##### 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 March 31, 2005                                               
|          
|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                                                                                          |  | Not Applicable                             
|(State or other jurisdiction of
    incorporation or organization)                              |  | (I.R.S. employer
    identification number)
|                                                                                               
|3399 Peachtree Road NE, Suite 1500
    Atlanta, Georgia(Address of principal executive offices) |  | 30326(Zip Code)                            

Telephone: (404) 814-4200


(Registrants telephone number, including area code)


þ o


o þ












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TABLE OF CONTENTS


|                                             |  |                                                                                           |  |          |    | 
|-------------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | -------- | -- | 
|                                             |  |                                                                                           |  | Page No. |   
|                                             |  |                                                                                           |  |          |   
|                                             |  | PART I.  FINANCIAL
    INFORMATION                                                        |  |          |    | 
|Item 1.                                      |  | Financial Statements                                                                      |  |          | 1  | 
|Item 2.                                      |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations |  |          | 28 | 
|Item 3.                                      |  | Quantitative and Qualitative Disclosures
    About Market Risk                            |  |          | 36 | 
|Item 4.                                      |  | Controls and Procedures                                                                   |  |          | 38 | 
|                                             |  | PART II.  OTHER
    INFORMATION                                                           |  |          |    | 
|Item 1.                                      |  | Legal Proceedings                                                                         |  |          | 38 | 
|Item 2.                                      |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                           |  |          | 38 | 
|Item 3.                                      |  | Defaults Upon Senior Securities                                                           |  |          | 39 | 
|Item 4.                                      |  | Submission of Matters to a Vote of Security
    Holders                                   |  |          | 39 | 
|Item 5.                                      |  | Other Information                                                                         |  |          | 39 | 
|Item 6.                                      |  | Exhibits                                                                                  |  |          | 39 | 
|EX-31.1 SECTION 302 CERTIFICATION OF THE CEO
|EX-31.2 SECTION 302 CERTIFICATION OF THE CFO
|EX-32.1 SECTION 906 CERTIFICATION OF THE CEO
|EX-32.2 SECTION 906 CERTIFICATION OF THE CFO





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##### Table of Contents






PART I. FINANCIAL INFORMATION







|        |                      
|------- | ---------------------
|Item 1. | Financial Statements.

Novelis Inc.


CONSOLIDATED AND COMBINED STATEMENTS OF INCOME




|                                                                                                                                    |                                |                            |       |      |       |   |       |      |       |  
|----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | -------------------------- | ----- | ---- | ----- | - | ----- | ---- | ----- | -
|Three Months Ended March 31                                                                                                         |                                | 2005                       |       |      | 2004  |  
|                                                                                                                                    |                               
|Sales and operating revenues                                                                                                        |                                |                            |       |      |       |   |       |     
|                                                                                                                                    |                                |  third parties            |       |      | 2,118 |   |       |      | 1,718 |  
|                                                                                                                                    |                                |  related parties (NOTE 7) |       |      |      |   |       |      | 92    |  
|                                                                                                                                   
|                                                                                                                                    |                                |                            | 2,118 |      |       |   | 1,810 |     
|                                                                                                                                   
|Costs and expenses                                                                                                                  |                                |                            |       |      |       |   |       |     
|Cost of sales and operating expenses, excluding depreciation and
    amortization noted below                                       |                                |                            |       |      |       |   |       |     
|                                                                                                                                    |                                |  third parties            |       |      | 1,884 |   |       |      | 1,505 |  
|                                                                                                                                    |                                |  related parties (NOTE 7) |       |      |      |   |       |      | 80    |  
|Depreciation and amortization                                                                                                       |                                |                            | 58    |      |       |   | 61    |     
|Selling, general and administrative expenses                                                                                        |                                |                            | 76    |      |       |   | 60    |     
|Research and development expenses                                                                                                   |                                |                            | 8     |      |       |   | 4     |     
|Research and development expenses  related parties
    (NOTE 7)                                                                    |                                |                            |      |      |       |   | 6     |     
|Interest                                                                                                                            |                                |                            |       |      |       |   |       |     
|                                                                                                                                    |                                |  third parties            |       |      | 44    |   |       |      | 11    |  
|                                                                                                                                    |                                |  related parties (NOTE 7) |       |      |      |   |       |      | 8     |  
|Other expenses (income)  net (NOTE 9)                                                                                              |                                |                            |       |      |       |   |       |     
|                                                                                                                                    |                                |  third parties            |       |      | (14   | ) |       |      | 4     |  
|                                                                                                                                    |                                |  related parties (NOTE 7) |       |      |      |   |       |      | (43   | )
|                                                                                                                                   
|                                                                                                                                    |                                |                            | 2,056 |      |       |   | 1,696 |     
|                                                                                                                                   
|Income before income taxes and other items                                                                                          |                                |                            | 62    |      |       |   | 114   |     
|Income taxes (NOTE 6)                                                                                                               |                                |                            | 29    |      |       |   | 43    |     
|                                                                                                                                   
|Income before other items                                                                                                           |                                |                            | 33    |      |       |   | 71    |     
|Equity income                                                                                                                       |                                |                            | 2     |      |       |   | 2     |     
|Minority interests                                                                                                                  |                                |                            | (6    | )    |       |   | (4    | )   
|                                                                                                                                   
|Net income                                                                                                                          |                                |                            | 29    |      |       |   | 69    |     
|                                                                                                                                   
|Earnings per share(NOTE 4)                                                                                                          |                                |                            |       |      |       |   |       |     
|                                                                                                                                    | Net income per share  basic   |                            |       | 0.39 |       |   |       | 0.93 |      
|                                                                                                                                    | Net income per share  diluted |                            |       | 0.39 |       |   |       | 0.92 |      
|                                                                                                                                   
|Dividends per common share                                                                                                          |                                |                            | 0.09  |      |       |   |      |     
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                    |                                |                            |      
|Supplemental information(NOTE 1)                                                                                                    |                                |                            |       |      |       |   |       |     
|Net income attributable to consolidated results of Novelis from
    January 6 to March 31, 2005  increase to
    Retained earnings |                                |                            | 59    |      |       |   |       |     
|Net loss attributable to combined results of Novelis from
    January 1 to January 5, 2005  decrease to
    Owners net investment |                                |                            | (30   | )    |       |   |       |     
|                                                                                                                                    |                                |                            |      
|Net income                                                                                                                          |                                |                            | 29    |      |       |   |       |     
|                                                                                                                                    |                                |                            |      

The accompanying notes are an integral part of the financial
statements.


1



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##### Table of Contents



Novelis Inc.


