


$
(2,678
)

$
5,970  48




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Consolidating
    Statement of Cash Flows
 (In
    millions)
  May 16, 2007 Through June 30, 2007
    (Successor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedOPERATING ACTIVITIESNet cash provided by (used in)
    operating activities

$
14


$
(23
)

$
(35
)





$
(44
)INVESTING ACTIVITIESCapital expenditures


(2
)


(18
)


(2
)






(22
)Proceeds from sales of assets










1







1Changes to investment in and
    advances to non-consolidated affiliates


(40
)


1







40



1Proceeds from loans
    receivable  net  related parties






4











4Net proceeds from settlement of
    derivative instruments


6



22



1







29Net cash provided by (used in)
    investing activities


(36
)


9







40



13FINANCING ACTIVITIESProceeds from issuance of common
    stock


92



40







(40
)


92Principal repayments


(7
)


(39
)










(46
)Short-term borrowings 
    net third parties


(10
)


72



21







83 related parties


(19
)


8



11







Dividends minority interests










(1
)






(1
)Debt issuance costs


(13
)














(13
)Net cash provided by financing
    activities


43



81



31



(40
)


115Net increase (decrease) in cash
    and cash equivalents


21



67



(4
)






84Effect of exchange rate changes
    on cash balances held in foreign currencies


















Cash and cash
    equivalents  beginning of period


8



74



20







102Cash and cash
    equivalents  end of period

$
29


$
141


$
16


$



$
186  49




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Consolidating
    Statement of Cash Flows
 (In
    millions)
  April 1, 2007 Through May 15, 2007
    (Predecessor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedOPERATING ACTIVITIESNet cash used in operating
    activities

$
(21
)

$
(181
)

$
(28
)

$



$
(230
)INVESTING ACTIVITIESCapital expenditures


(1
)


(10
)


(6
)






(17
)Changes to investment in and
    advances to non-consolidated affiliates






1











1Net proceeds from settlement of
    derivative instruments


(5
)


23











18Net cash (used in) provided by
    investing activities


(6
)


14



(6
)






2FINANCING ACTIVITIESProceeds from issuance of debt






150











150Principal repayments






(1
)










(1
)Short-term borrowings 
    net third parties


45



9



6







60 related parties


(15
)


11



4







Dividends minority interests










(7
)






(7
)Debt issuance costs


(2
)














(2
)Proceeds from the exercise of
    stock options


1















1Net cash provided by financing
    activities


29



169



3







201Net increase (decrease) in cash
    and cash equivalents


2



2



(31
)






(27
)Effect of exchange rate changes
    on cash balances held in foreign currencies






1











1Cash and cash
    equivalents  beginning of period


6



71



51







128Cash and cash
    equivalents  end of period

$
8


$
74


$
20


$



$
102  50




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Consolidating
    Statement of Cash Flows
 (In
    millions)
  Three Months Ended June 30, 2006 (Predecessor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedOPERATING ACTIVITIESNet cash provided by (used in)
    operating activities

$
57


$
(27
)

$
(20
)

$
(46
)

$
(36
)INVESTING ACTIVITIESCapital expenditures


(2
)


(19
)


(13
)






(34
)Proceeds from sales of assets






1











1Changes to investment in and
    advances to non-consolidated affiliates






1











1Proceeds from loans
    receivable  net  related parties


20



(6
)


3



(8
)


9Net proceeds from settlement of
    derivative instruments






87



(1
)






86Net cash provided by (used in)
    investing activities


18



64



(11
)


(8
)


63FINANCING ACTIVITIESProceeds from issuance of debt third parties










20







20 related parties






59







(59
)


Principal repayments third parties


(21
)


(36
)


(40
)






(97
) related parties


(40
)


(24
)


(3
)


67



Short-term borrowings 
    net third parties






32



(4
)






28 related parties


(20
)


(12
)


32







Dividends common shareholders


(7
)


(45
)


(1
)


46



(7
) minority interests










(1
)






(1
)Debt issuance costs


(3
)














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


(91
)


(26
)


3



54



(60
)Net increase (decrease) in cash
    and cash equivalents


(16
)


11



(28
)






(33
)Effect of exchange rate changes
    on cash balances held in foreign currencies






