##### 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 1934
 For the quarterly period ended December 31, 2010
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For 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
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)3560 Lenox Road, Suite 2000
    
    30326Atlanta, Georgia
    
    (Zip Code)(Address of principal executive offices)
 Telephone: (404) 760-4000  (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### 



TABLE OF CONTENTS
 PART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    3Condensed Consolidated Statements of Operations for the Three and Nine Months Ended
December 31, 2010 and 2009 (unaudited)
    
    
    3Condensed Consolidated Balance Sheets as of December 31, 2010 and March 31, 2010 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2010
and 2009 (unaudited)
    
    
    5Condensed Consolidated Statement of Shareholders Equity for the Nine Months Ended December
31, 2010 (unaudited)
    
    
    6Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months
Ended December 31, 2010 and 2009 (unaudited)
    
    
    7Notes to the Condensed Consolidated Financial Statements (unaudited)
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    37Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    53Item 4.
    
    Controls and Procedures
    
    
    56PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    59Item 1A.
    
    Risk Factors
    
    
    59Item 6.
    
    Exhibits
    
    
    60EX-4.5EX-4.6EX-10.1EX-10.2EX-10.3EX-10.4EX-10.5EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Novelis Inc.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In millions)
 Three Months
    
    
    Nine MonthsEnded
    
    
    EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    2,560
    
    
    $
    2,112
    
    
    $
    7,617
    
    
    $
    6,253Cost of goods sold (exclusive of depreciation and amortization)
    
    
    2,232
    
    
    
    1,795
    
    
    
    6,628
    
    
    
    5,066Selling, general and administrative expenses
    
    
    94
    
    
    
    92
    
    
    
    272
    
    
    
    243Depreciation and amortization
    
    
    100
    
    
    
    93
    
    
    
    307
    
    
    
    285Research and development expenses
    
    
    9
    
    
    
    10
    
    
    
    27
    
    
    
    27Interest expense and amortization of debt issuance costs
    
    
    46
    
    
    
    44
    
    
    
    125
    
    
    
    131Interest income
    
    
    (4
    )
    
    
    (2
    )
    
    
    (10
    )
    
    
    (8
    )Gain on change in fair value of derivative instruments, net
    
    
    (30
    )
    
    
    (40
    )
    
    
    (58
    )
    
    
    (192
    )Loss on early extinguishment of debt
    
    
    74
    
    
    
    
    
    
    
    74
    
    
    
    Restructuring charges, net
    
    
    20
    
    
    
    1
    
    
    
    35
    
    
    
    7Equity in net (gain) loss of non-consolidated affiliates
    
    
    5
    
    
    
    (8
    )
    
    
    11
    
    
    
    12Other (income) expense, net
    
    
    16
    
    
    
    (2
    )
    
    
    5
    
    
    
    (21
    )2,562
    
    
    
    1,983
    
    
    
    7,416
    
    
    
    5,550Income (loss) before income taxes
    
    
    (2
    )
    
    
    129
    
    
    
    201
    
    
    
    703Income tax provision
    
    
    33
    
    
    
    48
    
    
    
    104
    
    
    
    247Net income (loss)
    
    
    (35
    )
    
    
    81
    
    
    
    97
    
    
    
    456Net income attributable to noncontrolling interests
    
    
    11
    
    
    
    13
    
    
    
    31
    
    
    
    50Net income (loss) attributable to our common shareholder
    
    $
    (46
    )
    
    $
    68
    
    
    $
    66
    
    
    $
    406
  3




---



##### Table of Contents



Novelis Inc.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In millions, except number of shares)
 December 31,
    
    
    March 31,2010
    
    
    2010ASSETSCurrent assetsCash and cash equivalents
    
    $
    297
    
    
    $
    437Accounts receivable (net of allowances of $6 and $4 as of December 31, 2010 and March 31, 2010) third parties
    
    
    1,180
    
    
    
    1,143 related parties
    
    
    16
    
    
    
    24Inventories
    
    
    1,301
    
    
    
    1,083Prepaid expenses and other current assets
    
    
    47
    
    
    
    39Fair value of derivative instruments
    
    
    168
    
    
    
    197Deferred income tax assets
    
    
    17
    
    
    
    12Total current assets
    
    
    3,026
    
    
    
    2,935Property, plant and equipment, net
    
    
    2,490
    
    
    
    2,632Goodwill
    
    
    611
    
    
    
    611Intangible assets, net
    
    
    707
    
    
    
    749Investment in and advances to non-consolidated affiliates
    
    
    683
    
    
    
    709Fair value of derivative instruments, net of current portion
    
    
    20
    
    
    
    7Long-term deferred income tax assets
    
    
    14
    
    
    
    5Other long-term assets third parties
    
    
    178
    
    
    
    93 related parties
    
    
    19
    
    
    
    21Total assets
    
    $
    7,748
    
    
    $
    7,762LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    21
    
    
    $
    116Short-term borrowings
    
    
    121
    
    
    
    75Accounts payable third parties
    
    
    1,104
    
    
    
    1,076 related parties
    
    
    45
    
    
    
    53Fair value of derivative instruments
    
    
    105
    
    
    
    110Accrued expenses and other current liabilities
    
    
    441
    
    
    
    436Deferred income tax liabilities
    
    
    36
    
    
    
    34Total current liabilities
    
    
    1,873
    
    
    
    1,900Long-term debt, net of current portion
    
    
    4,060
    
    
    
    2,480Long-term deferred income tax liabilities
    
    
    519
    
    
    
    497Accrued postretirement benefits
    
    
    517
    
    
    
    499Other long-term liabilities
    
    
    357
    
    
    
    376Total liabilities
    
    
    7,326
    
    
    
    5,752Commitments and contingenciesShareholders equityCommon stock, no par value; unlimited number of shares authorized; 1,000 shares issued and
outstanding as of December 31, 2010 and March 31, 2010
    
    
    
    
    
    
    Additional paid-in capital
    
    
    1,830
    
    
    
    3,530Accumulated deficit
    
    
    (1,492
    )
    
    
    (1,558
    )Accumulated other comprehensive loss
    
    
    (88
    )
    
    
    (103
    )Total Novelis shareholders equity
    
    
    250
    
    
    
    1,869Noncontrolling interests
    
    
    172
    
    
    
    141Total equity
    
    
    422
    
    
    
    2,010Total liabilities and shareholders equity
    
    $
    7,748
    
    
    $
    7,762
  4




---



##### Table of Contents



Novelis Inc.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In millions)
 Nine MonthsEndedDecember 31,2010
    
    
    2009OPERATING ACTIVITIESNet income
    
    $
    97
    
    
    $
    456Adjustments to determine net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    307
    
    
    
    285Gain on change in fair value of derivative instruments, net
    
    
    (58
    )
    
    
    (192
    )Loss on extinguishment of debt
    
    
    74
    
    
    
    Deferred income taxes
    
    
    12
    
    
    
    230Write-off and amortization of fair value adjustments, net
    
    
    8
    
    
    
    (139
    )Equity in net loss of non-consolidated affiliates
    
    
    11
    
    
    
    12Foreign exchange remeasurement of debt
    
    
    
    
    
    
    (17
    )Gain on sale of assets
    
    
    (11
    )
    
    
    Gain on reversal of accrued legal claim
    
    
    
    
    
    
    (3
    )Other, net
    
    
    3
    
    
    
    8Changes in assets and liabilities:Accounts receivable
    
    
    (37
    )
    
    
    107Inventories
    
    
    (220
    )
    
    
    (218
    )Accounts payable
    
    
    22
    
    
    
    34Other current assets
    
    
    (7
    )
    
    
    9Other current liabilities
    
    
    21
    
    
    
    35Other noncurrent assets
    
    
    (8
    )
    
    
    (16
    )Other noncurrent liabilities
    
    
    4
    
    
    
    39Net cash provided by operating activities
    
    
    218
    
    
    
    630INVESTING ACTIVITIESCapital expenditures
    
    
    (132
    )
    
    
    (74
    )Proceeds from sales of assets, third parties
    
    
    18
    
    
    
    4Proceeds from sales of assets, related parties
    
    
    10
    
    
    
    Changes to investment in and advances to non-consolidated affiliates
    
    
    1
    
    
    
    3Proceeds from related party loans receivable, net
    
    
    8
    
    
    
    15Net proceeds (outflow) from settlement of derivative instruments
    
    
    81
    
    
    
    (432
    )Net cash used in investing activities
    
    
    (14
    )
    
    
    (484
    )FINANCING ACTIVITIESProceeds from issuance of debt, third parties
    
    
    3,985
    
    
    
    177Proceeds from issuance of debt, related parties
    
    
    
    
    
    
    4Principal payments, third parties
    
    
    (2,486
    )
    
    
    (20
    )Principal payments, related parties
    
    
    
    
    
    
    (95
    )Short-term borrowings, net
    
    
    49
    
    
    
    (211
    )Return of capital to our common shareholder
    
    
    (1,700
    )
    
    
    Dividends, noncontrolling interest
    
    
    (18
    )
    
    
    (13
    )Debt issuance costs
    
    
    (174
    )
    
    
    (1
    )Net cash used in financing activities
    
    
    (344
    )
    
    
    (159
    )Net decrease in cash and cash equivalents
    
    
    (140
    )
    
    
    (13
    )Effect of exchange rate changes on cash balances held in foreign currencies
    
    
    
    
    
    
    17Cash and cash equivalents  beginning of period
    
    
    437
    
    
    
    248Cash and cash equivalents  end of period
    
    $
    297
    
    
    $
    252
  5




---



##### Table of Contents



Novelis Inc.
 
 CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

(unaudited)

(In millions, except number of shares)
 Novelis Inc. ShareholderAccumulatedOtherAdditional
    
    
    
    
    
    
    Comprehensive
    
    
    Non-Common Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Loss
    
    
    controlling
    
    
    TotalShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    (AOCI)
    
    
    Interests
    
    
    EquityBalance as of March 31, 2010
    
    
    1,000
    
    
    $
    
    
    
    $
    3,530
    
    
    $
    (1,558
    )
    
    $
    (103
    )
    
    $
    141
    
    
    $
    2,010Net loss attributable to our

common shareholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    66Net income attributable to 

noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    31Currency translation adjustment,
net of tax provision of $
million included in Accumulated
other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    1
    
    
    
    6Change in fair value of effective
portion of cash flow hedges, net
of tax provision of $11 included
in Accumulated other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    21Postretirement benefit plans:Change in pension and other
benefits, net of tax provision
of $6 included in Accumulated
other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )Return of capital to our common
shareholder
    
    
    
    
    
    
    
    
    
    
    (1,700
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,700
    )Noncontrolling interests dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Balance as of December 31, 2010
    
    
    1,000
    
    
    $
    
    
    
    $
    1,830
    
    
    $
    (1,492
    )
    
    $
    (88
    )
    
    $
    172
    
    
    $
    422
  6




---



##### Table of Contents



Novelis Inc.
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(In millions)
 Three Months Ended
    
    
    Three Months EndedDecember 31, 2010
    
    
    December 31, 2009Attributable to
    
    
    Attributable to
    
    
    
    
    
    
    Attributable to
    
    
    Attributable toOur Common
    
    
    Noncontrolling
    
    
    
    
    
    
    Our Common
    
    
    NoncontrollingShareholder
    
    
    Interests
    
    
    Total
    
    
    Shareholder
    
    
    Interests
    
    
    TotalNet income (loss)
    
    $
    (46
    )
    
    $
    11
    
    
    $
    (35
    )
    
    $
    68
    
    
    $
    13
    
    
    $
    81Other comprehensive income (loss):Currency translation adjustment
    
    
    (33
    )
    
    
    
    
    
    
    (33
    )
    
    
    (21
    )
    
    
    2
    
    
    
    (19
    )Net change in fair value of effective
portion of cash flow hedges
    
    
    22
    
    
    
    
    
    
    
    22
    
    
    
    3
    
    
    
    
    
    
    
    3Postretirement benefit plans:Change in pension and other benefits
    
    
    (17
    )
    
    
    
    
    
    
    (17
    )
    
    
    7
    
    
    
    
    
    
    
    7Other comprehensive income (loss)
before income tax effect
    
    
    (28
    )
    
    
    
    
    
    
    (28
    )
    
    
    (11
    )
    
    
    2
    
    
    
    (9
    )Income tax provision related to items
of other comprehensive income (loss)
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )
    
    
    3
    
    
    
    
    
    
    
    3Other comprehensive income, net of tax
    
    
    (26
    )
    
    
    
    
    
    
    (26
    )
    
    
    (14
    )
    
    
    2
    
    
    
    (12
    )Comprehensive income
    
    $
    (72
    )
    
    $
    11
    
    
    $
    (61
    )
    
    $
    54
    
    
    $
    15
    
    
    $
    69
 Nine Months Ended
    
    
    Nine Months EndedDecember 31, 2010
    
    
    December 31, 2009Attributable to
    
    
    Attributable to
    
    
    
    
    
    
    Attributable to
    
    
    Attributable toOur Common
    
    
    Noncontrolling
    
    
    
    
    
    
    Our Common
    
    
    NoncontrollingShareholder
    
    
    Interests
    
    
    Total
    
    
    Shareholder
    
    
    Interests
    
    
    TotalNet income
    
    $
    66
    
    
    $
    31
    
    
    $
    97
    
    
    $
    406
    
    
    $
    50
    
    
    $
    456Other comprehensive income (loss):Currency translation adjustment
    
    
    5
    
    
    
    1
    
    
    
    6
    
    
    
    109
    
    
    
    16
    
    
    
    125Net change in fair value of effective
portion of cash flow hedges
    
    
    32
    
    
    
    
    
    
    
    32
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Postretirement benefit plans:Change in pension and other benefits
    
    
    (17
    )
    
    
    
    
    
    
    (17
    )
    
    
    13
    
    
    
    
    
    
    
    13Other comprehensive income before
income tax effect
    
    
    20
    
    
    
    1
    
    
    
    21
    
    
    
    121
    
    
    
    16
    
    
    
    137Income tax provision related to items
of other comprehensive income (loss)
    
    
    5
    
    
    
    
    
    
    
    5
    
    
    
    9
    
    
    
    
    
    
    
    9Other comprehensive income, net of tax
    
    
    15
    
    
    
    1
    
    
    
    16
    
    
    
    112
    
    
    
    16
    
    
    
    128Comprehensive income
    
    $
    81
    
    
    $
    32
    
    
    $
    113
    
    
    $
    518
    
    
    $
    66
    
    
    $
    584
  7




---



##### Table of Contents



Novelis Inc.
 