CONSOLIDATED AND COMBINED BALANCE SHEETS




|                                                                                                                                 |                                                |           |       |        |              |  |       |        |  
|-------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | --------- | ----- | ------ | ------------ |  | ----- | ------ | -
|                                                                                                                                 |                                                | March 31, |       |        | December 31, | 
|As at                                                                                                                            |                                                | 2005      |       |        | 2004         | 
|                                                                                                                                 |                                               
|ASSETS                                                                                                                           |                                                |           |       |        |              |  |       |       
|Current assets                                                                                                                   |                                                |           |       |        |              |  |       |       
|Cash and time deposits                                                                                                           |                                                |           | 78    |        |              |  | 31    |       
|Trade receivables (net of allowances of $33 in 2005 and $33 in
    2004)                                                         |                                                |           |       |        |              |  |       |       
|                                                                                                                                 |  third parties                                |           |       | 1,078  |              |  |       | 710    |  
|                                                                                                                                 |  related parties (NOTE 7)                     |           |       |       |              |  |       | 87     |  
|Other receivables                                                                                                                |                                                |           |       |        |              |  |       |       
|                                                                                                                                 |  third parties                                |           |       | 308    |              |  |       | 118    |  
|                                                                                                                                 |  related parties (NOTES 7 AND 8)              |           |       | 38     |              |  |       | 846    |  
|Inventories                                                                                                                      |                                                |           |       |        |              |  |       |       
|                                                                                                                                 | Aluminum                                       |           |       | 1,085  |              |  |       | 1,081  |  
|                                                                                                                                 | Raw materials                                  |           |       | 18     |              |  |       | 20     |  
|                                                                                                                                 | Other supplies                                 |           |       | 146    |              |  |       | 125    |  
|                                                                                                                                
|                                                                                                                                 |                                                |           | 1,249 |        |              |  | 1,226 |       
|                                                                                                                                
|Total current assets                                                                                                             |                                                |           | 2,751 |        |              |  | 3,018 |       
|                                                                                                                                
|Deferred charges and other assets                                                                                                |                                                |           | 277   |        |              |  | 193   |       
|Long-term receivables from related parties (NOTE 7)                                                                              |                                                |           | 93    |        |              |  | 104   |       
|Property, plant and equipment                                                                                                    |                                                |           |       |        |              |  |       |       
|                                                                                                                                 | Cost (excluding Construction work in progress) |           |       | 5,365  |              |  |       | 5,506  |  
|                                                                                                                                 | Construction work in progress                  |           |       | 116    |              |  |       | 112    |  
|                                                                                                                                 | Accumulated depreciation                       |           |       | (3,231 | )            |  |       | (3,270 | )
|                                                                                                                                
|                                                                                                                                 |                                                |           | 2,250 |        |              |  | 2,348 |       
|                                                                                                                                
|Intangible assets (net of accumulated amortization of $10 in
    2005 and $9 in 2004)                                            |                                                |           | 33    |        |              |  | 35    |       
|Goodwill                                                                                                                         |                                                |           | 263   |        |              |  | 256   |       
|                                                                                                                                
|Total assets                                                                                                                     |                                                |           | 5,667 |        |              |  | 5,954 |       
|                                                                                                                                
|                                                                                                                                
|LIABILITIES AND SHAREHOLDERS/ INVESTED EQUITY                                                                                   |                                                |           |       |        |              |  |       |       
|Current liabilities                                                                                                              |                                                |           |       |        |              |  |       |       
|Payables and accrued liabilities                                                                                                 |                                                |           |       |        |              |  |       |       
|                                                                                                                                 |  third parties                                |           |       | 1,443  |              |  |       | 859    |  
|                                                                                                                                 |  related parties (NOTE 7)                     |           |       | 36     |              |  |       | 401    |  
|Short-term borrowings                                                                                                            |                                                |           |       |        |              |  |       |       
|                                                                                                                                 |  third parties                                |           |       | 26     |              |  |       | 229    |  
|                                                                                                                                 |  related parties (NOTE 7)                     |           |       |       |              |  |       | 312    |  
|Debt maturing within one year (NOTE 10)                                                                                          |                                                |           |       |        |              |  |       |       
|                                                                                                                                 |  third parties                                |           |       | 4      |              |  |       | 1      |  
|                                                                                                                                 |  related parties (NOTE 7)                     |           |       |       |              |  |       | 290    |  
|                                                                                                                                
|Total current liabilities                                                                                                        |                                                |           | 1,509 |        |              |  | 2,092 |       
|                                                                                                                                
|Debt not maturing within one year (NOTE 10)                                                                                      |                                                |           |       |        |              |  |       |       
|                                                                                                                                 |  third parties                                |           |       | 2,851  |              |  |       | 139    |  
|                                                                                                                                 |  related parties (NOTE 7)                     |           |       |       |              |  |       | 2,307  |  
|Deferred credits and other liabilities                                                                                           |                                                |           | 460   |        |              |  | 472   |       
|Deferred income taxes (NOTE 6)                                                                                                   |                                                |           | 179   |        |              |  | 249   |       
|Minority interests                                                                                                               |                                                |           | 141   |        |              |  | 140   |       
|Shareholders/ Invested equity                                                                                                   |                                                |           |       |        |              |  |       |       
|Common shares, no par value  unlimited number of
    shares authorized; issued and outstanding:
    73,988,932 shares (NOTE 11) |                                                |           |      |        |              |  |      |       
|Additional paid-in capital                                                                                                       |                                                |           | 460   |        |              |  |      |       
|Retained earnings                                                                                                                |                                                |           | 52    |        |              |  |      |       
|Accumulated other comprehensive income                                                                                           |                                                |           | 15    |        |              |  | 88    |       
|Owners net investment                                                                                                           |                                                |           |      |        |              |  | 467   |       
|                                                                                                                                
|                                                                                                                                 |                                                |           | 527   |        |              |  | 555   |       
|                                                                                                                                
|Commitments and contingencies (NOTE 13)                                                                                          |                                                |           |       |        |              |  |       |       
|                                                                                                                                
|Total liabilities and shareholders/invested equity                                                                              |                                                |           | 5,667 |        |              |  | 5,954 |       
|                                                                                                                                

The accompanying notes are an integral part of the financial
statements.


2



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Novelis Inc.


CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS




|                                                         |                                                  |                                            |                   |        |      |     |      |      |     |      |  
|-------------------------------------------------------- | ------------------------------------------------ | ------------------------------------------ | ----------------- | ------ | ---- | --- | ---- | ---- | --- | ---- | -
|Three months ended March 31                              |                                                  | 2005                                       |                   |        | 2004 |    
|                                                         |                                                 
|OPERATING ACTIVITIES                                     |                                                  |                                            |                   |        |      |     |      |     
|Net income                                               |                                                  |                                            | 29                |        |      |     | 69   |     
|Adjustments to determine cash from operating activities: |                                                  |                                            |                   |        |      |     |      |     
|                                                         | Depreciation and amortization                    |                                            |                   | 58     |      |     |      | 61   |    
|                                                         | Deferred income taxes                            |                                            |                   | (21    | )    |     |      | 19   |    
|                                                         | Equity income                                    |                                            |                   | (2     | )    |     |      | (2   | )  
|                                                         | Stock option compensation                        |                                            |                   | 1      |      |     |      |     |    
|                                                         | Change in operating working capital              |                                            |                   |        |      |     |      |      |    
|                                                         |                                                  | Change in receivables                      |                   |        |      |     |      |      |     |     
|                                                         |                                                  |                                            |  third parties   |        |      | (55 | )    |      |     | (104 | )
|                                                         |                                                  | Change in inventories                      |                   |        | (95  | )   |      |      | (88 | )   
|                                                         |                                                  | Change in payables and accrued liabilities |                   |        |      |     |      |      |     |     
|                                                         |                                                  |                                            |  third parties   |        |      | 238 |      |      |     | 87   |  
|                                                         |                                                  |                                            |  related parties |        |      | (6  | )    |      |     | 85   |  
|                                                         | Change in deferred charges and other assets      |                                            |                   | (52    | )    |     |      | (14  | )  
|                                                         | Change in deferred credits and other liabilities |                                            |                   | 1      |      |     |      | 23   |    
|                                                         | Other  net                                      |                                            |                   | 16     |      |     |      | 2    |    
|                                                        
|Cash from operating activities                           |                                                  |                                            | 112               |        |      |     | 138  |     
|                                                        
|FINANCING ACTIVITIES                                     |                                                  |                                            |                   |        |      |     |      |     
|Proceeds from issuance of new debt from third parties    |                                                  |                                            | 2,748             |        |      |     | 317  |     
|Debt repayments                                          |                                                  |                                            |                   |        |      |     |      |     
|                                                         |  third parties                                  |                                            |                   | (1,540 | )    |     |      |     |    
|                                                         |  related parties                                |                                            |                   | (1,180 | )    |     |      |     |    
|Short-term borrowings  net                              |                                                  |                                            |                   |        |      |     |      |     
|                                                         |  third parties                                  |                                            |                   | (443   | )    |     |      | (152 | )  
|                                                         |  related parties                                |                                            |                   | (74    | )    |     |      | 8    |    
|Dividends  common shareholders                          |                                                  |                                            | (7                | )      |      |     |     |     
|Dividends  minority interest                            |                                                  |                                            | (6                | )      |      |     | (2   | )   
|Net receipts from (payments to) Alcan                    |                                                  |                                            | 82                |        |      |     | (81  | )   
|                                                        
|Cash from (used for) financing activities                |                                                  |                                            | (420              | )      |      |     | 90   |     
|                                                        
|INVESTMENT ACTIVITIES                                    |                                                  |                                            |                   |        |      |     |      |     
|Purchase of property, plant and equipment                |                                                  |                                            | (23               | )      |      |     | (20  | )   
|Change in loans receivable  third parties               |                                                  |                                            | 341               |        |      |     |     |     
|Change in loans receivable  related parties             |                                                  |                                            | 37                |        |      |     | (212 | )   
|                                                        
|Cash from (used for) investment activities               |                                                  |                                            | 355               |        |      |     | (232 | )   
|                                                        
|Increase (Decrease) in cash and time deposits            |                                                  |                                            | 47                |        |      |     | (4   | )   
|Cash and time deposits  beginning of period             |                                                  |                                            | 31                |        |      |     | 27   |     
|                                                        
|Cash and time deposits  end of period                   |                                                  |                                            | 78                |        |      |     | 23   |     
|                                                        

The accompanying notes are an integral part of the financial
statements.


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##### Table of Contents



Novelis Inc.


CONSOLIDATED AND COMBINED STATEMENTS OF SHAREHOLDERS/
INVESTED EQUITY




|                                                             |  |               |        |            |         |  |   |          |       |             |               |     |  |             |    |   |            |  |     |       |  |  |      |      |  |  |     |  
|------------------------------------------------------------ |  | ------------- | ------ | ---------- | ------- |  | - | -------- | ----- | ----------- | ------------- | --- |  | ----------- | -- | - | ---------- |  | --- | ----- |  |  | ---- | ---- |  |  | --- | -
|                                                             |  |               |        |            |         |  |   |          |       | Accumulated |               |     |  |             |   
|                                                             |  |               |        | Additional |         |  |   |          | Other |             |               |     |  |            
|                                                             |  | Common Shares |        |            | Paid-In |  |   | Retained |       |             | Comprehensive |     |  | Owners Net |    |   |           
|                                                             |  | Shares        |        |            | Amount  |  |   | Capital  |       |             | Earnings      |     |  | Income      |    |   | Investment |  |     | Total | 
|                                                             | 
|Balance at December 31, 2004                                 |  |               |       |            |         |  |  |          |       |             |              |     |  |             |   |   |            |  | 88  |       |  |  | 467  |      |  |  | 555 |  
|Net income  Q1 2005                                         |  |               |       |            |         |  |  |          |       |             |              |     |  |             | 59 |   |            |  |    |       |  |  | (30  | )(b) |  |  | 29  |  
|Comprehensive loss (NOTE 16)                                 |  |               |       |            |         |  |  |          |       |             |              |     |  |             |   |   |            |  | (73 | )     |  |  |     |      |  |  | (73 | )
|Dividends                                                    |  |               |       |            |         |  |  |          |       |             |              |     |  |             | (7 | ) |            |  |    |       |  |  | (7   | )    |  |  | (14 | )
|Transfer (to)/ from Alcan  net                              |  |               |       |            |         |  |  |          |       |             |              |     |  |             |   |   |            |  |    |       |  |  | 30   |      |  |  | 30  |  
|Issuance of common stock in connection with the distribution |  |               | 73,989 |            |         |  |  |          |       |             | 460           | (a) |  |             |   |   |            |  |    |       |  |  | (460 | )    |  |  |    |  
|                                                            
|Balance at March 31, 2005                                    |  |               | 73,989 |            |         |  |  |          |       |             | 460           |     |  |             | 52 |   |            |  | 15  |       |  |  |     |      |  |  | 527 |  
|                                                            



|    |  |                                                                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Represents the amount of Owners net investment after
    transfers (to)/ from Alcan  net and the net loss from
    January 1 to January 5, 2005.
|   
|(b) |  | Refer to note 1  Background and Basis of
    Presentation.                                                                                       

The accompanying notes are an integral part of the financial
statements.