1



1







2Cash and cash
    equivalents  beginning of period


29



55



40







124Cash and cash
    equivalents  end of period

$
13


$
67


$
13


$



$
93  51




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  FORWARD
    LOOKING STATEMENTS
  The following information should be read together with our
    unaudited condensed consolidated financial statements and
    accompanying notes included elsewhere in this quarterly report
    for a more complete understanding of our financial condition and
    results of operations. The following discussion contains
    forward-looking statements that reflect our plans, estimates and
    beliefs. Our actual results could differ materially from those
    discussed in these forward-looking statements. Factors that
    could cause or contribute to these differences include, but are
    not limited to, those discussed below, particularly in
    SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND
    MARKET DATA.
  GENERAL
    Acquisition
    of Novelis Common Stock
      Push Down Basis of
    Accounting Required in Certain Limited Circumstances Business
    Combinations
 52




---



##### Table of Contents



REFERENCES
    Form 10-K Form 10-K
  CHANGE IN
    FISCAL YEAR END
  Form 10-Q
  NOTE REGARDING
    COMBINED RESULTS OF OPERATIONS AND SELECTED FINANCIAL AND
    OPERATING INFORMATION DUE TO THE ACQUISITION
      May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2007Successor



Predecessor


CombinedCombined Shipments:Shipments (kt(A)):Rolled products


407




348



755Ingot products(B)


23




15



38Total shipments


430




363



793     (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.  53




---



##### Table of Contents



May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2007Successor



Predecessor


CombinedCombined Results of Operations
    ($ in millions)Net sales

$
1,547



$
1,281


$
2,828Cost of goods sold (exclusive of
    depreciation and amortization shown below)


1,436




1,205



2,641Selling, general and
    administrative expenses


42




95



137Depreciation and amortization


53




28



81Research and development expenses


13




6



19Interest expense and amortization
    of debt issuance costs  net


25




26



51Gain on change in fair value of
    derivative instruments  net


(14
)



(20
)


(34
)Equity in net (income) loss of
    non-consolidated affiliates


1




(1
)


Sale transaction fees







32



32Other expenses  net


11




4



151,567




1,375



2,942Loss before provision for taxes on
    loss and minority interests share


(20
)



(94
)


(114
)Provision for taxes on loss


36




4



40Loss before minority
    interests share


(56
)



(98
)


(154
)Minority interests share


2




1



3Net loss

$
(54
)


$
(97
)

$
(151
)   HIGHLIGHTS
   54




---



##### Table of Contents




    Shipments and selected financial information are as follows:  Three MonthsEndedJune 30,2007


2006Combined


Predecessor($ in millions)Shipments (kt):Rolled products


755



753Ingot products


38



47Total shipments


793



800Net sales

$
2,828


$
2,564Net income (loss)

$
(151
)

$
6Increase in total debt(A)

$
248


$
44     (A)
    Excluding unamortized fair value adjustments of $66 million
    as of June 30, 2007 recorded as part of the acquisition by
    Hindalco.  
    Rolled products shipments increased in Europe driven by strong
    demand across the product lines and in the can market in South
    America. These gains were offset by lower shipments in North
    America and Asia. North America experienced lower demand
    from distributors due to the slowdown in the housing market. In
    addition, North America can sheet shipments were negatively
    impacted by a labor strike at one of our large customers during
    the first quarter of fiscal 2008. Asia had lower shipments in
    industrial and light gauge markets as a result of continued
    price pressure from Chinese exports.
    London Metal Exchange (LME) pricing for aluminum (metal) was an
    average of 4.1% higher during the first quarter of fiscal 2008
    than the comparable prior year period.
    Net sales for the first quarter of fiscal 2008 increased from
    the comparable prior year period due primarily to increased
    prices, lower exposure to metal price ceilings and a rise in LME
    prices. The benefit of higher LME prices was limited by metal
    price ceilings in sales contracts representing approximately 10%
    of our total shipments in the fiscal 2008 quarter and 20% of our
    total shipments in the comparable prior year period. During the
    first quarter of fiscal 2008 and the comparable prior year
    period, we were unable to pass through approximately
    $80 million and $140 million, respectively, of metal
    purchase costs associated with sales under these contracts for a
    net favorable comparable impact of approximately
    $60 million. The first quarter of fiscal 2008 was also
    positively impacted by $44 million related to the accretion
    of fair value reserves associated with these contracts as
    discussed more fully below under Metal Price Ceilings.
    Compared to the prior year quarter ending June 30, 2006,
    net income for the first quarter of fiscal 2008 was negatively
    impacted by the following items associated with or triggered by
    the Arrangement: (1) $43 million (pre-tax) of
    incremental stock compensation expense,
    (2) $32 million (pre-tax) of sale transaction fees,
    (3) $19 million (pre-tax) of incremental expenses
    (described below) associated with push down accounting and the
    preliminary fair value allocation of purchase price. Other items
    negatively impacting the first quarter of fiscal 2008 compared
    to the quarter ended June 30, 2006 include metal price lag
    described below and $60 million of additional income tax
    expense.
    Our total debt increased $248 million (excluding
    unamortized fair value adjustments of $66 million recorded
    as part of the acquisition by Hindalco) during the quarter ended
    June 30, 2007 as a result of our need to fund additional
    working capital requirements and certain costs associated with
    the Arrangement, including sale transaction fees and share-based
    compensation.
    As described more fully in Note 2  Acquisition
    of Novelis Common Stock in the accompanying condensed and
    consolidated financial statements, the consideration paid by
    Hindalco to acquire Novelis have been pushed down to us and
    initially allocated to the assets acquired and liabilities
    assumed based 55