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 1.   BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Description of Business and Basis of Presentation
    Acquisition of Novelis Common Stock
  Amalgamation of AV Aluminum Inc. and Novelis Inc.
   8




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
  Consolidation Policy
  Reclassifications and Adjustment
    Recently Adopted Accounting Standards
 Consolidations: Improvements to Financial Reporting by Enterprises Involved with
Variable Interest Entities. Transfers and Servicing: Accounting for Transfers of Financial Assets
 Recently Issued Accounting Standards
  9




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
 2.   RESTRUCTURING PROGRAMS
  North
    
    
    
    
    
    
    South
    
    
    
    
    
    
    RestructuringEurope
    
    
    America
    
    
    Asia
    
    
    America
    
    
    Corporate
    
    
    ReservesBalance as of March 31, 2010
    
    $
    28
    
    
    $
    10
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    38Provisions, net
    
    
    17
    
    
    
    11
    
    
    
    
    
    
    
    8
    
    
    
    6
    
    
    
    42Cash payments
    
    
    (7
    )
    
    
    (14
    )
    
    
    
    
    
    
    (3
    )
    
    
    (1
    )
    
    
    (25
    )Balance as of December 31, 2010
    
    $
    38
    
    
    $
    7
    
    
    $
    
    
    
    $
    5
    
    
    $
    5
    
    
    $
    55
 Europe
   North America
  South America
  Corporate
  3.   INVENTORIES
  December 31,
    
    
    March 31,2010
    
    
    2010Finished goods
    
    $
    264
    
    
    $
    270Work in process
    
    
    463
    
    
    
    431Raw materials
    
    
    474
    
    
    
    295Supplies
    
    
    107
    
    
    
    931,308
    
    
    
    1,089Allowances
    
    
    (7
    )
    
    
    (6
    )Inventories
    
    $
    1,301
    
    
    $
    1,083
 10




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
 4.    CONSOLIDATION OF VARIABLE INTEREST ENTITIES (VIE)
     December 31,
    
    
    March 31,2010
    
    
    2010AssetsCurrent assetsCash and cash equivalents
    
    $
    3
    
    
    $
    3Accounts receivable
    
    
    28
    
    
    
    29Inventories, net
    
    
    37
    
    
    
    31Prepaid expenses and other current assets
    
    
    1
    
    
    
    1Total current assets
    
    
    69
    
    
    
    64Property, plant and equipment, net
    
    
    11
    
    
    
    10Goodwill
    
    
    12
    
    
    
    12Deferred income taxes
    
    
    52
    
    
    
    41Other long-term assets
    
    
    3
    
    
    
    3Total assets
    
    $
    147
    
    
    $
    130LiabilitiesCurrent liabilitiesAccounts payable
    
    $
    27
    
    
    $
    23Accrued expenses and other current liabilities
    
    
    14
    
    
    
    12Total current liabilities
    
    
    41
    
    
    
    35Accrued postretirement benefits
    
    
    118
    
    
    
    97Other long-term liabilities
    
    
    2
    
    
    
    3Total liabilities
    
    $
    161
    
    
    $
    135
 11




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
 5.     INVESTMENT IN AND ADVANCES TO NON-CONSOLIDATED AFFILIATES AND RELATED PARTY TRANSACTIONS
   Three Months
    
    
    Nine MonthsEnded
    
    
    EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    52
    
    
    $
    63
    
    
    $
    167
    
    
    $
    183Costs, expenses and provisions for taxes on income
    
    
    57
    
    
    
    55
    
    
    
    178
    
    
    
    195Net income (loss)
    
    $
    (5
    )
    
    $
    8
    
    
    $
    (11
    )
    
    $
    (12
    )Purchase of tolling services from Aluminium Norf GmbH (Norf)
    
    $
    51
    
    
    $
    61
    
    
    $
    166
    
    
    $
    181
   December 31,
    
    March 31,2010
    
    2010Accounts receivable
    
    $
    16
    
    
    $
    24Other long-term receivables
    
    $
    19
    
    
    $
    21Accounts payable
    
    $
    45
    
    
    $
    53
  12




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
 6.     DEBT
  December 31, 2010
    
    
    March 31, 2010Unamortized
    
    
    
    
    
    
    
    
    
    
    UnamortizedInterest
    
    
    
    
    
    
    Fair Value
    
    
    Carrying
    
    
    
    
    
    
    Fair Value
    
    
    CarryingRates(A)
    
    
    Principal
    
    
    Adjustments(B)
    
    
    Value
    
    
    Principal
    
    
    Adjustments(B)
    
    
    ValueThird party debt:Short term borrowings
    
    
    2.74
    %
    
    $
    121
    
    
    $
    
    
    
    $
    121
    
    
    $
    75
    
    
    $
    
    
    
    $
    75Novelis Inc.Floating rate Term Loan Facility, due
December 2016
    
    
    5.25
    %
    
    
    1,500
    
    
    
    (44
    )
    
    
    1,456
    
    
    
    
    
    
    
    
    
    
    
    Floating rate Term Loan Facility, due
July 2014
    
    
    
    %(C)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    292
    
    
    
    
    
    
    
    2928.375% Senior Notes, due December 2017
    
    
    8.375
    %
    
    
    1,100
    
    
    
    
    
    
    
    1,100
    
    
    
    
    
    
    
    
    
    
    
    8.75% Senior Notes, due December 2020
    
    
    8.75
    %
    
    
    1,400
    
    
    
    (1
    )
    
    
    1,399
    
    
    
    
    
    
    
    
    
    
    
    11.5% Senior Notes, due February 2015
    
    
    
    %(C)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185
    
    
    
    (3
    )
    
    
    1827.25% Senior Notes, due February 2015
    
    
    7.25
    %(C)
    
    
    74
    
    
    
    3
    
    
    
    77
    
    
    
    1,124
    
    
    
    41
    
    
    
    1,165Novelis CorporationFloating rate Term Loan Facility, due
July 2014
    
    
    
    %(C)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    859
    
    
    
    (46
    )
    
    
    813Novelis Switzerland S.A.Capital lease obligation, due
December 2019 (Swiss francs (CHF) 46
million)
    
    
    7.50
    %
    
    
    48
    
    
    
    (3
    )
    
    
    45
    
    
    
    45
    
    
    
    (3
    )
    
    
    42Capital lease obligation, due August
2011 (CHF 1 million)
    
    
    2.49
    %
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    1Novelis Korea LimitedBank loan, due October 2010
    
    
    
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100OtherOther debt, due December 2011 through
November 2015
    
    
    4.16
    %
    
    
    3
    
    
    
    
    
    
    
    3
    
    
    
    1
    
    
    
    
    
    
    
    1Total debt  third parties
    
    
    
    
    
    
    4,247
    
    
    
    (45
    )
    
    
    4,202
    
    
    
    2,682
    
    
    
    (11
    )
    
    
    2,671Less: Short term borrowings
    
    
    
    
    
    
    (121
    )
    
    
    
    
    
    
    (121
    )
    
    
    (75
    )
    
    
    
    
    
    
    (75
    )Current portion of long term debt
    
    
    
    
    
    
    (21
    )
    
    
    
    
    
    
    (21
    )
    
    
    (116
    )
    
    
    
    
    
    
    (116
    )Long-term debt, net of current
portion  third parties:
    
    
    
    
    
    $
    4,105
    
    
    $
    (45
    )
    
    $
    4,060
    
    
    $
    2,491
    
    
    $
    (11
    )
    
    $
    2,480
 
 (A)
    
    Interest rates are as of December 31, 2010 and exclude the effects of
related interest rate swaps and accretion/amortization of fair value
adjustments as a result of the Arrangement, the debt exchange
completed in fiscal 2009 and the Refinancing completed in December
2010.(B)
    
    Debt existing at the time of the Arrangement was recorded at fair
value. Additional floating rate Term Loan with a face value of $220
million issued in March 2009 was recorded at a fair value of $165
million. 11.5% Senior Notes with a face value of $185 million issued
in August 2009 were recorded at a fair value of $181 million. In
connection with the refinancing transaction of our prior secured term
loan with the new 2010 Term Loan Facility, a portion of these
historical fair value adjustments were allocated to the 2010 Term Loan
Facility.(C)
    
    On December 17, 2010, we completed a series of refinancing
transactions which resulted in the repayment of the total principal
amount of the floating rate Term Loan Facility due July 2014, the
total outstanding principal amount of the 11.5% Senior Notes due
February 2015 and $1,050 million of aggregate principal amount of
7.25% Senior Notes due 2015. See Refinancing below for additional
discussion. 13




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
  As of December 31, 2010
    
    AmountWithin one year
    
    $
    1422 years
    
    
    203 years
    
    
    204 years
    
    
    205 years
    
    
    95Thereafter
    
    
    3,950Total
    
    $
    4,247
 Refinancing
     Debt
 2017 Notes and 2020 Notes
  14




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
    Registration Rights Agreements
   
    
    use reasonable effort to file a registration statement with respect to an exchange offer
within 180 days after the issue date of the Notes and cause the registration statement to
be declared effective under the Securities Act within 365 days after the issue date of the
Notes;
 
    
    commence the exchange offer as soon as practicable after the effectiveness of the
registration statement; and
 
    
    keep the exchange offer open for not less than 30 days after the date notice of the
exchange offer is mailed to the holders of the Notes.
  15




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
 New Senior Secured Credit Facilities
    Total NetPeriod
    
    Leverage RatioMarch 30, 2011 through March 31, 2012
    
    4.75 to 1.0April 1, 2012 through March 31, 2013
    
    4.50 to 1.0April 1, 2013 through March 31, 2014
    
    4.375 to 1.0April 1, 2014 through March 31, 2015
    
    4.25 to 1.0April 1, 2015 and thereafter
    
    4.0 to 1.0
  Short-Term Borrowings and Lines of Credit
   16




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
 Interest Rate Swaps
   7.     SHARE-BASED COMPENSATION
  
    
    The Novelis Long-Term Incentive Plan FY 2009  FY 2012 (2009 LTIP) was authorized in
June 2008. Under the 2009 LTIP, phantom stock appreciation rights (SARs) were granted to
certain of our executive officers and key employees.
 
    
    The Novelis Long-Term Incentive Plan FY 2010  FY 2013 (2010 LTIP) was authorized in
June 2009. Under the 2010 LTIP, SARs were granted to certain of our executive officers and
key employees.
 
    
    The Novelis Long-Term Incentive Plan FY 2011- FY 2014 (2011 LTIP) was authorized in May
2010. The 2011 LTIP provides for SARs and phantom restricted stock units (RSUs).
   Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    20092009 LTIP
    
    $
    1
    
    
    $
    2
    
    
    $
    4
    
    
    $
    32010 LTIP
    
    
    1
    
    
    
    1
    
    
    
    7
    
    
    
    22011 LTIP
    
    
    2
    
    
    
    
    
    
    
    3
    
    
    
    Total compensation expense
    
    $
    4
    
    
    $
    3
    
    
    $
    14
    
    
    $
    5
  AggregateGrant Date Fair
    
    
    IntrinsicNumber of
    
    
    Value
    
    
    Value (USD2011 LTIP
    
    RSUs
    
    
    (in Indian Rupees)
    
    
    in millions)RSUs outstanding as of March 31, 2010
    
    
    
    
    
    
    
    
    
    $
    Granted
    
    
    905,704
    
    
    
    147.78
    
    
    
    3Forfeited/Cancelled
    
    
    (7,140
    )
    
    
    147.10RSUs outstanding as of December 31, 2010
    
    
    898,564
    
    
    
    147.78
    
    
    $
    5
 17




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
 AggregateRemaining
    
    
    IntrinsicNumber of
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    Value (USD2011 LTIP
    
    SARs
    
    
    (in Indian Rupees)
    
    
    (In years)
    
    
    in millions)SARs outstanding as of March 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    Granted
    
    
    7,114,877
    
    
    
    147.78Forfeited/Cancelled
    
    
    (56,088
    )
    
    
    147.10SARs outstanding as of December 31, 2010
    
    
    7,058,789
    
    
    
    147.78
    
    
    
    6.40
    
    
    $
    16
 Weighted
    
    
    Weighted Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicNumber of
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    Value (USD2010 LTIP
    
    SARs
    
    
    (in Indian Rupees)
    
    
    (In years)
    
    
    in millions)SARs outstanding as of March 31, 2010
    
    
    13,680,431
    
    
    
    87.68
    
    
    
    6.24
    
    
    $
    29Granted
    
    
    32,278
    
    
    
    125.33Exercised
    
    
    (1,965,238
    )
    
    
    86.19Forfeited/Cancelled
    
    
    (635,894
    )
    
    
    85.79SARs outstanding as of December 31, 2010
    
    
    11,111,577
    
    
    
    88.45
    
    
    
    5.48
    
    
    $
    25
 AggregateRemaining
    
    
    IntrinsicNumber of
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    Value (USD2009 LTIP
    
    SARs
    
    
    (in Indian Rupees)
    
    
    (In years)
    
    
    in millions)SARs outstanding as of March 31, 2010
    
    
    11,371,399
    
    
    
    60.50
    
    
    
    5.25
    
    
    $
    18Exercised
    
    
    (1,637,230
    )
    
    
    60.50Forfeited/Cancelled
    
    
    (718,626
    )
    
    
    60.50SARs outstanding as of December 31, 2010
    
    
    9,015,543
    
    
    
    60.50
    
    
    
    4.47
    
    
    $
    14
  2011 LTIP
    
    2010 LTIP
    
    2009 LTIPRisk-free interest rate
    
    7.54  7.83%
    
    7.55  7.84%
    
    7.17  7.44%Dividend yield
    
    0.55%
    
    0.55%
    
    0.55%Volatility
    
    48.39%
    
    51.25%
    
    52.91%Time interval (in years)
    
    0.004
    
    0.004
    
    0.004
   8.     POSTRETIREMENT BENEFIT PLANS
  18




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
  Pension Benefit PlansThree Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    9
    
    
    $
    8
    
    
    $
    27
    
    
    $
    24Interest cost
    
    
    16
    
    
    
    15
    
    
    
    48
    
    
    
    43Expected return on assets
    
    
    (14
    )
    
    
    (10
    )
    
    
    (42
    )
    
    
    (30
    )Amortization  losses
    
    
    2
    
    
    
    3
    
    
    
    8
    
    
    
    9Net periodic benefit cost
    
    $
    13
    
    
    $
    16
    
    
    $
    41
    
    
    $
    46
 Other BenefitsThree Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    2
    