4



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS


March 31, 2005






|   |                                     
|-- | ------------------------------------
|1. | BACKGROUND AND BASIS OF PRESENTATION



| |           
| | ----------
| | Background











| |                             
| | ----------------------------
| | Post-transaction adjustments





| |                                     
| | ------------------------------------
| | Agreements between Novelis and Alcan





| |                      
| | ---------------------
| | Basis of presentation



5



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|   |                                                   
|-- | --------------------------------------------------
|1. | BACKGROUND AND BASIS OF
    PRESENTATION (Contd)













| |                           
| | --------------------------
| | General Corporate Expenses



6



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|   |                                                   
|-- | --------------------------------------------------
|1. | BACKGROUND AND BASIS OF
    PRESENTATION (Contd)





| |                                      
| | -------------------------------------
| | Pensions and Post-Retirement Benefits











| |             
| | ------------
| | Income Taxes



7



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|   |                                                   
|-- | --------------------------------------------------
|1. | BACKGROUND AND BASIS OF
    PRESENTATION (Contd)



| |                
| | ---------------
| | Cash Management







| |                 
| | ----------------
| | Interest Expense







| |            
| | -----------
| | Derivatives





| |              
| | -------------
| | Stock Options





| |                   
| | ------------------
| | Earnings Per Share





|   |                    
|-- | -------------------
|2. | ACCOUNTING POLICIES



8



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|   |                              
|-- | -----------------------------
|2. | ACCOUNTING POLICIES (Contd)





| |                            
| | ---------------------------
| | Principles of Consolidation







| |                    
| | -------------------
| | Debt Issuance Costs





| |                
| | ---------------
| | Dividend Policy





| |                                      
| | -------------------------------------
| | Pensions and Post-Retirement Benefits





| |                                     
| | ------------------------------------
| | Recently Issued Accounting Standards



| |                                         
| | ----------------------------------------
| | Conditional Asset Retirement Obligations

conditional asset
retirement obligation


9



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|   |                              
|-- | -----------------------------
|2. | ACCOUNTING POLICIES (Contd)





| |                    
| | -------------------
| | Share-Based Payment





|   |                   
|-- | ------------------
|3. | ACCOUNTING CHANGES



| |                                                 
| | ------------------------------------------------
| | Stock Options and Other Stock-Based Compensation





| |                                            
| | -------------------------------------------
| | Consolidation of Variable Interest Entities





10



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|   |                   
|-- | ------------------
|4. | EARNINGS PER SHARE



|                                                   |                                               |      |      |       |      |  |      |       |  |  | 
|-------------------------------------------------- | --------------------------------------------- | ---- | ---- | ----- | ---- |  | ---- | ----- |  |  | 
|Three months ended March 31,                       |                                               | 2005 |      |       | 2004 |  |      |      
|                                                  
|Numerator:                                         |                                               |      |      |       |      |  |      |       |  | 
|                                                   | Net income                                    |      |      | 29    |      |  |      | 69    |  |  | 
|                                                  
|Denominator (number of common shares in millions): |                                               |      |      |       |      |  |      |       |  | 
|                                                   | Weighted average number of outstanding shares |      |      | 73.99 |      |  |      | 73.99 |  |  | 
|                                                   | Effect of dilutive stock options              |      |      | 0.19  |      |  |      | 0.44  |  |  | 
|                                                  
|                                                   | Adjusted number of outstanding shares         |      |      | 74.18 |      |  |      | 74.43 |  |  | 
|                                                  
|Earnings per share  basic (in US$)                |                                               |      | 0.39 |       |      |  | 0.93 |       |  | 
|                                                  
|Earnings per share  diluted (in US$)              |                                               |      | 0.39 |       |      |  | 0.92 |       |  | 
|                                                  







|   |                       
|-- | ----------------------
|5. | RESTRUCTURING PROGRAMS



| |                              
| | -----------------------------
| | 2005 Restructuring Activities





| |                              
| | -----------------------------
| | 2004 Restructuring Activities





| |         
| | --------
| | Pechiney



11



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|   |                                 
|-- | --------------------------------
|5. | RESTRUCTURING PROGRAMS (Contd)



| |                                    
| | -----------------------------------
| | Other 2004 restructuring activities







| |                           
| | --------------------------
| | 2001 Restructuring Program







|                                                                          |  |           |     |       |            |  |    |       |  |  |       |   |  |  |     |   |  | 
|------------------------------------------------------------------------- |  | --------- | --- | ----- | ---------- |  | -- | ----- |  |  | ----- | - |  |  | --- | - |  | 
|                                                                          |  |           |     | ASSET |            |  |    |       |  |  |      
|                                                                          |  | SEVERANCE |     |       | IMPAIRMENT |  |    |       |  |  |       |  
|                                                                          |  | COSTS     |     |       | PROVISIONS |  |    | OTHER |  |  | TOTAL |   |  | 
|                                                                         
|Provision balance as at January 1, 2004                                   |  |           | 19  |       |            |  |   |       |  |  | 12    |   |  |  | 31  |   |  | 
|2004:                                                                     |  |           |     |       |            |  |    |       |  |  |       |   |  |  |     |   |  | 
|Charges recorded in the statement of income                               |  |           | 7   |       |            |  | 8  |       |  |  | (1    | ) |  |  | 14  |   |  | 
|Liabilities recorded in the allocation of the Pechiney purchase
    price |  |           | 17  |       |            |  |   |       |  |  | 2     |   |  |  | 19  |   |  | 
|Cash payments  net                                                       |  |           | (14 | )     |            |  |   |       |  |  | (5    | ) |  |  | (19 | ) |  | 
|Non-cash charges (recoveries)                                             |  |           |    |       |            |  | (8 | )     |  |  | 6     |   |  |  | (2  | ) |  | 
|                                                                         
|Provision balance as at December 31, 2004                                 |  |           | 29  |       |            |  |   |       |  |  | 14    |   |  |  | 43  |   |  | 
|                                                                         
|Q1 2005:                                                                  |  |           |     |       |            |  |    |       |  |  |       |   |  |  |     |   |  | 
|Recoveries recorded in the statement of income                            |  |           |    |       |            |  |   |       |  |  | (1    | ) |  |  | (1  | ) |  | 
|Cash payments  net                                                       |  |           | (4  | )     |            |  |   |       |  |  | (2    | ) |  |  | (6  | ) |  | 
|                                                                         
|Provision balance as at March 31, 2005                                    |  |           | 25  |       |            |  |   |       |  |  | 11    |   |  |  | 36  |   |  | 
|                                                                         

12



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|   |             
|-- | ------------
|6. | INCOME TAXES

|                            |  |      |     |   |      |  |    |  |  | 
|--------------------------- |  | ---- | --- | - | ---- |  | -- |  |  | 
|Three Months Ended March 31 |  | 2005 |     |   | 2004 |  |    | 
|                           
|Current                     |  |      | 50  |   |      |  | 24 |  |  | 
|Deferred                    |  |      | (21 | ) |      |  | 19 |  |  | 
|                           
|                            |  |      | 29  |   |      |  | 43 |  |  | 
|                           





|   |                           
|-- | --------------------------
|7. | RELATED PARTY TRANSACTIONS



|                                            |  |      |    |  |      |  |     |   |  | 
|------------------------------------------- |  | ---- | -- |  | ---- |  | --- | - |  | 
|Three Months Ended March 31                 |  | 2005 |    |  | 2004 |  |     |  
|                                           
|Sales and operating
    revenues(A)         |  |      |    |  |      |  |     |   |  | 
|Alcan                                       |  |      |   |  |      |  | 92  |   |  | 
|                                           
|Cost of sales and operating
    expenses(A) |  |      |    |  |      |  |     |   |  | 
|Alcan                                       |  |      |   |  |      |  | 80  |   |  | 
|                                           
|Research and development
    expenses(B)    |  |      |    |  |      |  |     |   |  | 
|Alcan                                       |  |      |   |  |      |  | 6   |   |  | 
|                                           
|Interest
    expense(C)                     |  |      |    |  |      |  |     |   |  | 
|Alcan                                       |  |      |   |  |      |  | 8   |   |  | 
|                                           
|Other expense (income) net                  |  |      |    |  |      |  |     |   |  | 
|Service fee
    income(D)                   |  |      |   |  |      |  | (9  | ) |  | 
|Service fee
    expense(E)                  |  |      |   |  |      |  | 9   |   |  | 
|Interest income                             |  |      |   |  |      |  | (5  | ) |  | 
|Derivatives(F)                              |  |      |   |  |      |  | (44 | ) |  | 
|Other                                       |  |      |   |  |      |  | 6   |   |  | 
|                                           
|Total transactions with Alcan               |  |      |   |  |      |  | (43 | ) |  | 
|                                           
|Purchase of inventory/tolling services      |  |      |    |  |      |  |     |   |  | 
|Aluminium Norf GmbH                         |  |      | 51 |  |      |  | 48  |   |  | 
|Alcan(G)                                    |  |      |   |  |      |  | 493 |   |  | 
|                                           