---



##### Table of Contents



on our preliminary estimates of fair value, using methodologies
    and assumptions that we believe are reasonable. This preliminary
    allocation of fair value results in additional charges or income
    to the post-acquisition consolidated statement of operations. A
    summary of the pre-tax impacts of these items on the first
    quarter of fiscal 2008 is shown below (in millions).  Increase (Decrease) to:Pre-Tax


SegmentIncome


Income(A)Depreciation and amortization

$
(22
)

$
Favorable/unfavorable contracts


43



43In-process research and
    development write-off


(9
)


(9
)Inventory


(29
)


(29
)Equity investments


(3
)


Fair value of debt


1



Total pre-tax impact

$
(19
)

$
5     (A)
    We use Segment Income to measure the profitability and financial
    performance of our operating segments, as discussed below in
    RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30,
    2007 (THREE MONTHS COMBINED NON-GAAP) COMPARED TO THE QUARTER
    ENDED JUNE 30, 2006.  OUR
    BUSINESS
  Business
    Model and Key Concepts
    METAL
    PRICE CEILINGS
     56




---



##### Table of Contents



METAL
    PRICE LAG
        RISK
    MITIGATION
    and/or
    Accounting for Derivative
    Instruments and Hedging Activities.
 57




---



##### Table of Contents



INTERNAL
    CONTROLS
  Form 10-K
  SPIN-OFF
    FROM ALCAN
    Post-Transaction
    Adjustments
    Agreements
    between Novelis and Alcan
  Form 10-K
 58




---



##### Table of Contents



OPERATIONS
    AND SEGMENT REVIEW
    Three MonthsEndedJune 30,


Percent2007


2006


ChangeCombined


PredecessorShipments (kt)Rolled products, including tolling
    (the conversion of customer-owned metal)


755



753



0.3
%Ingot products, including primary
    and secondary ingot and recyclable aluminum


38



47



(19.1
)%Total shipments


793



800



(0.9
)%   Three MonthsEndedJune 30,


Percent2007


2006


Change($ in millions)Combined


PredecessorResults of OperationsNet sales

$
2,828


$
2,564



10.3
%Cost of goods sold (exclusive of
    depreciation and amortization shown below)


2,641



2,407



9.7
%Selling, general and
    administrative expenses


137



98



39.8
%Depreciation and amortization


81



59



37.3
%Research and development expenses


19



10



90.0
%Interest expense and amortization
    of debt issuance costs  net


51



49



4.1
%Gain on change in fair value of
    derivatives  net


(34
)


(41
)


(17.1
)%Equity in net income of
    non-consolidated affiliates






(4
)


(100.0
)%Sale transaction fees


32







n.m.Other (income)
    expenses  net


15



(4
)


(475.0
)%2,942



2,574



14.3
%Loss before provision (benefit)
    for taxes on loss and minority interests share