    
    $
    2
    
    
    $
    6
    
    
    $
    5Interest cost
    
    
    2
    
    
    
    2
    
    
    
    6
    
    
    
    8Net periodic benefit cost
    
    $
    4
    
    
    $
    4
    
    
    $
    12
    
    
    $
    13
  Employer Contributions to Plans
  Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Funded pension plans
    
    $
    15
    
    
    $
    10
    
    
    $
    32
    
    
    $
    22Unfunded pension plans
    
    
    3
    
    
    
    3
    
    
    
    9
    
    
    
    11Savings and defined contribution pension plans
    
    
    4
    
    
    
    4
    
    
    
    13
    
    
    
    11Total contributions
    
    $
    22
    
    
    $
    17
    
    
    $
    54
    
    
    $
    44
  9.     CURRENCY (GAINS) LOSSES
  Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Net gain on change in fair value of currency derivative 
instruments(A)
    
    $
    (42
    )
    
    $
    (15
    )
    
    $
    (53
    )
    
    $
    (66
    )Net (gain) loss on remeasurement and transaction gains or losses(B)
    
    
    11
    
    
    
    (2
    )
    
    
    10
    
    
    
    (9
    )Net currency gain
    
    $
    (31
    )
    
    $
    (17
    )
    
    $
    (43
    )
    
    $
    (75
    )
 
 (A)
    
    Included in (Gain) loss on change in fair value of derivative instruments, net.(B)
    
    Included in Other (income) expense, net. 19




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  (Continued)
  Nine Months Ended
    
    
    Year EndedDecember 31, 2010
    
    
    March 31, 2010Cumulative currency translation adjustment  beginning of period
    
    $
    (3
    )
    
    $
    (78
    )Effect of changes in exchange rates
    
    
    6
    
    
    
    75Cumulative currency translation adjustment  end of period
    
    $
    3
    
    
    $
    (3
    )
 10.     FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS
       December 31, 2010Assets
    
    
    Liabilities
    
    
    Net Fair ValueCurrent
    
    
    Noncurrent
    
    
    Current
    
    
    Noncurrent(A)
    
    
    Assets/(Liabilities)Derivatives designated as hedging instruments:Cash flow hedgesCurrency exchange contracts
    
    $
    4
    
    
    $
    6
    
    
    $
    
    
    
    $
    (1
    )
    
    $
    9Interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Electricity swap
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    (23
    )
    
    
    (30
    )Aluminum contracts
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19Fair value hedgeAluminum contracts
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Total derivatives designated as hedging instruments
    
    
    29
    
    
    
    6
    
    
    
    (7
    )
    
    
    (24
    )
    
    
    4Derivatives not designated as hedging instruments:Aluminum contracts
    
    
    94
    
    
    
    4
    
    
    
    (78
    )
    
    
    
    
    
    
    20Currency exchange contracts
    
    
    45
    
    
    
    10
    
    
    
    (11
    )
    
    
    (1
    )
    
    
    43Interest rate swaps
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )Energy contracts
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )Total derivatives not designated as hedging instruments
    
    
    139
    
    
    
    14
    
    
    
    (98
    )
    
    
    (1
    )
    
    
    54Total derivative fair value
    
    $
    168
    
    
    $
    20
    
    
    $
    (105
    )
    
    $
    (25
    )
    
    $
    58
 20




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
  March 31, 2010Assets
    
    
    Liabilities
    
    
    Net Fair ValueCurrent
    
    
    Noncurrent
    
    
    Current
    
    
    Noncurrent(A)
    
    
    Assets/(Liabilities)Derivatives designated as hedging instruments:Cash flow hedgesCurrency exchange contracts
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (21
    )
    
    $
    (21
    )Interest rate swaps
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    (1
    )
    
    
    (7
    )Electricity swap
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    (27
    )
    
    
    (35
    )Total derivatives designated as hedging instruments
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    (49
    )
    
    
    (63
    )Derivatives not designated as hedging instruments:Aluminum contracts
    
    
    149
    
    
    
    6
    
    
    
    (80
    )
    
    
    
    
    
    
    75Currency exchange contracts
    
    
    48
    
    
    
    1
    
    
    
    (10
    )
    
    
    (1
    )
    
    
    38Energy contracts
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    (6
    )Total derivatives not designated as hedging instruments
    
    
    197
    
    
    
    7
    
    
    
    (96
    )
    
    
    (1
    )
    
    
    107Total derivative fair value
    
    $
    197
    
    
    $
    7
    
    
    $
    (110
    )
    
    $
    (50
    )
    
    $
    44
 
 (A)
    
    The noncurrent portions of derivative liabilities are included in
Other long-term liabilities in the accompanying condensed consolidated
balance sheets. Aluminum
     Energy
   Interest Rate
  21




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
   Foreign Currency
     Other
   22




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
  Three Months
    
    
    Nine MonthsEnded
    
    
    EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Derivative Instruments Not Designated as HedgesAluminum contracts
    
    $
    (12
    )
    
    $
    26
    
    
    $
    5
    
    
    $
    123Currency exchange contracts
    
    
    38
    
    
    
    15
    
    
    
    49
    
    
    
    66Interest Rate swaps
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )
    
    
    Energy contracts
    
    
    (1
    )
    
    
    (2
    )
    
    
    (5
    )
    
    
    (2
    )Gain (loss) recognized
    
    
    20
    
    
    
    39
    
    
    
    44
    
    
    
    187Derivative Instruments Designated as HedgesCash flow hedgesAluminum contracts
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    Currency exchange contracts
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    Electricity swap
    
    
    2
    
    
    
    1
    
    
    
    6
    
    
    
    5Gain recognized
    
    
    10
    
    
    
    1
    
    
    
    14
    
    
    
    5Gain on change in fair value of derivative instruments, net
    
    $
    30
    
    
    $
    40
    
    
    $
    58
    
    
    $
    192
  Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Realized gains (losses) included in segment income
    
    $
    17
    
    
    $
    (22
    )
    
    $
    91
    
    
    $
    (424
    )Realized gain on other derivatives not in segment income
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    1Unrealized gains (losses)
    
    
    9
    
    
    
    62
    
    
    
    (37
    )
    
    
    615Gain on change in fair value of derivative instruments, net
    
    $
    30
    
    
    $
    40
    
    
    $
    58
    
    
    $
    192
  Amount of Gain or (Loss)Recognized inAmount of Gain or (Loss)
    
    
    
    
    Amount of Gain or (Loss)
    
    
    Income/(Expense) onRecognized in OCI on
    
    
    
    
    Reclassified from
    
    
    Derivative (Ineffective PortionDerivative
    
    
    
    
    AOCI into Income/(Expense)
    
    
    and Amount Excluded from(Effective Portion)
    
    
    
    
    (Effective Portion)
    
    
    Effectiveness Testing)Three Months
    
    
    Nine Months
    
    
    Location of Gain or (Loss)
    
    Three Months
    
    
    Nine Months
    
    
    Three Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Reclassified from
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    EndedDerivatives in Cash Flow
    
    December 31,
    
    
    December 31,
    
    
    Accumulated OCI into Earnings
    
    December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,Hedging Relationships
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    (Effective Portion)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Electricity swap
    
    $
    2
    
    
    $
    
    
    
    $
    10
    
    
    $
    (3
    )
    
    (Gain) loss on derivative instruments, net
    
    $
    2
    
    
    $
    1
    
    
    $
    5
    
    
    $
    3
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2Aluminum contracts
    
    
    15
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    Cost of goods sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    Interest rate swaps
    
    
    2
    
    
    
    4
    
    
    
    1
    
    
    
    5
    
    
    Interest expense and amortization of debt issuance costs(A)
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )
    
    
    Currency exchange contracts
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    Total
    
    $
    19
    
    
    $
    4
    
    
    $
    32
    
    
    $
    2
    
    
    
    
    $
    (3
    )
    
    $
    1
    
    
    $
    
    
    
    $
    3
    
    
    $
    3
    
    
    $
    
    
    
    $
    3
    
    
    $
    2
 
 (A)
    
    All AOCI related to interest rate swaps was released upon refinancing and
de-designation. Gains or losses are released through (Gain) loss on derivative instruments,
net. 23




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
 11.      FAIR VALUE MEASUREMENTS
      Derivative Contracts
     24




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
  December 31, 2010
    
    
    March 31, 2010Assets
    
    
    Liabilities
    
    
    Assets
    
    
    LiabilitiesLevel 2Aluminum contracts
    
    $
    120
    
    
    $
    (75
    )
    
    $
    151
    
    
    $
    (76
    )Currency exchange contracts
    
    
    65
    
    
    
    (13
    )
    
    
    49
    
    
    
    (32
    )Energy contracts
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (6
    )Interest rate swaps
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (7
    )Total Level 2 Instruments
    
    
    185
    
    
    
    (97
    )
    
    
    200
    
    
    
    (121
    )Level 3Aluminum contracts
    
    
    3
    
    
    
    (3
    )
    
    
    4
    
    
    
    (4
    )Electricity swap
    
    
    
    
    
    
    (30
    )
    
    
    
    
    
    
    (35
    )Total Level 3 Instruments
    
    
    3
    
    
    
    (33
    )
    
    
    4
    
    
    
    (39
    )Total
    
    $
    188
    
    
    $
    (130
    )
    
    $
    204
    
    
    $
    (160
    )
   Level 3DerivativeInstruments(A)Balance as of March 31, 2010
    
    $
    (35
    )Net realized/unrealized (losses) included in earnings(B)
    
    
    5Net realized/unrealized (losses) included in Other comprehensive income (loss)(C)
    
    
    5Net purchases, issuances and settlements
    
    
    (5
    )Net transfers from Level 3 to Level 2
    
    
    Balance as of December 31, 2010
    
    $
    (30
    )
 
 (A)
    
    Represents derivative assets net of derivative liabilities.(B)
    
    Included in (Gain) loss on change in fair value of derivative instruments, net.(C)
    
    Included in Change in fair value of effective portion of hedges, net. Financial Instruments Not Recorded at Fair Value
  December 31, 2010
    
    March 31, 2010Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    ValueAssetsLong-term receivables from related parties
    
    $
    19
    
    
    $
    19
    
    
    $
    21
    
    
    $
    21LiabilitiesTotal debt  third parties (excluding short term borrowings)
    
    $
    4,081
    
    
    $
    4,132
    
    
    $
    2,596
    
    
    $
    2,432
 25




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
 12.      OTHER (INCOME) EXPENSE, NET
  Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Net (gain) loss on currency remeasurement and transaction gains or losses
    
    $
    11
    
    
    $
    (2
    )
    
    $
    10
    
    
    $
    (9
    )Gain on the reversal of accrued legal claims
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )(Gain) loss on sale of assets, net
    
    
    2
    
    
    
    1
    
    
    
    (11
    )
    
    
    Gain on tax litigation settlement in Brazil
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )Other, net
    
    
    3
    
    
    
    2
    
    
    
    6
    
    
    
    (3
    )Other (income) expense, net
    
    $
    16
    
    
    $
    (2
    )
    
    $
    5
    
    
    $
    (21
    )
 13.      INCOME TAXES
  Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Pre-tax income before equity in net income of
non-consolidated affiliates and noncontrolling
interests
    
    $
    3
    
    
    $
    121
    
    
    $
    212
    
    
    $
    715Canadian statutory tax rate
    
    
    29
    %
    
    
    30
    %
    
    
    29
    %
    
    
    30
    %Provision at the Canadian statutory rate
    
    
    1
    
    
    
    37
    
    
    
    62
    
    
    
    215Increase (decrease) for taxes on income resulting from:Exchange translation items
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    18Exchange remeasurement of deferred income taxes
    
    
    4
    
    
    
    5
    
    
    
    15
    
    
    
    41Change in valuation allowances
    
    
    15
    
    
    
    3
    
    
    
    30
    
    
    
    6Expense (income) items not subject to tax
    
    
    2
    
    
    
    (2
    )
    
    
    4
    
    
    
    (6
    )Tax rate differences on foreign earnings
    
    
    9
    
    
    
    2
    
    
    
    (5
    )
    
    
    (7
    )Uncertain tax positions, net
    
    
    1
    
    
    
    6
    
    
    
    (2
    )
    
    
    (19
    )Other  net
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Income tax provision
    
    $
    33
    
    
    $
    48
    
    
    $
    104
    
    
    $
    247Effective tax rate
    
    
    1,100
    %
    
    
    40
    %
    
    
    49
    %
    
    
    35
    %
  14.      COMMITMENTS AND CONTINGENCIES
  26




---



##### Table of Contents



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




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
 Brazil Tax Matters
   Guarantees of Indebtedness
    Maximum
    
    LiabilityPotential
    
    CarryingType of Entity
    
    Future Payment
    
    ValueWholly-owned subsidiaries
    
    $
    142
    
    
    $
    40
  15.      SEGMENT, MAJOR CUSTOMER AND MAJOR SUPPLIER INFORMATION
 Segment Information
  28




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
   Selected Segment Financial Information
 North
    
    
    
    
    
    
    
    
    
    South
    
    CorporateTotal Assets
    
    America
    
    Europe
    
    Asia
    
    America
    
    and Other
    
    Eliminations
    
    TotalDecember 31, 2010
    
    $
    2,599
    
    
    $
    2,897
    
    
    $
    926
    
    
    $
    1,394
    
    
    $
    140
    
    
    $
    (208
    )
    
    $
    7,748March 31, 2010
    
    $
    2,726
    
    
    $
    2,870
    
    
    $
    965
    
    
    $
    1,344
    
    
    $
    49
    
    
    $
    (192
    )
    
    $
    7,762
 Selected Operating Results
    
    North
    
    
    
    
    
    
    
    
    
    South
    
    CorporateThree Months Ended December 31, 2010
    
    America
    
    Europe
    
    Asia
    
    America
    
    and Other
    
    Eliminations
    
    TotalNet sales
    
    $
    939
    
    
    $
    835
    
    
    $
    470
    
    
    $
    321
    
    
    $
    
    
    
    $
    (5
    )
    
    $
    2,560Depreciation and amortization
    
    
    41
    
    
    
    36
    
    
    
    14
    
    
    
    20
    
    
    
    1
    
    
    
    (12
    )
    
    
    100Capital expenditures
    
    
    15
    
    
    
    25
    
    
    
    9
    
    
    
    25
    
    
    
    (2
    )
    
    
    (11
    )
    
    
    61
 Selected Operating Results
    
    North
    
    
    
    
    
    
    
    
    