|    |  |                                                                                                                                                                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) |  | The Company sells inventory to Alcan and certain investees
    accounted for under the equity method in the ordinary course of
    business. In 2004, Alcan was considered a related party to
    Novelis.                                        
|   
|(B) |  | These expenses are comprised of an allocation of research and
    development expenses incurred by Alcan on behalf of the Company.
    In 2004, Alcan was considered a related party to Novelis.                                                  
|   
|(C) |  | As discussed further below as well as in
    note 10  Debt Not Maturing Within One Year, the
    Company had various short-term and long-term debt payable to
    Alcan where interest was charged on both a fixed and a floating
    rate basis.

13



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|   |                                     
|-- | ------------------------------------
|7. | RELATED PARTY TRANSACTIONS (Contd)



|    |  |                                                                                                                                          
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|(D) |  | Service fee income relates to revenues generated through sales
    of research and development and other corporate services to
    Alcan.
|   
|(E) |  | Service fee expense relates to the purchase of corporate
    services from Alcan.                                                        
|   
|(F) |  | Alcan is the counterparty to all of the Companys metal
    derivatives and most of the currency derivatives.                            
|   
|(G) |  | Alcan is the primary supplier of prime and sheet ingot to the
    Company. Refer to note 13  Commitments and
    Contingencies.         



|                                         |  |           |    |  |              |  |       | 
|---------------------------------------- |  | --------- | -- |  | ------------ |  | ----- | 
|                                         |  | March 31, |    |  | December 31, | 
|As at                                    |  | 2005      |    |  | 2004         | 
|                                         | 
|Trade
    receivables(A)                 |  |           |    |  |              |  |       | 
|Alcan                                    |  |           |   |  |              |  | 87    | 
|                                        
|Other receivables                        |  |           |    |  |              |  |       | 
|Alcan(B)                                 |  |           |   |  |              |  | 801   | 
|Aluminium Norf
    GmbH(C)               |  |           | 38 |  |              |  | 45    | 
|                                        
|                                         |  |           | 38 |  |              |  | 846   | 
|                                        
|Long-term receivables                    |  |           |    |  |              |  |       | 
|Alcan                                    |  |           |   |  |              |  | 2     | 
|Aluminium Norf
    GmbH(C)               |  |           | 93 |  |              |  | 102   | 
|                                        
|                                         |  |           | 93 |  |              |  | 104   | 
|                                        
|Payables and accrued
    liabilities(A)  |  |           |    |  |              |  |       | 
|Alcan                                    |  |           |   |  |              |  | 356   | 
|Aluminium Norf GmbH                      |  |           | 36 |  |              |  | 45    | 
|                                        
|                                         |  |           | 36 |  |              |  | 401   | 
|                                        
|Short-term
    borrowings(D)             |  |           |    |  |              |  |       | 
|Alcan                                    |  |           |   |  |              |  | 312   | 
|                                        
|Debt maturing within one
    year(E)     |  |           |    |  |              |  |       | 
|Alcan                                    |  |           |   |  |              |  | 290   | 
|                                        
|Debt not maturing within one
    year(E) |  |           |    |  |              |  |       | 
|Alcan                                    |  |           |   |  |              |  | 2,307 | 
|                                        



|    |  |                                                                                                                                                                                                                                
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) |  | The Company purchases from and sells inventory to Alcan and
    purchases services from an investee accounted for under the
    equity method, in the ordinary course of business.                                             
|   
|(B) |  | The balance at December 31, 2004 included various
    short-term floating rate notes totalling
    266 million
    and $55 maturing within one year that were settled by Alcan in
    2005 as part of the spin-off of Novelis.
|   
|(C) |  | Current and non-current portions of a loan to an investee
    accounted for under the equity method.                                                                                                                           
|   
|(D) |  | The balance at December 31, 2004 comprised loans due to
    Alcan in various currencies including
    193 million
    and GBP 20 million that were repaid in 2005 as part of the
    spin-off of Novelis.                     
|   
|(E) |  | The Company had various loans payable to Alcan as at
    December 31, 2004 as described in note 10 
    Debt Not Maturing Within One Year.                                                                                    

14



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|   |                                    
|-- | -----------------------------------
|8. | SALES AND FORFAITING OF RECEIVABLES







|   |                              
|-- | -----------------------------
|9. | OTHER EXPENSES (INCOME)  NET



|                                       |  |      |     |   |      |  |     |  
|-------------------------------------- |  | ---- | --- | - | ---- |  | --- | -
|Three Months Ended March 31,           |  | 2005 |     |   | 2004 | 
|                                       | 
|Restructuring (recoveries) costs  net |  |      | (1  | ) |      |  |    |  
|Gain on disposal of fixed assets       |  |      | (1  | ) |      |  | (6  | )
|Interest income                        |  |      | (2  | ) |      |  | (6  | )
|Exchange (gains) losses                |  |      | (11 | ) |      |  | 1   |  
|Derivatives
    gains(1)               |  |      | (14 | ) |      |  | (42 | )
|Bridge financing commitment fee        |  |      | 13  |   |      |  |    |  
|Other                                  |  |      | 2   |   |      |  | 14  |  
|                                      
|                                       |  |      | (14 | ) |      |  | (39 | )
|                                      



|    |                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes $45 pre-tax ($30 after-tax) mark-to-market losses on
    derivative contracts, primarily with Alcan, for the period from
    January 1 to 5, 2005, as described in
    note 1  Background and Basis of Presentation.



|    |                                  
|--- | ---------------------------------
|10. | DEBT NOT MATURING WITHIN ONE YEAR

|                                                              |  |           |       |  |              |  |       |  
|------------------------------------------------------------- |  | --------- | ----- |  | ------------ |  | ----- | -
|                                                              |  | March 31, |       |  | December 31, | 
|As at                                                         |  | 2005      |       |  | 2004         | 
|                                                              | 
|DUE TO RELATED PARTIES                                        |  |           |       |  |              |  |       |  
|Total debt due to related
    parties(A)                      |  |           |      |  |              |  | 2,597 |  
|Debt maturing within one year included in current liabilities |  |           |      |  |              |  | (290  | )
|                                                             
|Debt not maturing within one year due to related parties      |  |           |      |  |              |  | 2,307 |  
|                                                             
|DUE TO THIRD PARTIES                                          |  |           |       |  |              |  |       |  
|Novelis Inc.                                                  |  |           |       |  |              |  |       |  
|Floating rate Term Loan B, due
    2012(B)(C)                 |  |           | 444   |  |              |  |      |  
|7.25% Senior notes, due
    2015(D)                           |  |           | 1,400 |  |              |  |      |  
|Novelis Corporation                                           |  |           |       |  |              |  |       |  
|Floating rate Term Loan B, due
    2012(B)(C)(F)              |  |           | 771   |  |              |  |      |  

15



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|    |                                                 
|--- | ------------------------------------------------
|10. | DEBT NOT MATURING WITHIN ONE
    YEAR  (Contd)

|                                                              |  |           |       |   |              |  |     |  
|------------------------------------------------------------- |  | --------- | ----- | - | ------------ |  | --- | -
|                                                              |  | March 31, |       |   | December 31, | 
|As at                                                         |  | 2005      |       |   | 2004         | 
|                                                              | 
|Novelis Valais S.A.                                           |  |           |       |   |              |  |     |  
|Capital lease obligation, due 2020 (CHF 62 million)           |  |           | 52    |   |              |  |    |  
|                                                             
|Novelis Korea Limited(E)                                      |  |           |       |   |              |  |     |  
|Bank loan, due 2008                                           |  |           | 50    |   |              |  |    |  
|Bank loan, due 2007                                           |  |           | 70    |   |              |  | 70  |  
|Bank loan, due 2007 (Korean won (KRW) 40 billion)             |  |           | 39    |   |              |  | 39  |  
|Bank loan, due 2007 (KRW 25 billion)                          |  |           | 24    |   |              |  | 24  |  
|Bank loans, due 2005/2011 (KRW 2 billion)                     |  |           | 2     |   |              |  | 2   |  
|                                                             
|Other                                                         |  |           |       |   |              |  |     |  
|Bank loans, due 2005/2011(F)                                  |  |           | 3     |   |              |  | 3   |  
|Other debt, due 2005/2010                                     |  |           |      |   |              |  | 2   |  
|                                                             
|                                                              |  |           | 2,855 |   |              |  | 140 |  
|Debt maturing within one year included in current liabilities |  |           | (4    | ) |              |  | (1  | )
|                                                             
|Debt not maturing within one year due to third parties        |  |           | 2,851 |   |              |  | 139 |  
|                                                             