(114
)


(10
)


1,040.0
%Provision (benefit) for taxes on
    loss


40



(20
)


(300.0
)%Income (loss) before minority
    interests share


(154
)


10



(1,640.0
)%Minority interests share


3



(4
)


(175.0
)%Net income (loss)

$
(151
)

$
6



(2,616.7
)%       59




---



##### Table of Contents



Three MonthsEndedJune 30,


Percent2007


2006


ChangeCombined


PredecessorLondon Metal Exchange
    PricesAluminum (per metric tonne, and
    presented in U.S. dollars):Closing cash price as of end of
    quarter

$
2,686


$
2,551



5.3
%Average cash price during the
    quarter

$
2,761


$
2,652



4.1
%   Three MonthsEnded


U.S. DollarJune 30,


Strengthen/2007


2006


(Weaken)Combined


PredecessorFederal Reserve Bank of New
    York Exchange RatesAverage of the month end rates:U.S. dollar per Euro


1.354



1.275



(6.2
)%Brazilian real per U.S. dollar


1.961



2.185



(10.3
)%South Korean won per U.S. dollar


927



946



(2.1
)%Canadian dollar per U.S. dollar


1.080



1.113



(3.0
)%   Three MonthsEndedJune 30,


Percent2007


2006


ChangeCombined


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

$
61.69


$
67.25



(8.3
)%Natural GasAverage Henry Hub contract
    settlement price (per MMBTU) (A)

$
7.55


$
6.78



11.4
%     (A)
    One MMBTU is the equivalent of one decatherm, or one million
    British Thermal Units (BTUs).  RESULTS
    OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2007 (THREE MONTHS
    COMBINED NON-GAAP) COMPARED TO THE QUARTER ENDED JUNE 30,
    2006
  Shipments
    Net
    sales
   60




---



##### Table of Contents



Costs and
    expenses
    Three Months Ended June 30,2007


2006% of





% of$ in Millions


Net Sales


$ in Millions


Net SalesCombined


PredecessorCost of goods sold (exclusive of
    depreciation and amortization)

$
2,641



93.4
%

$
2,407



93.9
%Selling, general and
    administrative expenses


137



4.8
%


98



3.8
%Depreciation and amortization


81



2.9
%


59



2.3
%Research and development expenses


19



0.7
%


10



0.4
%Interest expense and amortization
    of debt issuance costs  net


51



1.8
%


49



1.9
%Gain on change in fair value of
    derivative instruments  net


(34
)


(1.2
)%


(41
)


(1.6
)%Equity in net income of
    non-consolidated affiliates







%


(4
)


(0.2
)%Sale transaction fees


32



1.1
%







%Other (income)
    expenses  net


15



0.5
%


(4
)


(0.2
)%$
2,942



104.0
%

$
2,574



100.4
%   Cost of goods sold.
  Selling, general and administrative expenses
    (SG&A).
  Depreciation and amortization.
  Research and development expenses.
  Sale transaction fees.
  Other (income) expenses 
    net.
 61




---



##### Table of Contents



Provision
    (benefit) for taxes on loss
      Net
    loss
    OPERATING
    SEGMENT REVIEW FOR THE QUARTER ENDED JUNE 30, 2007 (THREE MONTHS
    COMBINED NON-GAAP) COMPARED TO THE QUARTER ENDED JUNE 30,
    2006
      Disclosure About the Segments of
    an Enterprise and Related Information.
 62




---



##### Table of Contents



Form 10-K
  .
    Net
    sales
    May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2007Successor



Predecessor


CombinedCombined Net sales by Operating
    Segment:North America

$
574



$
446


$
1,020Europe


593




510



1,103Asia


246




216



462South America


134




109



243Total Net sales

$
1,547



$
1,281


$
2,828  63




---



##### Table of Contents



Segment
    Income
    May 16, 2007



April 1, 2007


Three MonthsThrough



Through


EndedJune 30, 2007



May 15, 2007


June 30, 2007Successor



Predecessor


CombinedCombined Results by Operating
    Segment:Segment Income (Loss)North America

$
23



$
(24
)

$
(1
)Europe


43




32



75Asia


(2
)



6



4South America


20




19



39Total Segment Income


84




33



117Interest expense and amortization
    of debt issuance costs  net


(25
)