    South
    
    CorporateThree Months Ended December 31, 2009
    
    America
    
    Europe
    
    Asia
    
    America
    
    and Other
    
    Eliminations
    
    TotalNet sales
    
    $
    786
    
    
    $
    725
    
    
    $
    390
    
    
    $
    235
    
    
    $
    
    
    
    $
    (24
    )
    
    $
    2,112Depreciation and amortization
    
    
    41
    
    
    
    23
    
    
    
    12
    
    
    
    14
    
    
    
    1
    
    
    
    2
    
    
    
    93Capital expenditures
    
    
    12
    
    
    
    20
    
    
    
    5
    
    
    
    3
    
    
    
    
    
    
    
    (12
    )
    
    
    28
 Selected Operating Results
    
    North
    
    
    
    
    
    
    
    
    
    South
    
    CorporateNine Months Ended December 31, 2010
    
    America
    
    Europe
    
    Asia
    
    America
    
    and Other
    
    Eliminations
    
    TotalNet sales
    
    $
    2,863
    
    
    $
    2,551
    
    
    $
    1,340
    
    
    $
    876
    
    
    $
    
    
    
    $
    (13
    )
    
    $
    7,617Depreciation and amortization
    
    
    124
    
    
    
    105
    
    
    
    43
    
    
    
    66
    
    
    
    5
    
    
    
    (36
    )
    
    
    307Capital expenditures
    
    
    32
    
    
    
    43
    
    
    
    22
    
    
    
    46
    
    
    
    11
    
    
    
    (22
    )
    
    
    132
 Selected Operating Results
    
    North
    
    
    
    
    
    
    
    
    
    South
    
    CorporateNine Months Ended December 31, 2009
    
    America
    
    Europe
    
    Asia
    
    America
    
    and Other
    
    Eliminations
    
    TotalNet sales
    
    $
    2,375
    
    
    $
    2,125
    
    
    $
    1,098
    
    
    $
    691
    
    
    $
    
    
    
    $
    (36
    )
    
    $
    6,253Depreciation and amortization
    
    
    121
    
    
    
    117
    
    
    
    35
    
    
    
    47
    
    
    
    3
    
    
    
    (38
    )
    
    
    285Capital expenditures
    
    
    25
    
    
    
    42
    
    
    
    10
    
    
    
    15
    
    
    
    
    
    
    
    (18
    )
    
    
    74
 29




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
  Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009North America
    
    $
    106
    
    
    $
    99
    
    
    $
    323
    
    
    $
    231Europe
    
    
    56
    
    
    
    60
    
    
    
    246
    
    
    
    153Asia
    
    
    62
    
    
    
    39
    
    
    
    173
    
    
    
    125South America
    
    
    40
    
    
    
    26
    
    
    
    127
    
    
    
    73Corporate and other(A)
    
    
    (26
    )
    
    
    (25
    )
    
    
    (78
    )
    
    
    (60
    )Depreciation and amortization
    
    
    (100
    )
    
    
    (93
    )
    
    
    (307
    )
    
    
    (285
    )Interest expense and amortization of debt issuance costs
    
    
    (46
    )
    
    
    (44
    )
    
    
    (125
    )
    
    
    (131
    )Interest income
    
    
    4
    
    
    
    2
    
    
    
    10
    
    
    
    8Unrealized gains (losses) on change in fair value of derivative instruments, net
    
    
    9
    
    
    
    62
    
    
    
    (37
    )
    
    
    615Realized gains on derivative instruments not included in segment income (B)
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    1Adjustment to eliminate proportional consolidation(C)
    
    
    (11
    )
    
    
    2
    
    
    
    (32
    )
    
    
    (31
    )Loss on early extinguishment of debt
    
    
    (74
    )
    
    
    
    
    
    
    (74
    )
    
    
    Restructuring charges, net
    
    
    (20
    )
    
    
    (1
    )
    
    
    (35
    )
    
    
    (7
    )Other income, net
    
    
    (6
    )
    
    
    2
    
    
    
    6
    
    
    
    11Income before income taxes
    
    
    (2
    )
    
    
    129
    
    
    
    201
    
    
    
    703Income tax provision
    
    
    33
    
    
    
    48
    
    
    
    104
    
    
    
    247Net income (loss)
    
    
    (35
    )
    
    
    81
    
    
    
    97
    
    
    
    456Net income attributable to noncontrolling interests
    
    
    11
    
    
    
    13
    
    
    
    31
    
    
    
    50Net income (loss) attributable to our common shareholder
    
    $
    (46
    )
    
    $
    68
    
    
    $
    66
    
    
    $
    406
 
 (A)
    
    Corporate and other includes functions that are managed directly from
our corporate office, which focuses on strategy development and
oversees governance, policy, legal compliance, human resources and
finance matters. These expenses have not been allocated to the
regions.(B)
    
    Realized gains on derivative instruments not included in segment
income represents realized gains on foreign currency derivatives
related to capital expenditures for our previously announced expansion
in South America.(C)
    
    The financial information for our segments includes the segment income
of our non-consolidated affiliates on a proportionately consolidated
basis, which is consistent with the way we manage our business
segments. However, under US GAAP, these non-consolidated affiliates
are accounted for using the equity method of accounting. Therefore, in
order to reconcile the financial information for the segments shown in
the tables above to the relevant US GAAP-based measures, we must
include our proportion of the remaining income statement items that
are not included in segment income above. See Note 5  Investment in
and Advances to Non-Consolidated Affiliates and Related Party
Transactions for further information about these non-consolidated
affiliates. Information about Major Customers and Primary Supplier
  Three Months Ended
    
    Nine Months EndedDecember 31,
    
    December 31,2010
    
    2009
    
    2010
    
    2009Rexam
    
    
    16
    %
    
    
    16
    %
    
    
    16
    %
    
    
    17
    %Anheuser-Busch
    
    
    13
    %
    
    
    10
    %
    
    
    13
    %
    
    
    11
    %
 30




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
  Three Months Ended
    
    Nine Months EndedDecember 31,
    
    December 31,2010
    
    2009
    
    2010
    
    2009Purchases from Rio Tinto Alcan as a percentage of total
    
    
    33
    %
    
    
    38
    %
    
    
    33
    %
    
    
    41
    %
 16.      SUPPLEMENTAL INFORMATION
  December 31,
    
    
    March 31,2010
    
    
    2010Currency translation adjustment
    
    $
    (3
    )
    
    $
    (8
    )Fair value of effective portion of cash flow hedges
    
    
    (6
    )
    
    
    (27
    )Pension and other benefits
    
    
    (79
    )
    
    
    (68
    )Accumulated other comprehensive loss
    
    $
    (88
    )
    
    $
    (103
    )
  Nine Months EndedDecember 31,2010
    
    2009Interest paid
    
    $
    112
    
    
    $
    92Income taxes paid, net
    
    $
    83
    
    
    $
    24
 17.      SUPPLEMENTAL GUARANTOR INFORMATION
   31




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
 NOVELIS INC.
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
 Three Months Ended December 31, 2010Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    254
    
    
    $
    2,043
    
    
    $
    751
    
    
    $
    (488
    )
    
    $
    2,560Cost of goods sold (exclusive of depreciation and amortization)
    
    
    246
    
    
    
    1,794
    
    
    
    680
    
    
    
    (488
    )
    
    
    2,232Selling, general and administrative expenses
    
    
    2
    
    
    
    75
    
    
    
    17
    
    
    
    
    
    
    
    94Depreciation and amortization
    
    
    1
    
    
    
    76
    
    
    
    23
    
    
    
    
    
    
    
    100Research and development expenses
    
    
    6
    
    
    
    2
    
    
    
    1
    
    
    
    
    
    
    
    9Interest expense and amortization of debt issuance costs
    
    
    38
    
    
    
    22
    
    
    
    1
    
    
    
    (15
    )
    
    
    46Interest income
    
    
    (15
    )
    
    
    (4
    )
    
    
    
    
    
    
    15
    
    
    
    (4
    )Gain on change in fair value of derivative instruments, net
    
    
    (3
    )
    
    
    (23
    )
    
    
    (4
    )
    
    
    
    
    
    
    (30
    )Loss on early debt extinguishment
    
    
    33
    
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    74Restructuring charges, net
    
    
    
    
    
    
    19
    
    
    
    1
    
    
    
    
    
    
    
    20Equity in net (income) loss of non-consolidated affiliates
    
    
    (22
    )
    
    
    5
    
    
    
    
    
    
    
    22
    
    
    
    5Other income, net
    
    
    (8
    )
    
    
    28
    
    
    
    (4
    )
    
    
    
    
    
    
    16278
    
    
    
    2,035
    
    
    
    715
    
    
    
    (466
    )
    
    
    2,562Income (loss) before income taxes
    
    
    (24
    )
    
    
    8
    
    
    
    36
    
    
    
    (22
    )
    
    
    (2
    )Income tax provision
    
    
    22
    
    
    
    4
    
    
    
    7
    
    
    
    
    
    
    
    33Net income (loss)
    
    
    (46
    )
    
    
    4
    
    
    
    29
    
    
    
    (22
    )
    
    
    (35
    )Net income attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    11Net income (loss) attributable to our common shareholder
    
    $
    (46
    )
    
    $
    4
    
    
    $
    18
    
    
    $
    (22
    )
    
    $
    (46
    )Three Months Ended December 31, 2009Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    212
    
    
    $
    1,659
    
    
    $
    623
    
    
    $
    (382
    )
    
    $
    2,112Cost of goods sold (exclusive of depreciation and amortization)
    
    
    191
    
    
    
    1,438
    
    
    
    548
    
    
    
    (382
    )
    
    
    1,795Selling, general and administrative expenses
    
    
    16
    
    
    
    61
    
    
    
    15
    
    
    
    
    
    
    
    92Depreciation and amortization
    
    
    
    
    
    
    71
    
    
    
    22
    
    
    
    
    
    
    
    93Research and development expenses
    
    
    6
    
    
    
    3
    
    
    
    1
    
    
    
    
    
    
    
    10Interest expense and amortization of debt issuance costs
    
    
    29
    
    
    
    30
    
    
    
    2
    
    
    
    (17
    )
    
    
    44Interest income
    
    
    (15
    )
    
    
    (3
    )
    
    
    (1
    )
    
    
    17
    
    
    
    (2
    )Gain on change in fair value of derivative instruments, net
    
    
    (2
    )
    
    
    (35
    )
    
    
    (3
    )
    
    
    
    
    
    
    (40
    )Restructuring charges, net
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Equity in net (income) loss of non-consolidated affiliates
    
    
    (75
    )
    
    
    (8
    )
    
    
    
    
    
    
    75
    
    
    
    (8
    )Other (income) expense, net
    
    
    (9
    )
    
    
    12
    
    
    
    (5
    )
    
    
    
    
    
    
    (2
    )141
    
    
    
    1,570
    
    
    
    579
    
    
    
    (307
    )
    
    
    1,983Income before income taxes
    
    
    71
    
    
    
    89
    
    
    
    44
    
    
    
    (75
    )
    
    
    129Income tax provision (benefit)
    
    
    3
    
    
    
    39
    
    
    
    6
    
    
    
    
    
    
    
    48Net income
    
    
    68
    
    
    
    50
    
    
    
    38
    
    
    
    (75
    )
    
    
    81Net income attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    13Net income attributable to our common shareholder
    
    $
    68
    
    
    $
    50
    
    
    $
    25
    
    
    $
    (75
    )
    
    $
    68
 32




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
 NOVELIS INC.
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
 Nine Months Ended December 31, 2010Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    775
    
    
    $
    6,142
    
    
    $
    2,198
    
    
    $
    (1,498
    )
    
    $
    7,617Cost of goods sold (exclusive of depreciation and amortization)
    
    
    738
    
    
    
    5,407
    
    
    
    1,981
    
    
    
    (1,498
    )
    
    
    6,628Selling, general and administrative expenses
    
    
    22
    
    
    
    204
    
    
    
    46
    
    
    
    
    
    
    
    272Depreciation and amortization
    
    
    4
    
    
    
    233
    
    
    
    70
    
    
    
    
    
    
    
    307Research and development expenses
    
    
    19
    
    
    
    7
    
    
    
    1
    
    
    
    
    
    
    
    27Interest expense and amortization of debt issuance costs
    
    
    96
    
    
    
    70
    
    
    
    3
    
    
    
    (44
    )
    
    
    125Interest income
    
    
    (44
    )
    
    
    (9
    )
    
    
    (1
    )
    
    
    44
    
    
    
    (10
    )Gain on change in fair value of derivative instruments, net
    
    
    (2
    )
    
    
    (56
    )
    
    
    
    
    
    
    
    
    
    
    (58
    )Loss on early debt extinguishment
    
    
    33
    
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    74Restructuring charges, net
    
    
    5
    
    
    
    28
    
    
    
    2
    
    
    
    
    
    
    
    35Equity in net (income) loss of non-consolidated affiliates
    
    
    (166
    )
    
    
    11
    
    
    
    
    
    
    
    166
    
    
    
    11Other (income) expense, net
    
    
    (16
    )
    
    
    28
    
    
    
    (7
    )
    
    
    
    
    
    
    5689
    
    
    
    5,964
    
    
    
    2,095
    
    
    
    (1,332
    )
    
    
    7,416Income before income taxes
    
    
    86
    
    
    
    178
    
    
    
    103
    
    
    
    (166
    )
    
    
    201Income tax provision
    
    
    20
    
    
    
    65
    
    
    
    19
    
    
    
    
    
    
    
    104Net income
    
    
    66
    
    
    
    113
    
    
    
    84
    
    
    
    (166
    )
    
    
    97Net income attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    31Net income attributable to our common shareholder
    
    $
    66
    
    
    $
    113
    
    
    $
    53
    
    
    $
    (166
    )
    
    $
    66Nine Months Ended December 31, 2009Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    598
    
    
    $
    4,936
    
    
    $
    1,780
    
    
    $
    (1,061
    )
    
    $
    6,253Cost of goods sold (exclusive of depreciation and amortization)
    
    
    540
    
    
    
    4,070
    
    
    
    1,517
    
    
    
    (1,061
    )
    
    
    5,066Selling, general and administrative expenses
    
    
    35
    
    
    
    166
    
    
    
    42
    
    
    
    
    
    
    
    243Depreciation and amortization
    
    
    2
    
    
    
    216
    
    
    
    67
    
    
    
    
    
    
    
    285Research and development expenses
    
    
    17
    
    
    
    8
    
    
    
    2
    
    
    
    
    
    
    
    27Interest expense and amortization of debt issuance costs
    
    
    84
    
    
    