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) |  | All of the Companys related party debt of $2,597 as at
    December 31, 2004 was payable to Alcan and was fully repaid
    in the first quarter of 2005. The related party debt was
    comprised of a combination of fixed and floating rate debt of
    $1,392 and fixed rate promissory notes (Alcan Notes) obtained in
    December 2004 of $1,205. The Alcan Notes comprised a major
    portion of the $1,375 bridge financing provided by Alcan to the
    Company as a result of the reorganization transactions described
    in note 1  Background and Basis of Presentation.
    The remaining balance of the Alcan Notes of $170 was obtained in
    January 2005. The Alcan Notes were duly refinanced with the
    proceeds of the $1.4 billion 10-year Senior Notes issued in
    February 2005 (refer to (D) below).                                                                                                                                                                                                     
|   
|(B) |  | In connection with the reorganization transactions described in
    note 1  Background and Basis of Presentation,
    the Company entered into senior secured credit facilities
    providing for aggregate borrowings of up to $1.8 billion.
    These facilities consist of a $1.3 billion seven-year
    senior secured Term Loan B facility, bearing interest at
    LIBOR plus 1.75%, all of which was borrowed on January 10,
    2005, and a $500 five-year multi- currency revolving credit
    facility. The Term Loan B facility consists of an $825 Term
    Loan B in the U.S. and a $475 Term Loan B in Canada.
    The proceeds of the Term Loan B facility were used in
    connection with the reorganization transactions, the
    Companys separation from Alcan and to pay related fees and
    expenses. Debt issuance costs incurred in relation to these
    facilities have been recorded in Deferred charges and other
    assets and are being amortized over the life of the related
    borrowing in Interest.
|   
|(C) |  | The Company has entered into interest rate swaps to fix the
    interest rate on $310 of the variable rate Term Loan B debt
    at an effective weighted average interest rate of 5.5% for
    periods of up to three years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(D) |  | On February 3, 2005, Novelis sold $1.4 billion
    aggregate principal amount of senior unsecured debt securities
    (Senior Notes). The Senior Notes, which were priced at par, bear
    interest at 7.25% and will mature on February 15, 2015. The
    net proceeds of the placement were used to repay the Alcan Notes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(E) |  | In 2004, Novelis Korea Limited (Novelis Korea), formerly Alcan
    Taihan Aluminium Limited, entered into a $70 floating rate
    long-term loan which was subsequently swapped for a 4.55% fixed
    rate KRW 73 billion loan and into two long-term
    floating rate loans of KRW 40 billion and
    KRW 25 billion that were swapped for fixed rates of
    4.80% and 4.45%, respectively. In 2005, interest on the
    KRW 2 billion loans ranges from 3.00% to 4.47% (2004:
    3.00% to 5.50%). In February 2005, Novelis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

16



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




| |  |                                                            
| |  | -----------------------------------------------------------
| |  | 10.        DEBT NOT
    MATURING WITHIN ONE YEAR  (Contd)





|    |  |                                                                                                                                                       
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|(F) |  | Interest rates are a function of the lenders prime
    commercial rates, the Korean 3-month Certificate of Deposit
    rate, or LIBOR/ EURIBOR rates.





|    |              
|--- | -------------
|11. | COMMON SHARES





| |                        
| | -----------------------
| | Shareholder Rights Plan







|    |                                                 
|--- | ------------------------------------------------
|12. | STOCK OPTIONS AND OTHER STOCK-BASED COMPENSATION



| |                            
| | ---------------------------
| | Executive Share Option Plan



17



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|    |                                                               
|--- | --------------------------------------------------------------
|12. | STOCK OPTIONS AND OTHER STOCK-BASED
    COMPENSATION (Contd)





|                           |  |      |       |  |      |  |       |  |  | 
|-------------------------- |  | ---- | ----- |  | ---- |  | ----- |  |  | 
|                           |  | 2005 |       |  | 2004 |  |       | 
|                          
|Dividend yield(%)          |  |      | 1.85  |  |      |  | 1.85  |  |  | 
|Expected volatility(%)     |  |      | 27.87 |  |      |  | 27.87 |  |  | 
|Risk-free interest rate(%) |  |      | 4.56  |  |      |  | 4.56  |  |  | 
|Expected life (years)      |  |      | 6     |  |      |  | 6     |  |  | 
|                          



| |                                   
| | ----------------------------------
| | Compensation To Be Settled in Cash



| |                                   
| | ----------------------------------
| | Stock Price Appreciation Unit Plan





| |                                          
| | -----------------------------------------
| | Total Shareholder Return Performance Plan





| |                                                 
| | ------------------------------------------------
| | Non-Executive Directors Deferred Share Unit Plan



18



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|    |                                                               
|--- | --------------------------------------------------------------
|12. | STOCK OPTIONS AND OTHER STOCK-BASED
    COMPENSATION (Contd)





| |                                    
| | -----------------------------------
| | Novelis Founders Performance Awards





| |                          
| | -------------------------
| | Deferred Share Agreements





| |                  
| | -----------------
| | Compensation Cost





|    |                              
|--- | -----------------------------
|13. | COMMITMENTS AND CONTINGENCIES











19



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|    |                                            
|--- | -------------------------------------------
|13. | COMMITMENTS AND
    CONTINGENCIES (Contd)



PAS Site.


PAS Oswego Site Performing Company.


Oswego North Ponds.




Butler Tunnel Site.




20



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|    |                                            
|--- | -------------------------------------------
|13. | COMMITMENTS AND
    CONTINGENCIES (Contd)



Tri-Cities Site.


Quanta Resources Site.


Sealand Site.


Toyo Coal Tar Remediation.


Diamond Alkali Superfund Site-Lower Passaic River
Initiative.


Jarl Extrusions (Rochester, NY).


21



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|    |                                            
|--- | -------------------------------------------
|13. | COMMITMENTS AND
    CONTINGENCIES (Contd)



Terre Haute TCE Issue.








| |   |                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the contributed businesses, liabilities or contracts;                                                                                                                                                                             
|
| |  | liabilities or obligations associated with the contributed
    businesses, as defined in the separation agreement between
    Novelis and Alcan, or otherwise assumed by the Company pursuant
    to the separation agreement; and
|
| |  | any breach by the Company of the separation agreement or any of
    the ancillary agreements entered into with Alcan in connection
    with the separation.                                                                       







|    |                                              
|--- | ---------------------------------------------
|14. | FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS



22



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS


14.                        FINANCIAL
INSTRUMENTS AND COMMODITY
CONTRACTS 










| |                                   
| | ----------------------------------
| | Financial Instruments  Fair Value







|    |                          
|--- | -------------------------
|15. | SUPPLEMENTARY INFORMATION

|                             |  |      |    |  |      |  |    | 
|---------------------------- |  | ---- | -- |  | ---- |  | -- | 
|Three Months Ended March 31, |  | 2005 |    |  | 2004 | 
|                             | 
|Statement of income          |  |      |    |  |      |  |    | 
|Interest on long-term debt   |  |      | 37 |  |      |  | 12 | 
|                            
|Statement of cash flows      |  |      |    |  |      |  |    | 
|Interest paid                |  |      | 20 |  |      |  | 18 | 
|Income taxes paid            |  |      | 5  |  |      |  | 12 | 
|                            

|                                                        |                     |           |  |     |              |  |  |     | 
|------------------------------------------------------- | ------------------- | --------- |  | --- | ------------ |  |  | --- | 
|                                                        |                     | March 31, |  |     | December 31, | 
|As at                                                   |                     | 2005      |  |     | 2004         | 
|                                                        |                    
|Balance sheet                                           |                     |           |  |     |              |  |  |    
|Payables and accrued liabilities include the following: |                     |           |  |     |              |  |  |    
|                                                        | Trade payables      |           |  | 887 |              |  |  | 899 | 
|                                                        | Accrued liabilities |           |  | 592 |              |  |  | 361 | 








|    |                     
|--- | --------------------
|16. | COMPREHENSIVE INCOME

|                                   |                                                                                          |      |     |     |      |  |     |     |  
|---------------------------------- | ---------------------------------------------------------------------------------------- | ---- | --- | --- | ---- |  | --- | --- | -
|Three Months Ended March 31,       |                                                                                          | 2005 |     |     | 2004 | 
|                                   |                                                                                         
|Net income                         |                                                                                          |      | 29  |     |      |  | 69  |    
|                                  
|Other comprehensive income (loss): |                                                                                          |      |     |     |      |  |     |    
|                                   | Net change in deferred translation adjustments                                           |      |     | (69 | )    |  |     | (39 | )
|                                   | Net change in minimum pension liability  net of taxes
    of $3 in 2005 and nil in 2004 |      |     | (4  | )    |  |     |    |  
|                                  
|                                   |                                                                                          |      | (73 | )   |      |  | (39 | )  
|                                  
|Comprehensive income (loss)        |                                                                                          |      | (44 | )   |      |  | 30  |    
|                                  