(26
)


(51
)Unrealized gains (losses) on
    change in fair value of derivative instruments  net(A)


(15
)



5



(10
)Realized gains (losses) on
    corporate derivative instruments  net


8




(3
)


5Depreciation and amortization


(53
)



(28
)


(81
)Minority interests share


2




1



3Adjustment to eliminate
    proportional consolidation(B)


(9
)



(7
)


(16
)Restructuring charges 
    net


(1
)



(1
)


(2
)Corporate selling, general and
    administrative expenses


(8
)



(35
)


(43
)Other corporate costs 
    net


(1
)







(1
)Sale transaction fees







(32
)


(32
)Provision for taxes on loss


(36
)



(4
)


(40
)Net loss

$
(54
)


$
(97
)

$
(151
)     (A)
    Unrealized gains (losses) on change in fair value of derivative
    instruments  net represents the portion of gains
    (losses) that were not settled in cash during the period.  (B)
    Our financial information for our segments (including Segment
    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 Segment Income to Net loss, the proportional
    Segment Income of these non-consolidated affiliates is removed
    from Total Segment Income, net of our share of their net
    after-tax results, which is reported as Equity in net (income)
    loss of non-consolidated affiliates on our condensed
    consolidated statements of operations. See
    Note 7  Investment in and Advances to
    Non-Consolidated Affiliates and Related Party Transactions for
    further information about these non-consolidated affiliates. 64




---



##### Table of Contents



Reconciliation
    Three Months EndedJune 30,2007


2006Combined


PredecessorSegment Income (Loss)North America

$
(1
)

$
23Europe


75



80Asia


4



26South America


39



44Total Segment Income


117



173Interest expense and amortization
    of debt issuance costs  net


(51
)


(49
)Unrealized gains (losses) on
    change in fair value of derivative instruments  net


(10
)


(37
)Realized gains (losses) on
    corporate derivative instruments  net


5



Depreciation and amortization


(81
)


(59
)Minority interests share


3



(4
)Adjustment to eliminate
    proportional consolidation


(16
)


(9
)Restructuring charges 
    net


(2
)


(2
)Corporate selling, general and
    administrative expenses


(43
)


(29
)Other corporate costs 
    net


(1
)


2Sale transaction fees


(32
)


Benefit (provision) for taxes on
    income (loss)


(40
)


20Net income (loss)

$
(151
)

$
6   OPERATING
    SEGMENT RESULTS
  North
    America
   65




---



##### Table of Contents



Three Months EndedJune 30,


Percent2007


2006


ChangeCombined


Predecessor($ in millions)Shipments (kt):Rolled products


277



298



(7.0
)%Ingot products


16



25



(36.0
)%Total shipments


293



323



(9.3
)%Net sales

$
1,020


$
992



2.8
%Segment Income (Loss)

$
(1
)

$
23



(104.3
)%Total assets

$
4,524


$
1,617



179.8
%   Shipments
    Net
    sales
    Metal Price Ceilings
  Segment
    Income
   66




---



##### Table of Contents



Total
    Assets
    Europe
      Three Months EndedJune 30,


Percent2007


2006


ChangeCombined


Predecessor($ in millions)Shipments (kt):Rolled products


285



266



7.1
%Ingot products


4



3



33.3
%Total shipments


289



269



7.4
%Net sales

$
1,103


$
922



19.6
%Segment Income

$
75


$
80



(6.3
)%Total assets

$
3,696


$
2,501



47.8
%   Shipments
    Net
    sales
    Segment
    Income
   67




---



##### Table of Contents



Total
    assets
    Asia
      Three Months EndedJune 30,


Percent2007


2006


ChangeCombined


Predecessor($ in millions)Shipments (kt):Rolled products


118



123



(4.1
)%Ingot products


11



13



(15.4
)%Total shipments


129



136



(5.1
)%Net sales

$
462


$
453



2.0
%Segment Income

$
4


$
26



(84.6
)%Total assets

$
1,323


$
1,076



23.0
%   Shipments
    Net
    sales
    Segment
    Income
    Total
    assets
   68