    89
    
    
    
    7
    
    
    
    (49
    )
    
    
    131Interest income
    
    
    (47
    )
    
    
    (8
    )
    
    
    (2
    )
    
    
    49
    
    
    
    (8
    )Gain on change in fair value of derivative instruments, net
    
    
    (5
    )
    
    
    (167
    )
    
    
    (20
    )
    
    
    
    
    
    
    (192
    )Restructuring charges, net
    
    
    
    
    
    
    5
    
    
    
    2
    
    
    
    
    
    
    
    7Equity in net (income) loss of non-consolidated affiliates
    
    
    (380
    )
    
    
    12
    
    
    
    
    
    
    
    380
    
    
    
    12Other (income) expense, net
    
    
    (24
    )
    
    
    36
    
    
    
    (33
    )
    
    
    
    
    
    
    (21
    )222
    
    
    
    4,427
    
    
    
    1,582
    
    
    
    (681
    )
    
    
    5,550Income before income taxes
    
    
    376
    
    
    
    509
    
    
    
    198
    
    
    
    (380
    )
    
    
    703Income tax provision (benefit)
    
    
    (30
    )
    
    
    243
    
    
    
    34
    
    
    
    
    
    
    
    247Net income
    
    
    406
    
    
    
    266
    
    
    
    164
    
    
    
    (380
    )
    
    
    456Net income attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    50Net income attributable to our common shareholder
    
    $
    406
    
    
    $
    266
    
    
    $
    114
    
    
    $
    (380
    )
    
    $
    406
 33




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
 NOVELIS INC.
 CONDENSED CONSOLIDATING BALANCE SHEET
(In millions)
 December 31, 2010Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assetsCash and cash equivalents
    
    $
    34
    
    
    $
    206
    
    
    $
    57
    
    
    $
    
    
    
    $
    297Accounts receivable, net of allowances third parties
    
    
    25
    
    
    
    734
    
    
    
    421
    
    
    
    
    
    
    
    1,180 related parties
    
    
    662
    
    
    
    229
    
    
    
    60
    
    
    
    (935
    )
    
    
    16Inventories
    
    
    54
    
    
    
    914
    
    
    
    333
    
    
    
    
    
    
    
    1,301Prepaid expenses and other current assets
    
    
    3
    
    
    
    36
    
    
    
    8
    
    
    
    
    
    
    
    47Fair value of derivative instruments
    
    
    7
    
    
    
    147
    
    
    
    23
    
    
    
    (9
    )
    
    
    168Deferred income tax assets
    
    
    
    
    
    
    16
    
    
    
    1
    
    
    
    
    
    
    
    17Total current assets
    
    
    785
    
    
    
    2,282
    
    
    
    903
    
    
    
    (944
    )
    
    
    3,026Property, plant and equipment, net
    
    
    136
    
    
    
    1,864
    
    
    
    490
    
    
    
    
    
    
    
    2,490Goodwill
    
    
    
    
    
    
    600
    
    
    
    11
    
    
    
    
    
    
    
    611Intangible assets, net
    
    
    9
    
    
    
    700
    
    
    
    (2
    )
    
    
    
    
    
    
    707Investments in and advances to non-consolidated
affiliates
    
    
    2,773
    
    
    
    683
    
    
    
    
    
    
    
    (2,773
    )
    
    
    683Fair value of derivative instruments, net of current portion
    
    
    2
    
    
    
    18
    
    
    
    2
    
    
    
    (2
    )
    
    
    20Deferred income tax assets
    
    
    1
    
    
    
    (2
    )
    
    
    15
    
    
    
    
    
    
    
    14Other long-term assets
    
    
    1,032
    
    
    
    195
    
    
    
    67
    
    
    
    (1,097
    )
    
    
    197Total assets
    
    $
    4,738
    
    
    $
    6,340
    
    
    $
    1,486
    
    
    $
    (4,816
    )
    
    $
    7,748LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    15
    
    
    $
    6
    
    
    $
    
    
    
    $
    
    
    
    $
    21Short-term borrowings third parties
    
    
    99
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    121 related parties
    
    
    5
    
    
    
    409
    
    
    
    18
    
    
    
    (432
    )
    
    
    Accounts payable third parties
    
    
    71
    
    
    
    588
    
    
    
    445
    
    
    
    
    
    
    
    1,104 related parties
    
    
    61
    
    
    
    352
    
    
    
    133
    
    
    
    (501
    )
    
    
    45Fair value of derivative instruments
    
    
    5
    
    
    
    98
    
    
    
    11
    
    
    
    (9
    )
    
    
    105Accrued expenses and other current liabilities
    
    
    56
    
    
    
    286
    
    
    
    100
    
    
    
    (1
    )
    
    
    441Deferred income tax liabilities
    
    
    
    
    
    
    35
    
    
    
    1
    
    
    
    
    
    
    
    36Total current liabilities
    
    
    312
    
    
    
    1,774
    
    
    
    730
    
    
    
    (943
    )
    
    
    1,873Long-term debt, net of current portion third parties
    
    
    4,017
    
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    4,060 related parties
    
    
    101
    
    
    
    916
    
    
    
    80
    
    
    
    (1,097
    )
    
    
    Deferred income tax liabilities
    
    
    
    
    
    
    509
    
    
    
    10
    
    
    
    
    
    
    
    519Accrued postretirement benefits
    
    
    36
    
    
    
    342
    
    
    
    139
    
    
    
    
    
    
    
    517Other long-term liabilities
    
    
    22
    
    
    
    334
    
    
    
    4
    
    
    
    (3
    )
    
    
    357Total liabilities
    
    
    4,488
    
    
    
    3,918
    
    
    
    963
    
    
    
    (2,043
    )
    
    
    7,326Commitments and contingenciesShareholders equityCommon stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional paid-in capital
    
    
    1,830
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,830Retained earnings/(accumulated deficit)/owners net investment
    
    
    (1,492
    )
    
    
    2,529
    
    
    
    402
    
    
    
    (2,931
    )
    
    
    (1,492
    )Accumulated other comprehensive income (loss)
    
    
    (88
    )
    
    
    (107
    )
    
    
    (51
    )
    
    
    158
    
    
    
    (88
    )Total Novelis shareholders equity
    
    
    250
    
    
    
    2,422
    
    
    
    351
    
    
    
    (2,773
    )
    
    
    250Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    172
    
    
    
    
    
    
    
    172Total equity
    
    
    250
    
    
    
    2,422
    
    
    
    523
    
    
    
    (2,773
    )
    
    
    422Total liabilities and shareholders equity
    
    $
    4,738
    
    
    $
    6,340
    
    
    $
    1,486
    
    
    $
    (4,816
    )
    
    $
    7,748
 34




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
 NOVELIS INC.
 CONDENSED CONSOLIDATING BALANCE SHEET
(In millions)
 As of March 31, 2010Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assetsCash and cash equivalents
    
    $
    22
    
    
    $
    266
    
    
    $
    149
    
    
    $
    
    
    
    $
    437Accounts receivable, net of allowances third parties
    
    
    24
    
    
    
    747
    
    
    
    372
    
    
    
    
    
    
    
    1,143 related parties
    
    
    695
    
    
    
    312
    
    
    
    62
    
    
    
    (1,045
    )
    
    
    24Inventories
    
    
    47
    
    
    
    770
    
    
    
    266
    
    
    
    
    
    
    
    1,083Prepaid expenses and other current assets
    
    
    2
    
    
    
    28
    
    
    
    9
    
    
    
    
    
    
    
    39Fair value of derivative instruments
    
    
    5
    
    
    
    161
    
    
    
    43
    
    
    
    (12
    )
    
    
    197Deferred income tax assets
    
    
    
    
    
    
    7
    
    
    
    5
    
    
    
    
    
    
    
    12Total current assets
    
    
    795
    
    
    
    2,291
    
    
    
    906
    
    
    
    (1,057
    )
    
    
    2,935Property, plant and equipment, net
    
    
    138
    
    
    
    1,976
    
    
    
    518
    
    
    
    
    
    
    
    2,632Goodwill
    
    
    
    
    
    
    600
    
    
    
    11
    
    
    
    
    
    
    
    611Intangible assets, net
    
    
    6
    
    
    
    740
    
    
    
    3
    
    
    
    
    
    
    
    749Investments in and advances to non-consolidated affiliates
    
    
    1,998
    
    
    
    708
    
    
    
    1
    
    
    
    (1,998
    )
    
    
    709Fair value of derivative instruments, net of current portion
    
    
    
    
    
    
    7
    
    
    
    2
    
    
    
    (2
    )
    
    
    7Deferred income tax assets
    
    
    1
    
    
    
    3
    
    
    
    1
    
    
    
    
    
    
    
    5Other long-term assets
    
    
    976
    
    
    
    199
    
    
    
    78
    
    
    
    (1,139
    )
    
    
    114Total assets
    
    $
    3,914
    
    
    $
    6,524
    
    
    $
    1,520
    
    
    $
    (4,196
    )
    
    $
    7,762LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    3
    
    
    $
    13
    
    
    $
    100
    
    
    $
    
    
    
    $
    116Short-term borrowings third parties
    
    
    
    
    
    
    61
    
    
    
    14
    
    
    
    
    
    
    
    75 related parties
    
    
    41
    
    
    
    457
    
    
    
    21
    
    
    
    (519
    )
    
    
    Accounts payable third parties
    
    
    58
    
    
    
    600
    
    
    
    418
    
    
    
    
    
    
    
    1,076 related parties
    
    
    62
    
    
    
    350
    
    
    
    166
    
    
    
    (525
    )
    
    
    53Fair value of derivative instruments
    
    
    7
    
    
    
    102
    
    
    
    13
    
    
    
    (12
    )
    
    
    110Accrued expenses and other current liabilities
    
    
    52
    
    
    
    279
    
    
    
    106
    
    
    
    (1
    )
    
    
    436Deferred income tax liabilities
    
    
    
    
    
    
    33
    
    
    
    1
    
    
    
    
    
    
    
    34Total current liabilities
    
    
    223
    
    
    
    1,895
    
    
    
    839
    
    
    
    (1,057
    )
    
    
    1,900Long-term debt, net of current portion third parties
    
    
    1,635
    
    
    
    844
    
    
    
    1
    
    
    
    
    
    
    
    2,480 related parties
    
    
    115
    
    
    
    929
    
    
    
    94
    
    
    
    (1,138
    )
    
    
    Deferred income tax liabilities
    
    
    
    
    
    
    485
    
    
    
    12
    
    
    
    
    
    
    
    497Accrued postretirement benefits
    
    
    31
    
    
    
    349
    
    
    
    119
    
    
    
    
    
    
    
    499Other long-term liabilities
    
    
    41
    
    
    
    333
    
    
    
    5
    
    
    
    (3
    )
    
    
    3762,045
    
    
    
    4,835
    
    
    
    1,070
    
    
    
    (2,198
    )
    
    
    5,752Commitments and contingenciesShareholders equityCommon stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional paid-in capital
    
    
    3,530
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,530Retained earnings (accumulated deficit)
    
    
    (1,558
    )
    
    
    1,818
    
    
    
    349
    
    
    
    (2,167
    )
    
    
    (1,558
    )Accumulated other comprehensive income (loss)
    
    
    (103
    )
    
    
    (129
    )
    
    
    (40
    )
    
    
    169
    
    
    
    (103
    )Total equity of our common shareholder
    
    
    1,869
    
    
    
    1,689
    
    
    
    309
    
    
    
    (1,998
    )
    
    
    1,869Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    141
    
    
    
    
    
    
    
    141Total equity
    
    
    1,869
    
    
    
    1,689
    
    
    
    450
    
    
    
    (1,998
    )
    
    
    2,010Total liabilities and equity
    
    $
    3,914
    
    
    $
    6,524
    
    
    $
    1,520
    
    
    $
    (4,196
    )
    
    $
    7,762
 35




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
 NOVELIS INC.
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)
 Nine Months Ended December 31, 2010Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedOPERATING ACTIVITIESNet cash provided by (used in) operating activities
    
    $
    (673
    )
    
    $
    839
    
    
    $
    52
    
    
    $
    
    
    
    $
    218INVESTING ACTIVITIESCapital expenditures
    
    
    (15
    )
    
    
    (86
    )
    
    
    (31
    )
    
    
    
    
    
    
    (132
    )Proceeds from sales of assets third parties
    
    
    
    
    
    
    17
    
    
    
    1
    
    
    
    
    
    
    
    18 related parties
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Changes to investment in and advances to non-consolidated affiliates
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Proceeds from loans receivable, net  related parties
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    8Net proceeds from settlement of derivative instruments
    
    
    (4
    )
    
    
    67
    
    
    
    18
    
    
    
    
    
    
    
    81Net cash provided by (used in) investing activities
    
    
    (19
    )
    
    
    17
    
    
    
    (12
    )
    
    
    
    
    
    
    (14
    )FINANCING ACTIVITIESProceeds from issuance of debt, third parties
    
    
    3,985
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,985Principal payments, third parties
    
    
    (1,527
    )
    
    
    (859
    )
    
    
    (100
    )
    
    
    
    
    
    
    (2,486
    )Related parties borrowings, net
    
    
    57
    
    
    
    52
    
    
    
    (23
    )
    
    
    (86
    )
    
    
    Short-term borrowings, net third parties
    
    
    99
    
    
    
    (58
    )
    
    
    8
    
    
    
    
    
    
    
    49 related parties
    
    
    (36
    )
    
    
    (48
    )
    
    
    (2
    )
    
    
    86
    
    
    
    Return of capital
    
    
    (1,700
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,700
    )Dividends  noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    (18
    )Debt issuance costs
    
    
    (174
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (174
    )Net cash provided by (used in) financing activities
    
    
    704
    
    
    
    (913
    )
    
    
    (135
    )
    
    
    
    
    
    
    (344
    )Net increase (decrease) in cash and cash equivalents
    
    
    12
    
    
    
    (57
    )
    
    
    (95
    )
    
    
    
    
    
    
    (140
    )Effect of exchange rate changes on cash balances held in foreign
currencies
    
    
    
    
    
    
    (3
    )
    
    
    3
    
    
    
    
    
    
    
    Cash and cash equivalents  beginning of period
    
    
    22
    
    
    
    266
    
    
    
    149
    
    
    
    
    
    
    
    437Cash and cash equivalents  end of period
    
    $
    34
    
    
    $
    206
    
    
    $
    57
    
    
    $
    
    
    