23



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|    |                               
|--- | ------------------------------
|16. | COMPREHENSIVE INCOME (Contd)

|                                       |  |           |     |   |              |  |     |  
|-------------------------------------- |  | --------- | --- | - | ------------ |  | --- | -
|                                       |  | March 31, |     |   | December 31, | 
|As at                                  |  | 2005      |     |   | 2004         | 
|                                       | 
|Accumulated other comprehensive income |  |           |     |   |              |  |     |  
|Deferred translation adjustments       |  |           | 51  |   |              |  | 120 |  
|Minimum pension liability              |  |           | (36 | ) |              |  | (32 | )
|                                      
|Accumulated other comprehensive income |  |           | 15  |   |              |  | 88  |  
|                                      



|    |                         
|--- | ------------------------
|17. | POST-RETIREMENT BENEFITS







| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) In the U.S., for Novelis employees previously
    participating in the Alcancorp Pension Plan and the Alcan
    Supplemental Executive Retirement Plan, Alcan agreed to
    recognize up to one year of additional service in its plan as
    long as such employee worked for Novelis and Novelis paid to
    Alcan the normal cost (in the case of the Alcancorp Pension
    Plan) and the current service cost (in the case of the Alcan
    Supplemental Executive Retirement Plan).
|
| | b) In the U.K., the sponsorship of the Alusuisse Holdings
    U.K. Ltd Pension Plan was transferred from Alcan to Novelis. No
    new plan was established.                                                                                                                                                                                                                                                                                                                                
|
| | c) In Switzerland, Novelis became a participating employer
    in the Alcan Swiss Pension Plans and Novelis employees are
    participating in these plans for up to one year (or longer with
    Alcan approval) provided Novelis makes the required pension
    contributions.                                                                                                                                                                                                           



Canada Pension Plan


Pension Plan for Officers




24



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|    |                                   
|--- | ----------------------------------
|17. | POST-RETIREMENT BENEFITS (Contd)



|                                        |  |                  |    |   |                |  |    |      |  |  |      |  |  |  |   | 
|--------------------------------------- |  | ---------------- | -- | - | -------------- |  | -- | ---- |  |  | ---- |  |  |  | - | 
|                                        |  | Pension Benefits |    |   | Other Benefits | 
|                                        | 
|Three months ended March 31,            |  | 2005             |    |   | 2004           |  |    | 2005 |  |  | 2004 | 
|                                        | 
|Components of net periodic benefit cost |  |                  |    |   |                |  |    |      |  |  |      |  |  |  |   | 
|Service cost                            |  |                  | 8  |   |                |  | 5  |      |  |  | 1    |  |  |  |  | 
|Interest cost                           |  |                  | 8  |   |                |  | 7  |      |  |  | 3    |  |  |  | 2 | 
|Expected return on assets               |  |                  | (6 | ) |                |  | (6 | )    |  |  |     |  |  |  |  | 
|Amortization                            |  |                  |    |   |                |  |    |      |  |  |      |  |  |  |   | 
| actuarial losses                      |  |                  | 2  |   |                |  | 1  |      |  |  |     |  |  |  |  | 
| prior service cost                    |  |                  | 1  |   |                |  | 1  |      |  |  |     |  |  |  |  | 
|                                       
|Net periodic benefit cost               |  |                  | 13 |   |                |  | 8  |      |  |  | 4    |  |  |  | 2 | 
|                                       



Employer Contributions








|    |                                  
|--- | ---------------------------------
|18. | INFORMATION BY OPERATING SEGMENTS



25



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|    |                                                
|--- | -----------------------------------------------
|18. | INFORMATION BY OPERATING
    SEGMENTS (Contd)





| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) BGP excluded restructuring costs related only to major
    corporate-wide acquisitions or initiatives whereas RI excludes
    all restructuring costs;                                                                                                           
|
| | b) BGP included pension costs based on the normal current
    service cost with all actuarial gains, losses and other
    adjustments being included in Intersegment and other. RI
    includes all these pension costs in the applicable operating
    segment; and
|
| | c) BGP excluded certain corporate non-operating costs
    incurred by an operating segment and included such costs in
    Intersegment and other. Under the current management structure,
    these costs remain in the operating segment.                          







Novelis North America




Novelis Europe




Novelis Asia




Novelis South America




Corporate




26



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##### Table of Contents



Novelis Inc.


NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS




|    |                                                
|--- | -----------------------------------------------
|18. | INFORMATION BY OPERATING
    SEGMENTS (Contd)



| |                   
| | ------------------
| | Risk Concentration



|                                                |  |              |     |                   |         |  |     |      |  |  |       |   |  |  |       |  
|----------------------------------------------- |  | ------------ | --- | ----------------- | ------- |  | --- | ---- |  |  | ----- | - |  |  | ----- | -
|                                                |  |              |     | THIRD AND RELATED |        
|SALES AND OPERATING REVENUES                    |  | INTERSEGMENT |     |                   | PARTIES | 
|                                                | 
|Three months ended March 31                     |  | 2005         |     |                   | 2004    |  |     | 2005 |  |  | 2004  |  
|                                                | 
|Novelis North America                           |  |              | 1   |                   |         |  | 1   |      |  |  | 827   |   |  |  | 670   |  
|Novelis Europe                                  |  |              | 19  |                   |         |  | 5   |      |  |  | 807   |   |  |  | 756   |  
|Novelis Asia                                    |  |              | 3   |                   |         |  | 2   |      |  |  | 338   |   |  |  | 268   |  
|Novelis South America                           |  |              | 16  |                   |         |  | 8   |      |  |  | 149   |   |  |  | 118   |  
|Adjustments for equity-accounted joint ventures |  |              |    |                   |         |  |    |      |  |  | (3    | ) |  |  | (2    | )
|Other                                           |  |              | (39 | )                 |         |  | (16 | )    |  |  |      |   |  |  |      |  
|                                               
|                                                |  |              |    |                   |         |  |    |      |  |  | 2,118 |   |  |  | 1,810 |  
|                                               

|                                                    |  |      |     |   |      |  |     |  
|--------------------------------------------------- |  | ---- | --- | - | ---- |  | --- | -
|REGIONAL INCOME                                     |  |      |     |  
|Three months ended March 31                         |  |      |     |  
|                                                    |  | 2005 |     |   | 2004 | 
|                                                    | 
|Novelis North America                               |  |      | 57  |   |      |  | 69  |  
|Novelis Europe                                      |  |      | 57  |   |      |  | 42  |  
|Novelis Asia                                        |  |      | 30  |   |      |  | 20  |  
|Novelis South America                               |  |      | 38  |   |      |  | 28  |  
|                                                   
|Total Regional Income                               |  |      | 182 |   |      |  | 159 |  
|Corporate Costs                                     |  |      | (27 | ) |      |  | (10 | )
|Impairment, restructuring and rationalization costs |  |      | 1   |   |      |  | 7   |  
|Adjustments for equity-accounted joint ventures     |  |      | (11 | ) |      |  | (11 | )
|Adjustments for mark-to-market of derivatives       |  |      | 19  |   |      |  | 49  |  
|Depreciation and amortization                       |  |      | (58 | ) |      |  | (61 | )
|Interest                                            |  |      | (44 | ) |      |  | (19 | )
|                                                   
|Income before income taxes and other items          |  |      | 62  |   |      |  | 114 |  
|                                                   

27



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##### Table of Contents








|        |                                                                                           
|------- | ------------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations.



OVERVIEW






|                                  |  |                 |       |  |      |   |       | 
|--------------------------------- |  | --------------- | ----- |  | ---- | - | ----- | 
|                                  |  | Three Months    |      
|                                  |  | Ended March 31, |      
|                                  |  |                 |      
|                                  |  | 2005            |       |  | 2004 |  
|                                  |  |                 |       |  |      |  
|                                  |  | ($ in millions) |      
|Sales and operating revenues      |  | $               | 2,118 |  |      | $ | 1,810 | 
|Total Regional Income(i)          |  |                 | 182   |  |      |   | 159   | 
|Net Income                        |  |                 | 29    |  |      |   | 69    | 
|Rolled products shipments(ii)(kt) |  |                 | 712   |  |      |   | 683   | 
|Total assets                      |  |                 | 5,667 |  |      |   | 6,691 | 






|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)  |  | Regional income comprises earnings before interest, taxes,
    depreciation and amortization excluding certain items, such as
    corporate office costs and asset and goodwill impairments,
    restructuring, rationalization and the change in fair market
    value of our derivatives, which are not under the control of the
    business groups. These items are managed by the Companys
    head office, which focuses on strategy development and oversees
    governance, policy, legal compliance, human resources and
    finance matters.                
|    
|     |  | Financial information for the regional groups includes the
    results of certain joint ventures on a proportionately
    consolidated basis, which is consistent with the way the
    business groups are managed. Under U.S. GAAP, these joint
    ventures are accounted for under the equity method. Therefore,
    in order to reconcile to income before income taxes and other
    items, the Regional Income of these joint ventures is removed
    from Total Regional Income for the Company and the net after-tax
    results are reported as equity income.
|    
|     |  | The change in the fair market value of derivatives has been
    removed from individual regional results and is shown on a
    separate line. This presentation provides a more accurate
    portrayal of underlying business group results and is in line
    with the Companys portfolio approach to risk management.                                                                                                                                                                                                                                               
|    
|(ii) |  | Includes conversion of customer-owned metal (tolling).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

HIGHLIGHTS


Net Income.


28



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##### Table of Contents



Shipments.


Regional Income.


Financing Activity.


RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
MARCH 31, 2005 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 2004




Sales and Operating Revenues and Shipments.