---



##### Table of Contents



South
    America
      Three Months EndedJune 30,


Percent2007


2006


ChangeCombined


Predecessor($ in millions)Shipments (kt):Rolled products


75



66



13.6
%Ingot products


7



6



16.6
%Total shipments


82



72



13.9
%Net sales

$
243


$
201



20.9
%Segment Income

$
39


$
44



(11.4
)%Total assets

$
1,321


$
803



64.5
%   Shipments
    Net
    sales
    Segment
    Income
    Total
    assets
   69




---



##### Table of Contents



LIQUIDITY
    AND CAPITAL RESOURCES
    May 16, 2007



April 1, 2007


ThreeThrough



Through


Months EndedJune 30, 2007



May 15, 2007


June 30, 2007Successor



Predecessor


CombinedOPERATING ACTIVITIESNet cash used in operating
    activities

$
(44
)


$
(230
)

$
(274
)INVESTING
    ACTIVITIESCapital expenditures


(22
)



(17
)


(39
)Proceeds from sales of assets


1








1Changes to investment in and
    advances to non-consolidated affiliates


1




1



2Proceeds from loans
    receivable  net  related parties


4








4Net proceeds from settlement of
    derivative instruments


29




18



47Net cash provided by investing
    activities


13




2



15FINANCING ACTIVITIESProceeds from issuance of common
    stock


92








92Proceeds from issuance of debt







150



150Principal repayments


(46
)



(1
)


(47
)Short-term borrowings 
    net


83




60



143Dividends  minority
    interests


(1
)



(7
)


(8
)Debt issuance costs


(13
)



(2
)


(15
)Proceeds from the exercise of
    stock options







1



1Net cash provided by financing
    activities


115




201



316Net increase (decrease) in cash
    and cash equivalents


84




(27
)


57Effect of exchange rate changes
    on cash balances held in foreign currencies







1



1Cash and cash
    equivalents  beginning of period


102




128



128Cash and cash
    equivalents  end of period

$
186



$
102


$
186   Operating
    Activities
   70




---



##### Table of Contents



Three Months EndedJune 30,2007


2006


ChangeCombined


Predecessor($ in millions)Net cash used in operating
    activities

$
(274
)

$
(36
)

$
(238
)Dividends


(8
)


(8
)


Capital expenditures


(39
)


(34
)


(5
)Net proceeds from settlement of
    derivative instruments


47



86



(39
)Free cash flow

$
(274
)

$
8


$
(282
)   June 30,


March 31,2007


2007


ChangeSuccessor


PredecessorEnding cash and cash equivalents

$
186


$
128


$
58     Financing
    Activities
  Overview
   71




---



##### Table of Contents



Senior
    Secured Credit Facilities
                 72




---



##### Table of Contents



New
    Senior Secured Credit Facilities
               73




---



##### Table of Contents



7.25% Senior Notes
          Tender
    Offer and Consent Solicitation for 7.25% Senior
    Notes
   74




---



##### Table of Contents



Interest
    Rate Swaps
  3-month
  Issuance
    of Additional Common Stock
    Investing
    Activities
    Three Months Ended June 30,2007


2006


ChangeCombined


Predecessor($ in millions)Net proceeds from settlement of
    derivative instruments

$
47


$
86


$
(39
)Capital expenditures


(39
)


(34
)


(5
)Proceeds from loans
    receivable  net


4



9



(5
)Changes to investment in and
    advances to non-consolidated affiliates


2



1



1Proceeds from sales of assets


1



1



Net cash provided by investing
    activities

$
15


$
63


$
(48
)         OFF-BALANCE
    SHEET ARRANGEMENTS
    
    any obligation under certain guarantees or contracts;
    a retained or contingent interest in assets transferred to an
    unconsolidated entity or similar entity or similar arrangement
    that serves as credit, liquidity or market risk support to that
    entity for such assets; 75




---



##### Table of Contents




    any obligation under certain derivative instruments; and
    any obligation under a material variable interest held by the
    registrant in an unconsolidated entity that provides financing,
    liquidity, market risk or credit risk support to the registrant,
    or engages in leasing, hedging or research and development
    services with the registrant.    Derivative
    Instruments
  Form 10-Q.
      Prior to
    Completion of the Arrangement
      Impact of
    the Arrangement and Purchase Accounting
    Subsequent
    to Completion of the Arrangement
   76