    $
    297
 36




---



##### Table of Contents



Novelis Inc.
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
(Continued)
 NOVELIS INC.
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)
 Nine Months Ended December 31, 2009Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedOPERATING ACTIVITIESNet cash provided by (used in) operating activities
    
    $
    9
    
    
    $
    449
    
    
    $
    172
    
    
    $
    
    
    
    $
    630INVESTING ACTIVITIESCapital expenditures
    
    
    (3
    )
    
    
    (52
    )
    
    
    (19
    )
    
    
    
    
    
    
    (74
    )Proceeds from sales of assets
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4Changes to investment in and advances to non-consolidated affiliates
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3Proceeds from loans receivable, net  related parties
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    15Net proceeds from settlement of derivative instruments
    
    
    (2
    )
    
    
    (327
    )
    
    
    (103
    )
    
    
    
    
    
    
    (432
    )Net cash provided by (used in) investing activities
    
    
    (5
    )
    
    
    (361
    )
    
    
    (118
    )
    
    
    
    
    
    
    (484
    )FINANCING ACTIVITIESProceeds from issuance of debt, third parties
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177Principal payments, third parties
    
    
    (2
    )
    
    
    (10
    )
    
    
    (8
    )
    
    
    
    
    
    
    (20
    )Related parties borrowings, net
    
    
    (161
    )
    
    
    (51
    )
    
    
    (13
    )
    
    
    134
    
    
    
    (91
    )Short-term borrowings, net third parties
    
    
    
    
    
    
    (188
    )
    
    
    (23
    )
    
    
    
    
    
    
    (211
    ) related parties
    
    
    6
    
    
    
    132
    
    
    
    (4
    )
    
    
    (134
    )
    
    
    Debt issuance costs
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )Dividends  noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    (13
    )
    
    
    
    
    
    
    (13
    )Net cash provided by (used in) financing activities
    
    
    19
    
    
    
    (117
    )
    
    
    (61
    )
    
    
    
    
    
    
    (159
    )Net increase (decrease) in cash and cash equivalents
    
    
    23
    
    
    
    (29
    )
    
    
    (7
    )
    
    
    
    
    
    
    (13
    )Effect of exchange rate changes on cash balances held in foreign
currencies
    
    
    
    
    
    
    5
    
    
    
    12
    
    
    
    
    
    
    
    17Cash and cash equivalents  beginning of period
    
    
    3
    
    
    
    175
    
    
    
    70
    
    
    
    
    
    
    
    248Cash and cash equivalents  end of period
    
    $
    26
    
    
    $
    151
    
    
    $
    75
    
    
    $
    
    
    
    $
    252
 37




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 FORWARD LOOKING STATEMENTS
 The following information should be read together with our unaudited condensed consolidated
financial statements and accompanying notes included elsewhere in this quarterly report for a more
complete understanding of our financial condition and results of operations. The following
discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in these forward-looking statements.
Factors that could cause or contribute to these differences include, but are not limited to, those
discussed below, particularly in SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND MARKET
DATA.
 OVERVIEW AND REFERENCES
      HIGHLIGHTS
  
    
    Net sales for the three months ended December 31, 2010 were $2.6 billion, an increase of
24% compared to the $2.1 billion reported in the same period a year ago. Shipments of flat
rolled products totaled 715 kt for the third quarter of fiscal 2011, an increase of 10%
compared to shipments of 649 kt in the third quarter of the previous year, driven by strong
end-market demand across all our regions. Additionally, average London Metal Exchange (LME)
aluminum prices for the period increased 17% compared to the same period of the previous
year.
    
    Operating cash flow was strong and we ended the period with $848 million of liquidity and
$297 million of cash on hand at December 31, 2010. We completed refinancing transactions to
raise $4.8 billion in debt funding and returned $1.7 billion of capital to our shareholder.
 38




---



##### Table of Contents




    
    We reported net sales of $7.6 billion for the nine months ended December 31, 2010, which is
an increase of 22% as compared to the same period last year when we reported net sales of
$6.3 billion. Shipments of flat rolled products totaled 2,198 kt for the nine months ended
December 31, 2010, an increase of 10% as compared to shipments of 1,992 kt for the nine
months ended December 31, 2009. Additionally, average LME aluminum prices rose 23% as
compared to the same period of the previous year.
 BUSINESS AND INDUSTRY CLIMATE
  Key Sales and Shipment Trends
 Three Months Ended
    
    
    Three Months EndedJune 30,
    
    
    September 30,
    
    
    December 31,
    
    
    March 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2009
    
    
    2009
    
    
    2009
    
    
    2010
    
    
    2010
    
    
    2010
    
    
    2010(In millions, excepts shipments which are in kt)Net sales
    
    $
    1,960
    
    
    $
    2,181
    
    
    $
    2,112
    
    
    $
    2,420
    
    
    $
    2,533
    
    
    $
    2,524
    
    
    $
    2,560Percentage increase
(decrease) in net sales
versus comparable
previous year period
    
    
    (37
    )%
    
    
    (26
    )%
    
    
    (3
    )%
    
    
    25
    %
    
    
    29
    %
    
    
    16
    %
    
    
    21
    %Rolled product shipments:North America
    
    
    254
    
    
    
    258
    
    
    
    243
    
    
    
    274
    
    
    
    278
    
    
    
    285
    
    
    
    262Europe
    
    
    185
    
    
    
    203
    
    
    
    188
    
    
    
    227
    
    
    
    232
    
    
    
    227
    
    
    
    208Asia
    
    
    130
    
    
    
    139
    
    
    
    134
    
    
    
    129
    
    
    
    146
    
    
    
    134
    
    
    
    148South America
    
    
    81
    
    
    
    93
    
    
    
    84
    
    
    
    86
    
    
    
    90
    
    
    
    91
    
    
    
    97Total
    
    
    650
    
    
    
    693
    
    
    
    649
    
    
    
    716
    
    
    
    746
    
    
    
    737
    
    
    
    715Beverage and food cans
    
    
    396
    
    
    
    407
    
    
    
    371
    
    
    
    406
    
    
    
    425
    
    
    
    429
    
    
    
    424All other rolled products
    
    
    254
    
    
    
    286
    
    
    
    278
    
    
    
    310
    
    
    
    321
    
    
    
    308
    
    
    
    291Total
    
    
    650
    
    
    
    693
    
    
    
    649
    
    
    
    716
    
    
    
    746
    
    
    
    737
    
    
    
    715Percentage increase
(decrease) in rolled
products shipments
versus comparable
previous year period:North America
    
    
    (11
    )%
    
    
    (12
    )%
    
    
    
    %
    
    
    11
    %
    
    
    9
    %
    
    
    10
    %
    
    
    8
    %Europe
    
    
    (32
    )%
    
    
    (20
    )%
    
    
    (5
    )%
    
    
    21
    %
    
    
    25
    %
    
    
    12
    %
    
    
    11
    %Asia
    
    
    (2
    )%
    
    
    14
    %
    
    
    26
    %
    
    
    50
    %
    
    
    12
    %
    
    
    (4
    )%
    
    
    10
    %South America
    
    
    (7
    )%
    
    
    7
    %
    
    
    (3
    )%
    
    
    1
    %
    
    
    11
    %
    
    
    (3
    )%
    
    
    15
    %Total
    
    
    (16
    )%
    
    
    (8
    )%
    
    
    3
    %
    
    
    18
    %
    
    
    15
    %
    
    
    6
    %
    
    
    10
    %Beverage and food cans
    
    
    (5
    )%
    
    
    (2
    )%
    
    
    2
    %
    
    
    12
    %
    
    
    7
    %
    
    
    5
    %
    
    
    14
    %All other rolled products
    
    
    (29
    )%
    
    
    (16
    )%
    
    
    3
    %
    
    
    27
    %
    
    
    6
    %
    
    
    8
    %
    
    
    5
    %Total
    
    
    (16
    )%
    
    
    (8
    )%
    
    
    3
    %
    
    
    18
    %
    
    
    15
    %
    
    
    6
    %
    
    
    10
    %
 Business Model and Key Concepts
 Conversion Business Model
   39




---



##### Table of Contents



LME
  Three Months
    
    
    
    
    
    Nine MonthsEnded
    
    
    
    
    
    EndedDecember 31,
    
    Percent
    
    December 31,
    
    Percent2010
    
    2009
    
    Change
    
    2010
    
    2009
    
    ChangeLondon Metal Exchange PricesAluminum (per metric tonne, and presented in U.S. dollars):Closing cash price as of beginning of period
    
    $
    2,314
    
    
    $
    1,852
    
    
    
    25
    %
    
    $
    2,288
    
    
    $
    1,366
    
    
    
    67
    %Average cash price during the period
    
    $
    2,343
    
    
    $
    2,003
    
    
    
    17
    %
    
    $
    2,176
    
    
    $
    1,767
    
    
    
    23
    %Closing cash price as of end of period
    
    $
    2,461
    
    
    $
    2,208
    
    
    
    11
    %
    
    $
    2,461
    
    
    $
    2,208
    
    
    
    11
    %
  Metal Derivative Instruments
     Metal Price Ceilings
  40




---



##### Table of Contents



Foreign Exchange
  Exchange Rate as of
    
    Average Exchange RateDecember 31,
    
    March 31,
    
    Three Months Ended
    
    Nine Months Ended2010
    
    2010
    
    December 31, 2010
    
    December 31, 2010U.S. dollar per Euro
    
    
    1.324
    
    
    
    1.353
    
    
    
    1.338
    
    
    
    1.304Brazilian real per U.S. dollar
    
    
    1.664
    
    
    
    1.784
    
    
    
    1.696
    
    
    
    1.739South Korean won per U.S. dollar
    
    
    1,139
    
    
    
    1,131
    
    
    
    1,141
    
    
    
    1,163Canadian dollar per U.S. dollar
    
    
    0.999
    
    
    
    1.014
    
    
    
    1.014
    
    
    
    1.033Exchange Rate as of
    
    Average Exchange RateDecember 31,
    
    March 31,
    
    Three Months Ended
    
    Nine Months Ended2009
    
    2009
    
    December 31, 2009
    
    December 31, 2009U.S. dollar per Euro
    
    
    1.435
    
    
    
    1.328
    
    
    
    1.470
    
    
    
    1.429Brazilian real per U.S. dollar
    
    
    1.743
    
    
    
    2.301
    
    
    
    1.774
    
    
    
    1.874South Korean won per U.S. dollar
    
    
    1,168
    
    
    
    1,377
    
    
    
    1,179
    
    
    
    1,235Canadian dollar per U.S. dollar
    
    
    1.048
    
    
    
    1.258
    
    
    
    1.060
    
    
    
    1.098
   RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2010 COMPARED TO THE THREE MONTHS
ENDED DECEMBER 31, 2009
   41




---



##### Table of Contents




    
    $9 million of gains on unrealized derivatives for the three months ended December 31,
2010 compared to $62 million of gains for the three months ended December 31, 2009
    
    $74 million of loss on early extinguishment of debt related to the refinancing of our
Term Loan facility, our 7.25% Notes and our 11.5% Notes during the three months ended
December 31, 2010
    
    $20 million of net restructuring charges for the three months ended December 31, 2010
primarily as a result of the announced shutdowns of our Bridgnorth, UK and Aratu, Brazil
facilities, as compared to $1 million of restructuring charges for the same period in the
prior year
    
    foreign exchange losses of $11 million as compared to gains of $2 million in the third
quarter of fiscal 2010.
  Segment Review
    Selected Operating Results
    
    North
    
    
    
    
    
    
    
    
    
    
    SouthThree Months Ended December 31, 2010
    
    America
    
    
    Europe
    
    
    Asia
    
    
    America
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    939
    
    
    $
    835
    
    
    $
    470
    
    
    $
    321
    
    
    $
    (5
    )
    
    $
    2,560Shipments (kt)Rolled products
    
    
    262
    
    
    
    208
    
    
    
    148
    
    
    
    97
    
    
    
    
    
    
    
    715Ingot products
    
    
    5
    
    
    
    17
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    36Total shipments
    
    
    267
    
    
    
    225
    
    
    
    148
    
    
    
    111
    
    
    
    
    
    
    
    751
 Selected Operating Results
    
    North
    
    
    
    
    
    
    
    
    
    
    SouthThree Months Ended December 31, 2009
    
    America
    
    
    Europe
    
    
    Asia
    
    
    America
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    786
    
    
    $
    725
    
    
    $
    390
    
    
    $
    235
    
    
    $
    (24
    )
    
    $
    2,112Shipments (kt)Rolled products
    
    
    243
    
    
    
    188
    
    
    
    134
    
    
    
    84
    
    
    
    
    
    
    
    649Ingot products
    
    
    11
    
    
    
    16
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    34Total shipments
    
    
    254
    
    
    
    204
    
    
    
    134
    
    
    
    91
    
    
    
    
    
    
    
    683
 42




---



##### Table of Contents



North
    
    
    
    
    
    
    
    
    
    
    SouthChanges in Segment income
    
    America
    
    
    Europe
    
    
    Asia
    
    
    AmericaSegment income  three months ended December 31, 2009
    
    $
    99
    
    
    $
    60
    
    
    $
    39
    
    
    $
    26Volume
    
    
    12
    
    
    
    5
    
    
    
    5
    
    
    
    8Conversion premium and product mix
    
    
    
    
    
    
    3
    
    
    
    8
    
    
    
    14Conversion costs(A)
    
    
    19
    
    
    
    2
    
    
    
    (7
    )
    
    
    (1
    )Metal price lag
    
    
    (2
    )
    
    
    (3
    )
    
    
    (2
    )
    
    
    5Foreign exchange
    
    
    (2
    )
    
    
    (9
    )
    
    
    22
    
    
    
    (12
    )Primary metal production
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )Other changes(B)
    
    
    (20
    )
    
    
    (2
    )
    
    
    (3
    )
    
    
    3Segment income  three months ended December 31, 2010
    
    $
    106
    
    
    $
    56
    
    
    $
    62
    
    
    $
    40
 
 (A)
    
    Conversion costs include expenses incurred in production such as
direct and indirect labor, energy, freight, scrap usage, alloys and
hardeners, coatings, alumina, melt loss, the incremental benefit of
used beverage cans (UBCs) and other metal costs. Fluctuations in this
component reflect cost efficiencies during the period as well as cost
inflation (deflation).(B)
    
    Other changes include selling, general & administrative costs and
research and development for all segments and certain other items
which impact one or more regions, including such items as the impact
of purchase accounting and metal price ceiling contracts. Significant
fluctuations in these items are discussed below. North America
    Europe
   43




---



##### Table of Contents



Asia
    South America
    44




---



##### Table of Contents



Reconciliation of segment results to Net income attributable to our common shareholder
  Three Months EndedDecember 31,2010
    
    
    2009North America
    
    $
    106
    
    
    $
    99Europe
    
    
    56
    
    
    
    60Asia
    
    
    62
    
    
    
    39South America
    
    
    40
    
    
    
    26Corporate and other
    
    
    (26
    )
    
    
    (25
    )Depreciation and amortization
    
    
    (100
    )
    
    
    (93
    )Interest expense and amortization of debt issuance costs
    
    
    (46
    )
    
    
    (44
    )Interest income
    
    
    4
    
    
    
    2Unrealized gains (losses) on change in fair value of derivative instruments, net
    
    
    9
    
    
    
    62Realized gains on derivative instruments not included in segment income
    
    
    4
    
    
    
    Adjustment to eliminate proportional consolidation
    
    
    (11
    )
    
    
    2Loss on early extinguishment of debt
    
    
    (74
    )
    
    
    Restructuring charges, net
    
    
    (20
    )
    
    
    (1
    )Other, net
    
    
    (6
    )
    
    
    2Income (loss) before income taxes
    
    
    (2
    )
    
    
    129Income tax provision
    
    
    33
    
    
    
    48Net income (loss)
    
    
    (35
    )
    
    
    81Net income attributable to noncontrolling interests
    
    
    11
    
    
    
    13Net income (loss) attributable to our common shareholder
    
    $
    (46
    )
    
    $
    68
        45




---



##### Table of Contents




    
    Our functional currency in Brazil is the U.S. dollar where the company holds significant
U.S. dollar denominated debt. As the value of the local currency strengthens or weakens
against the U.S. dollar, unrealized gains or losses are created for tax purposes, while the
underlying gains or losses are not recorded in our income statement.
    