Cost and Expenses.








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##### Table of Contents





Income Taxes.


OPERATING SEGMENT REVIEW




Reconciliation.


|                                           |                                             |                |     |     |      |  |     |     |  
|------------------------------------------ | ------------------------------------------- | -------------- | --- | --- | ---- |  | --- | --- | -
|                                           |                                             | First Quarter  |    
|                                           |                                             |                |    
|                                           |                                             | 2005           |     |     | 2004 | 
|                                           |                                             |                |     |     |      | 
|                                           |                                             | (US$ millions) |    
|Regional Income                            |                                             |                |     |     |      |  |     |    
|                                           | Novelis North America                       |                |     | 57  |      |  |     | 69  |  
|                                           | Novelis Europe                              |                |     | 57  |      |  |     | 42  |  
|                                           | Novelis Asia                                |                |     | 30  |      |  |     | 20  |  
|                                           | Novelis South America                       |                |     | 38  |      |  |     | 28  |  
|Total Regional Income                      |                                             |                | 182 |     |      |  | 159 |    
|                                           | Corporate Office                            |                |     | (27 | )    |  |     | (10 | )
|Additional Items for Reconciliation        |                                             |                |     |     |      |  |     |    
|                                           | Equity accounted joint venture eliminations |                |     | (11 | )    |  |     | (11 | )
|                                           | Change in fair market value of derivatives  |                |     | 19  |      |  |     | 49  |  
|                                           | Restructuring, rationalization & impairment |                |     | 1   |      |  |     | 7   |  
|                                           | Depreciation & amortization                 |                |     | (58 | )    |  |     | (61 | )
|                                           | Interest                                    |                |     | (44 | )    |  |     | (19 | )
|Income before income taxes and other items |                                             |                | 62  |     |      |  | 114 |    

Novelis North America.


|                              |  |                 |       |  |         |  |       |       |  |  |       |   
|----------------------------- |  | --------------- | ----- |  | ------- |  | ----- | ----- |  |  | ----- | --
|                              |  | 1st Qtr         |       |  | 1st Qtr |  |       |      
|North America                 |  | 2005            |       |  | 2004    |  |       | % Chg | 
|                              |  |                 |       |  |         |  |       |       | 
|                              |  | ($ in millions) |      
|Sales                         |  |                 | 827   |  |         |  | 670   |       |  |  | 23.4  | % 
|Regional Income               |  |                 | 57    |  |         |  | 69    |       |  |  | (17.4 | )%
|Rolled Product Shipments (kt) |  |                 | 283   |  |         |  | 274   |       |  |  | 3.3   | % 
|Regional Income per Ton       |  |                 | 201   |  |         |  | 252   |       |  |  | (20.2 | )%
|Depreciation                  |  |                 | 18    |  |         |  | 17    |       |  |  | 5.9   | % 
|Capital Expenditures          |  |                 | 8     |  |         |  | 11    |       |  |  | (27.3 | )%
|Total Assets                  |  |                 | 1,480 |  |         |  | 2,688 |       |  |  | (44.9 | )%



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##### Table of Contents







Novelis Europe.


|                              |  |                 |       |  |         |  |       |       |  |  |       |   
|----------------------------- |  | --------------- | ----- |  | ------- |  | ----- | ----- |  |  | ----- | --
|                              |  | 1st Qtr         |       |  | 1st Qtr |  |       |      
|Europe                        |  | 2005            |       |  | 2004    |  |       | % Chg | 
|                              |  |                 |       |  |         |  |       |       | 
|                              |  | ($ in millions) |      
|Sales                         |  |                 | 807   |  |         |  | 756   |       |  |  | 6.7   | % 
|Regional Income               |  |                 | 57    |  |         |  | 42    |       |  |  | 35.7  | % 
|Rolled Product Shipments (kt) |  |                 | 252   |  |         |  | 249   |       |  |  | 1.2   | % 
|Regional Income per Ton       |  |                 | 226   |  |         |  | 169   |       |  |  | 34.1  | % 
|Depreciation                  |  |                 | 26    |  |         |  | 28    |       |  |  | (7.1  | )%
|Capital Expenditures          |  |                 | 8     |  |         |  | 10    |       |  |  | (20.0 | )%
|Total Assets                  |  |                 | 2,469 |  |         |  | 2,363 |       |  |  | 4.5   | % 







Novelis Asia.


|                              |  |                 |     |  |         |  |     |       |  |  |       |   
|----------------------------- |  | --------------- | --- |  | ------- |  | --- | ----- |  |  | ----- | --
|                              |  | 1st Qtr         |     |  | 1st Qtr |  |     |      
|Asia                          |  | 2005            |     |  | 2004    |  |     | % Chg | 
|                              |  |                 |     |  |         |  |     |       | 
|                              |  | ($ in millions) |    
|Sales                         |  |                 | 338 |  |         |  | 268 |       |  |  | 26.1  | % 
|Regional Income               |  |                 | 30  |  |         |  | 20  |       |  |  | 50.0  | % 
|Rolled Product Shipments (kt) |  |                 | 114 |  |         |  | 108 |       |  |  | 5.6   | % 
|Regional Income per Ton       |  |                 | 263 |  |         |  | 185 |       |  |  | 42.2  | % 
|Depreciation                  |  |                 | 12  |  |         |  | 12  |       |  |  | 0     | % 
|Capital Expenditures          |  |                 | 3   |  |         |  | 4   |       |  |  | (25.0 | )%
|Total Assets                  |  |                 | 987 |  |         |  | 922 |       |  |  | 7.0   | % 

31



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##### Table of Contents







Novelis South America.


|                              |  |                 |     |  |         |  |     |       |  |  |       |   
|----------------------------- |  | --------------- | --- |  | ------- |  | --- | ----- |  |  | ----- | --
|                              |  | 1st Qtr         |     |  | 1st Qtr |  |     |      
|South America                 |  | 2005            |     |  | 2004    |  |     | % Chg | 
|                              |  |                 |     |  |         |  |     |       | 
|                              |  | ($ in millions) |    
|Sales                         |  |                 | 149 |  |         |  | 118 |       |  |  | 26.3  | % 
|Regional Income               |  |                 | 38  |  |         |  | 28  |       |  |  | 35.7  | % 
|Rolled Product Shipments (kt) |  |                 | 63  |  |         |  | 52  |       |  |  | 21.2  | % 
|Regional Income per Ton       |  |                 | 603 |  |         |  | 538 |       |  |  | 12.1  | % 
|Depreciation                  |  |                 | 11  |  |         |  | 12  |       |  |  | (8.3  | )%
|Capital Expenditures          |  |                 | 2   |  |         |  | 3   |       |  |  | (33.3 | )%
|Total Assets                  |  |                 | 766 |  |         |  | 812 |       |  |  | (5.7  | )%





LIQUIDITY AND CAPITAL RESOURCES




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##### Table of Contents



Operating Activities.


|                               |  |                 |     |   |         |  |     |  
|------------------------------ |  | --------------- | --- | - | ------- |  | --- | -
|                               |  | 1st Qtr         |     |   | 1st Qtr | 
|Cash Flow                      |  | 2005            |     |   | 2004    | 
|                               |  |                 |     |   |         | 
|                               |  | ($ in millions) |    
|Cash from Operating Activities |  |                 | 112 |   |         |  | 138 |  
|Dividends                      |  |                 | (13 | ) |         |  | (2  | )
|Capital Expenditures           |  |                 | (23 | ) |         |  | (20 | )
|Free Cash Flow(i)              |  |                 | 76  |   |         |  | 116 |  






|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) |  | Free cash flow (which is a non-GAAP measure) consists of cash
    from operating activities less capital expenditures and
    dividends. Dividends include those paid by our less than
    wholly-owned subsidiaries to their minority shareholders and
    dividends to the common shareholders of Novelis. Management
    believes that free cash flow is relevant to investors as it
    provides a measure of the cash generated internally that is
    available for debt service and other value creation
    opportunities. However, free cash flow does not necessarily
    represent cash available for discretionary activities, as
    certain debt service obligations must be funded out of free cash
    flow. The Companys method of calculating free cash flow
    may not be consistent with that of other companies.





Investment Activities.


|                                      |  |                 |      |  |         |  |      |          |  |  |      |   
|------------------------------------- |  | --------------- | ---- |  | ------- |  | ---- | -------- |  |  | ---- | --
|                                      |  | 1st Qtr         |      |  | 1st Qtr |  |      |         
|Capital Expenditures and Depreciation |  | 2005            |      |  | 2004    |  |      | % Change | 
|                                      |  |                 |      |  |         |  |      |          | 
|                                      |  | ($ in millions) |     
|Capital Expenditures                  |  |                 | 23   |  |         |  | 20   |          |  |  | 15.0 | % 
|Depreciation and Amortization Expense |  |                 | 58   |  |         |  | 61   |          |  |  | (4.9 | )%
|Reinvestment Rate(i)(%)               |  |                 | 39.7 |  |         |  | 32.8 |          |  |  |      |   






|    |  |                                                                                   
|--- |  | ----------------------------------------------------------------------------------
|(i) |  | Capital expenditures as a percentage of depreciation and
    amortization expense.



Financing Activities.