---



##### Table of Contents



As of June 30, 2007SuccessorNet FairMaturity Dates

Assets


Liabilities


ValueForeign exchange forward contracts

2007 through 2011

$
25


$
(17
)

$
8Interest rate swaps

2007 through 2008


2







2Cross-currency swaps

2007 through 2015


6



(95
)


(89
)Aluminum forward contracts

2007 through 2009


40



(6
)


34Electricity swap

2016


3







3Embedded derivative instruments

2007


1



(1
)


Natural gas swaps

2007






(1
)


(1
)Total fair value




77



(120
)


(43
)Less: current portion




71



(31
)


40Noncurrent portion



$
6


$
(89
)

$
(83
)   Guarantees
    of Indebtedness
    Maximum


LiabilityPotential Future


CarryingType of Entity

Payment


ValueWholly-owned Subsidiaries

$
76


$
45Majority-owned Subsidiaries


3



Aluminium Norf GmbH


13



   deposit-and-guarantee
    Other
   77




---



##### Table of Contents



CONTRACTUAL
    OBLIGATIONS
  Form 10-K
      DIVIDENDS
    CRITICAL
    ACCOUNTING POLICIES AND ESTIMATES
  Form 10-K
  RECENT
    ACCOUNTING STANDARDS
  FIN. 39-1, Amendment of FASB Interpretation No. 39 FIN 39-1). FIN 39-1 Offsetting of Amounts Related
    to Certain Contracts FIN 39-1 FIN 39-1
  The Fair Value Option for Financial Assets and Financial
    Liabilities Fair Value
    Measurements, and No. 107, Disclosures about Fair Value of
    Financial Instruments.
 78




---



##### Table of Contents



Fair Value Measurements
    SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS AND MARKET
    DATA
  Form 10-Q
    
    the level of our indebtedness and our ability to generate cash;
    changes in the prices and availability of aluminum (or premiums
    associated with such prices) or other materials and raw
    materials we use;
    the effect of metal price ceilings in certain of our sales
    contracts;
    the effectiveness of our metal hedging activities, including our
    internal used beverage can (UBC) and smelter hedges;
    relationships with, and financial and operating conditions of,
    our customers, suppliers and our ultimate parent, Hindalco;
    fluctuations in the supply of, and prices for, energy in the
    areas in which we maintain production facilities; 79




---



##### Table of Contents




    our ability to access financing for future capital requirements;
    continuing obligations and other relationships resulting from
    our spin-off from Alcan;
    changes in the relative values of various currencies;
    factors affecting our operations, such as litigation,
    environmental remediation and
    clean-up
    costs, 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 value of derivative instruments;
    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; and
    changes in interest rates that have the effect of increasing the
    amounts we pay under our principal credit agreement and other
    financing agreements.  Form 10-K
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk          Commodity
    Price Risks
   80




---



##### Table of Contents



Aluminum
            and/or
     81




---



##### Table of Contents



Sensitivities
    Pre-TaxDecline in


Loss inRate/Price


Fair Value($ In millions)Aluminum Forward Contracts


10
%

$
(23
)Aluminum Put Options


10
%


   Electricity
    and Natural Gas
          Sensitivities
    Pre-TaxDecline in


Loss inRate/Price


Fair Value($ In millions)Electricity


10
%

$
(6
)Natural Gas


10
%


(1
)   Foreign
    Currency Exchange Risks
   82




---



##### Table of Contents



non-U.S. dollar
    Form 10-K
  Sensitivities
    Pre-TaxIncrease (Decrease) in


Loss inExchange Rate


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


(10
)%

$
(29
)Korean won


(10
)%


(20
)Brazilian real


10
%


(24
)Canadian dollar


10
%


(4
)British pound


(10
)%


(2
)Swiss franc


(10
)%


(5
)    83




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##### Table of Contents



Pre-TaxChange in


Loss inRate


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


10
%

$
(52
)British pound


10
%

$
(14
)Swiss franc


10
%

$
(4
)   Interest
    Rate Risks
        Sensitivities
    Pre-TaxChange in


Loss inRate


Fair Value($ In millions)Interest Rate Swap
    ContractsNorth America


(10
)%

$
Asia


(10
)%


   Item 4.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Form 10-Q Rule 13a-15(e)
 84