    We have significant net deferred tax liabilities in Brazil that are remeasured to account
for currency fluctuations as the taxes are payable in local currency.
    
    Our income is taxed at various statutory tax rates in varying jurisdictions. Applying the
corresponding amounts of income and loss to the various tax rates results in differences
when compared to our Canadian statutory tax rate.
    
    We record increases and decreases to valuation allowances primarily related to tax losses
in certain jurisdictions where we believe it is more likely than not that we will not be
able to utilize those losses.
  RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2010 COMPARED TO THE NINE MONTHS ENDED
DECEMBER 31, 2009
    46




---



##### Table of Contents




    
    $37 million of losses on unrealized derivatives for the nine months ended December 31,
2010 compared to $615 million of gains for the nine months ended December 31, 2009
    
    $74 million of loss on early extinguishment of debt related to the refinancing of our
Term Loan facility, our 7.25% Notes and our 11.5% Notes during the nine months ended
December 31, 2010
    
    $35 million of restructuring charges for the nine months ended December 31, 2010
primarily as a result of the announced shutdowns of our Bridgnorth, UK and Aratu, Brazil
facilities and the relocation of our North American headquarters to Atlanta, US, as
compared to $7 million of restructuring charges for the same period in the prior year
    
    foreign exchange losses of $10 million as compared to gains of $9 million for the nine
months ended December 31, 2009
    
    $11 million gain on sale of fixed assets in Brazil for the nine months ended December
31, 2010 and a gain on the settlement of certain tax litigation in South America of $6
million for the nine months ended December 31, 2009.
  Segment Review
  Selected Operating Results
    
    North
    
    
    
    
    
    
    
    
    
    
    SouthNine Months Ended December 31, 2010
    
    America
    
    
    Europe
    
    
    Asia
    
    
    America
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    2,863
    
    
    $
    2,551
    
    
    $
    1,340
    
    
    $
    876
    
    
    $
    (13
    )
    
    $
    7,617Shipments (kt)Rolled products
    
    
    825
    
    
    
    667
    
    
    
    428
    
    
    
    278
    
    
    
    
    
    
    
    2,198Ingot products
    
    
    13
    
    
    
    51
    
    
    
    1
    
    
    
    34
    
    
    
    
    
    
    
    99Total shipments
    
    
    838
    
    
    
    718
    
    
    
    429
    
    
    
    312
    
    
    
    
    
    
    
    2,297
 Selected Operating Results
    
    North
    
    
    
    
    
    
    
    
    
    
    SouthNine Months Ended December 31, 2009
    
    America
    
    
    Europe
    
    
    Asia
    
    
    America
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    2,375
    
    
    $
    2,125
    
    
    $
    1,098
    
    
    $
    691
    
    
    $
    (36
    )
    
    $
    6,253Shipments (kt)Rolled products
    
    
    755
    
    
    
    576
    
    
    
    403
    
    
    
    258
    
    
    
    
    
    
    
    1,992Ingot products
    
    
    26
    
    
    
    58
    
    
    
    1
    
    
    
    21
    
    
    
    
    
    
    
    106Total shipments
    
    
    781
    
    
    
    634
    
    
    
    404
    
    
    
    279
    
    
    
    
    
    
    
    2,098
 47




---



##### Table of Contents



North
    
    
    
    
    
    
    
    
    
    
    SouthChanges in Segment income
    
    America
    
    
    Europe
    
    
    Asia
    
    
    AmericaSegment income  nine months ended December 31, 2009
    
    $
    231
    
    
    $
    153
    
    
    $
    125
    
    
    $
    73Volume
    
    
    47
    
    
    
    61
    
    
    
    10
    
    
    
    13Conversion premium and product mix
    
    
    29
    
    
    
    6
    
    
    
    22
    
    
    
    29Conversion costs(A)
    
    
    62
    
    
    
    (6
    )
    
    
    (16
    )
    
    
    11Metal price lag
    
    
    (8
    )
    
    
    50
    
    
    
    17
    
    
    
    7Foreign exchange
    
    
    (15
    )
    
    
    (24
    )
    
    
    22
    
    
    
    (19
    )Primary metal production
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16Other changes(B)
    
    
    (23
    )
    
    
    6
    
    
    
    (7
    )
    
    
    (3
    )Segment income  nine months ended December 31, 2010
    
    $
    323
    
    
    $
    246
    
    
    $
    173
    
    
    $
    127
 
 (A)
    
    Conversion costs include expenses incurred in production such as
direct and indirect labor, energy, freight, scrap usage, alloys and
hardeners, coatings, alumina and melt loss. Fluctuations in this
component reflect cost efficiencies during the period as well as cost
inflation (deflation).(B)
    
    Other changes include selling, general & administrative costs and
research and development for all segments and certain other items
which impact one or more regions, including such items as the impact
of purchase accounting and metal price ceiling contracts. Significant
fluctuations in these items are discussed below. North America
   Europe
   Asia
  48




---



##### Table of Contents



South America
   Reconciliation of segment results to Net income attributable to our common shareholder
  Nine MonthsEndedDecember 31,2010
    
    
    2009North America
    
    $
    323
    
    
    $
    231Europe
    
    
    246
    
    
    
    153Asia
    
    
    173
    
    
    
    125South America
    
    
    127
    
    
    
    73Corporate and other
    
    
    (78
    )
    
    
    (60
    )Depreciation and amortization
    
    
    (307
    )
    
    
    (285
    )Interest expense and amortization of debt issuance costs
    
    
    (125
    )
    
    
    (131
    )Interest income
    
    
    10
    
    
    
    8Unrealized gains (losses) on change in fair value of derivative instruments, net
    
    
    (37
    )
    
    
    615Realized gains on derivative instruments not included in segment income
    
    
    4
    
    
    
    1Adjustment to eliminate proportional consolidation
    
    
    (32
    )
    
    
    (31
    )Loss on early extinguishment of debt
    
    
    (74
    )
    
    
    Restructuring recoveries (charges), net
    
    
    (35
    )
    
    
    (7
    )Other costs, net
    
    
    6
    
    
    
    11Income (loss) before income taxes
    
    
    201
    
    
    
    703Income tax provision (benefit)
    
    
    104
    
    
    
    247Net income (loss)
    
    
    97
    
    
    
    456Net income attributable to noncontrolling interests
    
    
    31
    
    
    
    50Net income (loss) attributable to our common shareholder
    
    $
    66
    
    
    $
    406
   49




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
  Available Liquidity
  December 31,
    
    
    March 31,2010
    
    
    2010Cash and cash equivalents
    
    $
    297
    
    
    $
    437Overdrafts
    
    
    (22
    )
    
    
    (14
    )Availability under the ABL facility
    
    
    573
    
    
    
    603Total estimated liquidity
    
    $
    848
    
    
    $
    1,026
  50




---



##### Table of Contents



Free Cash Flow
   Nine Months EndedDecember 31,2010
    
    
    2009
    
    
    ChangeNet cash provided by operating activities
    
    $
    218
    
    
    $
    630
    
    
    $
    (412
    )Net cash used in investing activities
    
    
    (14
    )
    
    
    (484
    )
    
    
    470Less: Proceeds from sales of assets
    
    
    (28
    )
    
    
    (4
    )
    
    
    (24
    )Free cash flow
    
    $
    176
    
    
    $
    142
    
    
    $
    34Ending cash and cash equivalents
    
    $
    297
    
    
    $
    252
    
    
    $
    45
  Operating Activities
  Investing Activities
  Nine Months EndedDecember 31,2010
    
    
    2009
    
    
    ChangeCapital expenditures
    
    $
    (132
    )
    
    $
    (74
    )
    
    $
    (58
    )Net proceeds (outflow) from settlement of derivative instruments
    
    
    81
    
    
    
    (432
    )
    
    
    513Proceeds from sales of assets, third parties
    
    
    18
    
    
    
    4
    
    
    
    14Proceeds from sales of assets, related parties
    
    
    10
    
    
    
    
    
    
    
    10Changes to investment in and advances to non-consolidated affiliates
    
    
    1
    
    
    
    3
    
    
    
    (2
    )Proceeds from related parties loans receivable, net
    
    
    8
    
    
    
    15
    
    
    
    (7
    )Net cash used in investing activities
    
    $
    (14
    )
    
    $
    (484
    )
    
    $
    470
  51




---



##### Table of Contents



Financing Activities
  Nine Months EndedDecember 31,2010
    
    
    2009
    
    
    ChangeProceeds from issuance of debt, third parties
    
    $
    3,985
    
    
    $
    177
    
    
    $
    3,808Proceeds from issuance of debt, related parties
    
    
    
    
    
    
    4
    
    
    
    (4
    )Principal payments, third parties
    
    
    (2,486
    )
    
    
    (20
    )
    
    
    (2,466
    )Principal payments, related parties
    
    
    
    
    
    
    (95
    )
    
    
    95Short-term borrowings, net
    
    
    49
    
    
    
    (211
    )
    
    
    260Return of capital to our common shareholder
    
    
    (1,700
    )
    
    
    
    
    
    
    (1,700
    )Dividends, noncontrolling interest
    
    
    (18
    )
    
    
    (13
    )
    
    
    (5
    )Debt issuance costs
    
    
    (174
    )
    
    
    (1
    )
    
    
    (173
    )Net cash used in financing activities
    
    $
    (344
    )
    
    $
    (159
    )
    
    $
    (185
    )
     OFF-BALANCE SHEET ARRANGEMENTS
  Derivative Instruments
  52




---



##### Table of Contents



Guarantees of Indebtedness
    Maximum
    
    LiabilityPotential
    
    CarryingType of Entity
    
    Future Payment
    
    ValueWholly-owned subsidiaries
    
    $
    142
    
    
    $
    40
  Other
  CONTRACTUAL OBLIGATIONS
  RETURN OF CAPITAL
   CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  RECENT ACCOUNTING STANDARDS
  53




---



##### Table of Contents



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND MARKET DATA
   
    
    relationships with, and financial and operating conditions of, our customers, suppliers
and other stakeholders;
    
    changes in the prices and availability of aluminum (or premiums associated with aluminum
prices) or other materials and raw materials we use;
    
    fluctuations in the supply of, and prices for, energy in the areas in which we maintain
production facilities;
    
    our ability to access financing to fund current operations and for future capital
requirements;
    
    the level of our indebtedness and our ability to generate cash;
    
    deterioration of our ratings by a credit rating agency and our borrowing costs;
    
    changes in the relative values of various currencies and the effectiveness of our
currency hedging activities;
    
    union disputes and other employee relations issues;
    
    factors affecting our operations, such as litigation (including product liability
claims), environmental remediation and clean-up costs, labor relations and negotiations,
breakdown of equipment and other events;
    
    changes in general economic conditions, including deterioration in the global economy;
    
    changes in the fair value of derivative instruments or the failure of counterparties to
our derivative instruments to honor their agreements;
    
    the capacity and effectiveness of our metal hedging activities;
    
    availability of production capacity;
    
    impairment of our goodwill and other intangible assets;
    
    loss of key management and other personnel, or an inability to attract such management
and other personnel;
    
    risks relating to future acquisitions or divestitures;
 54




---



##### Table of Contents




    
    our inability to successfully implement our growth initiatives;
    
    changes in interest rates that have the effect of increasing the amounts we pay under our
senior secured credit facilities, other financing agreements and our defined benefit pension
plans;
    
    risks relating to certain joint ventures and subsidiaries that we do not entirely
control;
    
    Hindalcos interests as equity holder, which may conflict with our interest or your
interests as holders of the notes;
    
    the effect of new derivatives legislation on our ability to hedge risks associated with
our business;
    
    competition from other aluminum rolled products producers as well as from substitute
materials such as steel, glass, plastic and composite materials;
    
    cyclical demand and pricing within the principal markets for our products as well as
seasonality in certain of our customers industries;
    
    economic, regulatory and political factors within the countries in which we operate or
sell our products, including changes in duties or tariffs;
    
    changes in government regulations, particularly those affecting taxes and tax rates,
health care reform, climate change, environmental, health or safety compliance; and
    
    the effect of taxes and changes in tax rates.
  55




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
    Commodity Price Risks
  Aluminum
    Sensitivities
  Energy
  56




---



##### Table of Contents



Sensitivities
  Change in
    
    Change inPrice
    
    Fair ValueElectricity
    
    
    (10
    )%
    
    $
    (1
    )Natural Gas
    
    
    (10
    )%
    
    
    (3
    )
 Foreign Currency Exchange Risks
     57




---



##### Table of Contents



Sensitivities
  Change in
    
    Change inExchange Rate
    
    Fair ValueCurrency measured against the U.S. dollarBrazilian real
    
    
    (10
    )%
    
    $
    (39
    )Euro
    
    
    10
    %
    
    
    (56
    )Korean won
    
    
    (10
    )%
    
    
    (22
    )Canadian dollar
    
    
    (10
    )%
    
    
    (3
    )British pound
    
    
    (10
    )%
    
    
    (5
    )Swiss franc
    
    
    (10
    )%
    
    
    (2
    )
 Interest Rate Risks
   Sensitivities
  Change in
    
    Change inRate
    
    Fair ValueInterest Rate ContractsNorth America
    
    
    (100
    ) bps
    
    $
    (3
    )
 
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  58




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Our results and short term liquidity can be negatively impacted by timing differences between the
prices we pay under purchase contracts and metal prices we charge our customers.
   During many operating periods, we utilize substantially all of our production capacity, which may
put us at a competitive disadvantage since we may be unable to take on additional volumes to meet
our customers needs or acquire new business. Therefore, we may lose future business to
competitors with available capacity.
  Capital investments in debottlenecking or other organic growth initiatives may not produce the
returns we anticipate.
  If we are unable to obtain sufficient quantities of primary aluminum, recycled aluminum, sheet
ingot and other raw materials used in the production of our products, our ability to produce and
deliver products or to manufacture products on a timely basis could be adversely affected.
  59




---



##### Table of Contents



We may see increased costs arising from health care reform.
  Income tax payments may ultimately differ from amounts currently recorded by the Company. Future
tax law changes may materially increase the Companys prospective income tax expense.
  