33



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##### Table of Contents















CONTRACTUAL OBLIGATIONS






ACCOUNTING STANDARDS




34



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##### Table of Contents









| |   |                                                                                          
| | - | -----------------------------------------------------------------------------------------
| |  | FASB Interpretation No. 47, Accounting for
    Conditional Asset Retirement Obligations
|
| |  | SFAS No. 123R, Share Based Payment                                                     



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND
MARKET DATA








| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | our separation from Alcan;                                                                                      
|
| |  | the level of our indebtedness and our ability to generate cash
    following the separation;                    
|
| |  | relationships with, and financial and operating conditions of,
    our customers and suppliers;                 
|
| |  | changes in the prices and availability of 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 for future capital requirements;                                                
|
| |  | changes in the relative values of various currencies;                                                           

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##### Table of Contents





| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | factors affecting our operations, such as litigation, labor
    relations and negotiations, breakdown of equipment and other
    events;                     
|
| |  | economic, regulatory and political factors within the countries
    in which we operate or sell our products, including changes in
    duties or tariffs;    
|
| |  | competition from other aluminum rolled products producers as
    well as from substitute materials such as steel, glass, plastic
    and composite materials;
|
| |  | changes in general economic conditions;                                                                                                                      
|
| |  | cyclical demand and pricing within the principal markets for our
    products as well as seasonality in certain of our
    customers industries; and        
|
| |  | changes in government regulations, particularly those affecting
    environmental, health or safety compliance.                                              





|        |                                                           
|------- | ----------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures about Market Risk








Interest Rates




Currency Derivatives




|                                             |     |                       |                |                                          |     |        |    |        |    |        |   |        |   |         |  |     |       |  |  |        |  
|-------------------------------------------- | --- | --------------------- | -------------- | ---------------------------------------- | --- | ------ | -- | ------ | -- | ------ | - | ------ | - | ------- |  | --- | ----- |  |  | ------ | -
|                                             |     |                       |                |                                          |     |        |    |        |    |        |   |        |   | Total   |  |     |      
|                                             |     |                       |                |                                          |     |        |    |        |    |        |   |        |   | Nominal |  |     | Fair  | 
|                                             |     |                       |                | 2005                                     |     | 2006   |    | 2007   |    | 2008   |   | 2009   |   | Amount  |  |     | Value | 
|                                             |     |                       |                |                                          |     |        |    |        |    |        |   |        |   |         |  |     |       | 
|                                             |     |                       |                | (In US$ millions, except contract rates) |    
|FORWARD CONTRACTS                           
|To purchase USD against the foreign currency
|                                             | EUR |                       | Nominal Amount |                                          | 264 |        | 91 |        | 66 |        |  |        | 5 |         |  | 426 |       |  |  | (18.50 | )
|                                             |     | Average contract rate |                | 1.26                                     |     | 1.25   |    | 1.28   |    |       |   | 1.13   |   |         |  |     |       |  |  |       
|                                             | CHF |                       | Nominal Amount |                                          | 26  |        | 11 |        | 2  |        | 2 |        | 1 |         |  | 42  |       |  |  | (3.50  | )
|                                             |     | Average contract rate |                | 1.2270                                   |     | 1.3324 |    | 1.2873 |    | 1.2613 |   | 1.2381 |   |         |  |     |       |  |  |       
|                                             | GBP |                       | Nominal Amount |                                          | 31  |        |   |        |   |        |  |        |  |         |  | 31  |       |  |  | (0.54  | )
|                                             |     | Average contract rate |                | 1.82                                     |     |       |    |       |    |       |   |       |   |         |  |     |       |  |  |       

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|                                             |     |                       |                |                                          |    |        |    |        |   |        |   |        |   |         |  |    |       |  |  |       |  
|-------------------------------------------- | --- | --------------------- | -------------- | ---------------------------------------- | -- | ------ | -- | ------ | - | ------ | - | ------ | - | ------- |  | -- | ----- |  |  | ----- | -
|                                             |     |                       |                |                                          |    |        |    |        |   |        |   |        |   | Total   |  |    |      
|                                             |     |                       |                |                                          |    |        |    |        |   |        |   |        |   | Nominal |  |    | Fair  | 
|                                             |     |                       |                | 2005                                     |    | 2006   |    | 2007   |   | 2008   |   | 2009   |   | Amount  |  |    | Value | 
|                                             |     |                       |                |                                          |    |        |    |        |   |        |   |        |   |         |  |    |       | 
|                                             |     |                       |                | (In US$ millions, except contract rates) |   
|To sell USD against the foreign currency    
|                                             | EUR |                       | Nominal Amount |                                          | 10 |        |   |        |  |        |  |        |  |         |  | 10 |       |  |  | (0.17 | )
|                                             |     | Average contract rate |                | 1.2989                                   |    |       |    |       |   |       |   |       |   |         |  |    |       |  |  |      
|                                             | CHF |                       | Nominal Amount |                                          | 1  |        |   |        |  |        |  |        |  |         |  | 1  |       |  |  | (0.08 | )
|                                             |     | Average contract rate |                | 1.1273                                   |    |       |    |       |   |       |   |       |   |         |  |    |       |  |  |      
|                                             | GBP |                       | Nominal Amount |                                          | 35 |        | 1  |        |  |        |  |        |  |         |  | 36 |       |  |  | 1.02  |  
|                                             |     | Average contract rate |                | 1.76                                     |    | 1.74   |    |       |   |       |   |       |   |         |  |    |       |  |  |      
|                                             | KRW |                       | Nominal Amount |                                          | 57 |        |   |        |  |        |  |        |  |         |  | 57 |       |  |  | (0.80 | )
|                                             |     | Average contract rate |                | 1,0008.29                                |    |       |    |       |   |       |   |       |   |         |  |    |       |  |  |      
|To purchase EUR against the foreign currency
|                                             | GBP |                       | Nominal Amount |                                          | 88 |        | 3  |        | 2 |        |  |        |  |         |  | 93 |       |  |  | (0.84 | )
|                                             |     | Average contract rate |                | 0.6996                                   |    | 0.7193 |    | 0.7354 |   |       |   |       |   |         |  |    |       |  |  |      
|To sell EUR against the foreign currency    
|                                             | GBP |                       | Nominal Amount |                                          | 70 |        | 16 |        |  |        |  |        |  |         |  | 86 |       |  |  | 1.02  |  
|                                             |     | Average contract rate |                | 0.7019                                   |    | 0.7079 |    |       |   |       |   |       |   |         |  |    |       |  |  |      
|                                             | CHF |                       | Nominal Amount |                                          | 18 |        | 9  |        | 5 |        | 5 |        | 3 |         |  | 40 |       |  |  | (0.75 | )
|                                             |     | Average contract rate |                | 1.5118                                   |    | 1.4872 |    | 1.4611 |   | 1.4430 |   | 1.4266 |   |         |  |    |       |  |  |      
|To sell GBP against the foreign currency    
|                                             | CHF |                       | Nominal Amount |                                          | 13 |        |   |        |  |        |  |        |  |         |  | 13 |       |  |  | (0.34 | )
|                                             |     | Average contract rate |                | 2.17                                     |    |       |    |       |   |       |   |       |   |         |  |    |       |  |  |      
|To purchase GBP against the foreign currency
|                                             | CHF |                       | Nominal Amount |                                          | 8  |        |   |        |  |        |  |        |  |         |  | 8  |       |  |  | 0.09  |  
|                                             |     | Average contract rate |                | 2.20                                     |    |       |    |       |   |       |   |       |   |         |  |    |       |  |  |      



Derivative Commodity Contracts






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##### Table of Contents








|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

Evaluation
of disclosure controls and procedures.








| |                                                      
| | -----------------------------------------------------
| | Changes in internal control over financial reporting.






PART II. OTHER INFORMATION







|        |                   
|------- | ------------------
|Item 1. | Legal Proceedings.








|        |                                                                 
|------- | ----------------------------------------------------------------
|Item 2. | Unregistered Sales of Equity Securities and Use of
    Proceeds.



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|        |                                 
|------- | --------------------------------
|Item 3. | Defaults Upon Senior Securities.








|        |                                                         
|------- | --------------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security
    Holders.








|        |                   
|------- | ------------------
|Item 5. | Other Information.








|        |          
|------- | ---------
|Item 6. | Exhibits.

List of Exhibits


|            |  |                                                                                                                                                              
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                  
|            |  |                                                                                                                                                              
|31.1        |  | Certification of the Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                   
|31.2        |  | Certification of the Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                   
|32.1        |  | Certification of the Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002
|32.2        |  | Certification of the Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002

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##### Table of Contents



SIGNATURES






| |             
| | ------------
| | NOVELIS INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ Geoffrey P. Batt

| |                              
| | -----------------------------
| |                              
| | Geoffrey P. Batt             
| | Chief Financial Officer      
| | (Principal Financial Officer)



| |     |                     
| | --- | --------------------
| | By: | /s/ Jo-Ann Longworth

| |                               
| | ------------------------------
| |                               
| | Jo-Ann Longworth              
| | Controller                    
| | (Principal Accounting Officer)



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EXHIBIT INDEX


|        |      |  |             |                                                                                                                                                              
|------- | ---- |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |            
|Number  |      |  | Description
|        |      |  |            
|        | 31.1 |  |             | Certification of the Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                   
|       
|        | 31.2 |  |             | Certification of the Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                   
|       
|        | 32.1 |  |             | Certification of the Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002
|       
|        | 32.2 |  |             | Certification of the Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002

41