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##### Table of Contents



Form 10-K
  Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(f)
  Remediation
    Plan for Material Weakness Existing as of June 30,
    2007
  Form 10-K
 85




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##### Table of Contents



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Reynolds Boat Case.
    Form 10-K
      Coca-Cola
    Lawsuits. Coca-Cola Coca-Cola Coca-Cola Coca-Cola
 86




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##### Table of Contents



Coca-Cola Coca-Cola
    Anheuser-Busch Litigation.
        ARCO Aluminum Complaint.
     87




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##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders   88




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##### Table of Contents



Item 6.
    Exhibits  ExhibitNo.

Description2
.1

Arrangement Agreement by and among
    Hindalco Industries Limited, AV Aluminum Inc. and Novelis Inc.,
    dated as of February 10, 2007 (incorporated by reference to
    Exhibit 2.1 to our Current Report on
    Form 8-K
    filed on February 13, 2007)3
.1

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

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

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
.3

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))4
.4

First Amendment to the Shareholder
    Rights Agreement between Novelis Inc. and CIBC Mellon
    Trust Company, dated as of February 10, 2007
    (incorporated by reference to our Current Report on
    Form 8-K
    file on February 13, 2007)10
.1

Form of amendment to Recognition
    Agreements (incorporated by reference to Exhibit 10.1 to
    our Current Report on
    Form 8-K/A
    filed on May 8, 2007)10
.2

First Amendment to the Amended and
    Restated Novelis Founders Performance Awards Plan (incorporated
    by reference to Exhibit 10.2 to our Current Report on
    Form 8-K/A
    filed on May 8, 2007)10
.3

Amendment and waiver to the Credit
    Agreement dated May 9, 2007 (incorporated by reference to
    Exhibit 10.1 to our Current Report on
    Form 8-K
    filed on May 14, 2007)10
.4

Form of Indemnity Agreement
    between Novelis Inc. and Members of the Board of Directors of
    Novelis Inc. (incorporated by reference to Exhibit 10.1 to
    our Current Report on
    Form 8-K
    filed on May 21, 2007)10
.5

Form of Indemnity Agreement
    between Novelis Inc. and certain executive officers dated as of
    June 27, 2007 (incorporated by reference to
    Exhibit 10.1 to our Current Report on
    Form 8-K
    filed on June 28, 2007)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  89




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##### Table of Contents



SIGNATURES
      By:
    /s/  Steven
    Fisher      By:
    /s/  Robert
    M. Patterson       90




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNo.

Description2
.1

Arrangement Agreement by and among
    Hindalco Industries Limited, AV Aluminum Inc. and Novelis Inc.,
    dated as of February 10, 2007 (incorporated by reference to
    Exhibit 2.1 to our Current Report on
    Form 8-K
    filed on February 13, 2007)3
.1

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

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

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
.3

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))4
.4

First Amendment to the Shareholder
    Rights Agreement between Novelis Inc. and CIBC Mellon
    Trust Company, dated as of February 10, 2007
    (incorporated by reference to our Current Report on
    Form 8-K
    file on February 13, 2007)10
.1

Form of amendment to Recognition
    Agreements (incorporated by reference to Exhibit 10.1 to
    our Current Report on
    Form 8-K/A
    filed on May 8, 2007)10
.2

First Amendment to the Amended and
    Restated Novelis Founders Performance Awards Plan (incorporated
    by reference to Exhibit 10.2 to our Current Report on
    Form 8-K/A
    filed on May 8, 2007)10
.3

Amendment and waiver to the Credit
    Agreement dated May 9, 2007 (incorporated by reference to
    Exhibit 10.1 to our Current Report on
    Form 8-K
    filed on May 14, 2007)10
.4

Form of Indemnity Agreement
    between Novelis Inc. and Members of the Board of Directors of
    Novelis Inc. (incorporated by reference to Exhibit 10.1 to
    our Current Report on
    Form 8-K
    filed on May 21, 2007)10
.5

Form of Indemnity Agreement
    between Novelis Inc. and certain executive officers dated as of
    June 27, 2007 (incorporated by reference to
    Exhibit 10.1 to our Current Report on
    Form 8-K
    filed on June 28, 2007)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  91