 Item 6. Exhibits
 ExhibitNo.
    
    Description2.1
    
    Arrangement Agreement by and among Hindalco Industries Limited, AV Aluminum Inc. and
Novelis Inc., dated as of February 10, 2007 (incorporated by reference to Exhibit 2.1
to our Current Report on Form 8-K filed on February 13, 2007 (File No. 001-32312)).3.1
    
    Restated Certificate and Articles of Incorporation of Novelis Inc. (incorporated by
reference to Exhibit 3.1 to our Current Report on Form 8-K filed on January 7, 2005
(File No. 001-32312)).3.2
    
    Restated Certificate and Articles of Amalgamation of Novelis Inc. (incorporated by
reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q filed on November 10,
2010 (File No. 001-32312)).3.3
    
    Novelis Inc. Amended and Restated Bylaws, adopted as of July 24, 2008 (incorporated by
reference to Exhibit 3.2 to our Current Report on Form 8-K filed on July 25, 2008
(File No. 001-32312)).4.1
    
    Indenture, relating to the 8.375% Senior Notes due 2017, dated as of December 17,
2010, between the Company, the guarantors named on the signature pages thereto and The
Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to
Exhibit 4.1 to our Current Report on Form 8-K filed on December 17, 2010 (file No.
001-32312)).
 60




---



##### Table of Contents



ExhibitNo.
    
    Description4.2
    
    Indenture, relating to the 8.75% Senior Notes due 2020, dated as of
December 17, 2010, between the Company, the guarantors named on the
signature pages thereto and The Bank of New York Mellon Trust
Company, N.A., as trustee (incorporated by reference to Exhibit 4.2
to our Current Report on Form 8-K filed on December 17, 2010 (file
No. 001-32312)).4.3
    
    Form of 8.375% Senior Note due 2017 (incorporated by reference to
Exhibit 4.3 to our Current Report on Form 8-K filed on December 17,
2010 (file No. 001-32312)).4.4
    
    Form of 8.75% Senior Note due 2017 (incorporated by reference to
Exhibit 4.4 to our Current Report on Form 8-K filed on December 17,
2010 (file No. 001-32312)).4.5
    
    Supplemental Indenture, relating to the 7.25% Senior Notes due 2015,
among the Company, Novelis North America Holdings Inc., Novelis
Acquisitions LLC and The Bank of New York Mellon Trust Company N.A.,
as trustee, dated as of December 14, 2010.4.6
    
    Supplemental Indenture, relating to the 11.50% Senior Notes due 2015,
among the Company, Novelis North America Holdings Inc., Novelis
Acquisitions LLC and The Bank of New York Mellon Trust Company N.A.,
as trustee, dated as of December 14, 2010.4.7
    
    Supplemental Indenture, relating to the 7.25% Senior Notes due 2015,
among the Company and The Bank of New York Trust Company, as trustee,
dated as of December 17, 2010 (incorporated by reference to Exhibit
4.6 to our Current Report on Form 8-K filed on December 17, 2010
(file No. 001-32312)).4.8
    
    Supplemental Indenture, relating to the 11.50% Senior Notes due 2015,
among the Company and The Bank of New York Trust Company, as trustee,
dated as of December 17, 2010 (incorporated by reference to Exhibit
4.5 to our Current Report on Form 8-K filed on December 17, 2010
(file No. 001-32312)).4.9
    
    Registration Rights Agreement related to our 8.375% Senior Notes due
2017, dated as of December 17, 2010, among the Company, the
guarantors named on the signature pages thereto, Citigroup Global
Markets Inc., as Representative of the Initial Purchasers
(incorporated by reference to Exhibit 10.1 to our Current Report on
Form 8-K filed on December 17, 2010 (File No. 001-32312)).4.10
    
    Registration Rights Agreement related to our 8.75% Senior Notes due
2020, dated as of December 17, 2010, among the Company, the
guarantors named on the signature pages thereto, Citigroup Global
Markets Inc., as Representative of the Initial Purchasers
(incorporated by reference to Exhibit 10.2 to our Current Report on
Form 8-K filed on December 17, 2010 (File No. 001-32312)).10.1
    
    $800 million asset-based lending credit facility dated as of December
17, 2010 among Novelis Inc., as Parent Borrower, Novelis Corporation,
Novelis PAE Corporation, Novelis Brand LLC, Novelis South America
Holdings LLC, Aluminum Upstream Holdings LLC, as U.S. Borrowers,
Novelis UK Limited, AV Metals Inc., and the other loan parties from
time to time party thereto, the lenders from time to time party
thereto, the Collateral Agent, Bank of America, N.A., as Issuing
Bank, U.S. Swingline Lender and Administrative Agent, The Royal Bank
of Scotland plc, as European Swingline Lender, and the other parties
from time to time party thereto10.2
    
    $1.5 billion term loan facility dated as of December 17, 2010 among
Novelis Inc., as Borrower, AV Metals Inc., as Holdings, and the other
guarantors party thereto, with the lenders party thereto, Bank of
America, N.A., as administrative agent, JPMorgan Chase Bank, N.A., as
syndication agent, Citibank, N.A., The Royal Bank of Scotland PLC and
UBS AG, Stamford Branch, as co-documentation agents, and Merrill
Lynch, Pierce, Fenner and Smith Incorporated and J.P. Morgan
Securities LLC, as joint lead arrangers and Merrill Lynch, Pierce,
Fenner and Smith Incorporated, J.P. Morgan Securities LLC, Citigroup
Global Markets Inc., RBS Securities Inc. and UBS Securities LLC, as
joint bookrunners.10.3
    
    Intercreditor Agreement dated as of December 17, 2010 by and among
Novelis Inc., Novelis Corporation, Novelis PAE Corporation, Novelis
Brand LLC, Novelis South America Holdings LLC, Aluminum Upstream
Holdings LLC, Novelis UK Limited, AV Metals Inc., and the subsidiary
guarantors party thereto, as grantors, Bank of America, N.A., as
revolving credit administrative agent, revolving credit collateral
agent, Term Loan administrative agent, and Term Loan collateral
agent.10.4
    
    Security Agreement made by Novelis Inc., as Parent Borrower, Novelis
Corporation, Novelis PAE Corporation, Novelis Brand LLC, Novelis
South America Holdings LLC, Aluminum Upstream Holdings LLC, as U.S.
Borrowers and the guarantors from time to time party thereto in favor
of Bank of America, N.A., as collateral agent dated as of December
17, 2010.10.5
    
    Security Agreement made by Novelis Inc., as the Borrower and the
guarantors from time to time party thereto in favor of Bank of
America, N.A., as collateral agent dated as of December 17, 2010.31.1
    
    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
 61




---



##### Table of Contents



SIGNATURES
  NOVELIS INC.By:

/s/   Steven FisherSteven FisherChief Financial Officer
(Principal Financial Officer and
Authorized Officer)By
    /s/    Robert P. NelsonRobert P. NelsonVice President Finance  Controller
(Principal Accounting Officer)  62




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description2.1
    
    Arrangement Agreement by and among Hindalco Industries Limited, AV Aluminum Inc. and
Novelis Inc., dated as of February 10, 2007 (incorporated by reference to Exhibit 2.1 to
our Current Report on Form 8-K filed on February 13, 2007 (File No. 001-32312)).3.1
    
    Restated Certificate and Articles of Incorporation of Novelis Inc. (incorporated by
reference to Exhibit 3.1 to our Current Report on Form 8-K filed on January 7, 2005
(File No. 001-32312)).3.2
    
    Restated Certificate and Articles of Amalgamation of Novelis Inc. (incorporated by
reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q filed on November 10, 2010
(File No. 001-32312)).3.3
    
    Novelis Inc. Amended and Restated Bylaws, adopted as of July 24, 2008 (incorporated by
reference to Exhibit 3.2 to our Current Report on Form 8-K filed on July 25, 2008 (File
No. 001-32312)).4.1
    
    Indenture, relating to the 8.375% Senior Notes due 2017, dated as of December 17, 2010,
between the Company, the guarantors named on the signature pages thereto and The Bank of
New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit
4.1 to our Current Report on Form 8-K filed on December 17, 2010 (file No. 001-32312)).4.2
    
    Indenture, relating to the 8.75% Senior Notes due 2020, dated as of December 17, 2010,
between the Company, the guarantors named on the signature pages thereto and The Bank of
New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit
4.2 to our Current Report on Form 8-K filed on December 17, 2010 (file No. 001-32312)).4.3
    
    Form of 8.375% Senior Note due 2017 (incorporated by reference to Exhibit 4.3 to our
Current Report on Form 8-K filed on December 17, 2010 (file No. 001-32312)).4.4
    
    Form of 8.75% Senior Note due 2017 (incorporated by reference to Exhibit 4.4 to our
Current Report on Form 8-K filed on December 17, 2010 (file No. 001-32312)).4.5
    
    Supplemental Indenture, relating to the 7.25% Senior Notes due 2015, among the Company,
Novelis North America Holdings Inc., Novelis Acquisitions LLC and The Bank of New York
Mellon Trust Company N.A., as trustee, dated as of December 14, 2010.4.6
    
    Supplemental Indenture, relating to the 11.50% Senior Notes due 2015, among the Company,
Novelis North America Holdings Inc., Novelis Acquisitions LLC and The Bank of New York
Mellon Trust Company N.A., as trustee, dated as of December 14, 2010.4.7
    
    Supplemental Indenture, relating to the 7.25% Senior Notes due 2015, among the Company
and The Bank of New York Trust Company, as trustee, dated as of December 17, 2010
(incorporated by reference to Exhibit 4.6 to our Current Report on Form 8-K filed on
December 17, 2010 (file No. 001-32312)).4.8
    
    Supplemental Indenture, relating to the 11.50% Senior Notes due 2015, among the Company
and The Bank of New York Trust Company, as trustee, dated as of December 17, 2010
(incorporated by reference to Exhibit 4.5 to our Current Report on Form 8-K filed on
December 17, 2010 (file No. 001-32312)).4.9
    
    Registration Rights Agreement related to our 8.375% Senior Notes due 2017, dated as of
December 17, 2010, among the Company, the guarantors named on the signature pages
thereto, Citigroup Global Markets Inc., as Representative of the Initial Purchasers
(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on
December 17, 2010 (File No. 001-32312)).4.10
    
    Registration Rights Agreement related to our 8.75% Senior Notes due 2020, dated as of
December 17, 2010, among the Company, the guarantors named on the signature pages
thereto, Citigroup Global Markets Inc., as Representative of the Initial Purchasers
(incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on
December 17, 2010 (File No. 001-32312)).10.1
    
    $800 million asset-based lending credit facility dated as of December 17, 2010 among
Novelis Inc., as Parent Borrower, Novelis Corporation, Novelis PAE Corporation, Novelis
Brand LLC, Novelis South America Holdings LLC, Aluminum Upstream Holdings LLC, as U.S.
Borrowers, Novelis UK Limited, AV Metals Inc., and the other loan parties from time to
time party thereto, the lenders from time to time party thereto, the Collateral Agent,
Bank of America, N.A., as Issuing Bank, U.S. Swingline Lender and Administrative Agent,
The Royal Bank of Scotland plc, as European Swingline Lender, and the other parties from
time to time party thereto10.2
    
    $1.5 billion term loan facility dated as of December 17, 2010 among Novelis Inc., as
Borrower, AV Metals Inc., as Holdings, and the other guarantors party thereto, with the
lenders party thereto, Bank of America, N.A., as administrative agent, JPMorgan Chase
Bank, N.A., as syndication agent, Citibank, N.A., The Royal Bank of Scotland PLC and UBS
AG, Stamford Branch, as co-documentation agents, and Merrill Lynch, Pierce, Fenner and
Smith Incorporated and J.P. Morgan Securities LLC, as joint lead arrangers and Merrill
Lynch, Pierce, Fenner and Smith Incorporated, J.P. Morgan Securities LLC, Citigroup
Global Markets Inc., RBS Securities Inc. and UBS Securities LLC, as joint bookrunners.
 63




---



##### Table of Contents



ExhibitNo.
    
    Description10.3
    
    Intercreditor Agreement dated as of December 17, 2010 by and among
Novelis Inc., Novelis Corporation, Novelis PAE Corporation, Novelis
Brand LLC, Novelis South America Holdings LLC, Aluminum Upstream
Holdings LLC, Novelis UK Limited, AV Metals Inc., and the subsidiary
guarantors party thereto, as grantors, Bank of America, N.A., as
revolving credit administrative agent, revolving credit collateral
agent, Term Loan administrative agent, and Term Loan collateral
agent.10.4
    
    Security Agreement made by Novelis Inc., as Parent Borrower, Novelis
Corporation, Novelis PAE Corporation, Novelis Brand LLC, Novelis
South America Holdings LLC, Aluminum Upstream Holdings LLC, as U.S.
Borrowers and the guarantors from time to time party thereto in favor
of Bank of America, N.A., as collateral agent dated as of December
17, 2010.10.5
    
    Security Agreement made by Novelis Inc., as the Borrower and the
guarantors from time to time party thereto in favor of Bank of
America, N.A., as collateral agent dated as of December 17, 2010.31.1
    
    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
 64