May 15, 2013 - 10-K: Annual report pursuant to Section 13 and 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

Form 10-K



ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2013



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number 001-32312

Novelis Inc.

(Exact name of registrant as specified in its charter)



Canada		98-0442987
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

3560 Lenox Road, Suite 2000, Atlanta, GA		30326
(Address of principal executive offices)		(Zip Code)

(404) 760-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933.

Yes ¨ No ý

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”). Yes ¨ No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

As of May 14, 2013, the registrant had 1,000 common shares outstanding. All of the Registrant’s outstanding shares were held indirectly by Hindalco Industries Ltd., the Registrant’s parent company.

DOCUMENTS INCORPORATED BY REFERENCE

None

Novelis Inc.

TABLE OF CONTENTS




SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND MARKET DATA
PART I
Item 1. Business	4
Item 1A. Risk Factors	15
Item 1B. Unresolved Staff Comments	23
Item 2. Properties	23
Item 3. Legal Proceedings	26
Item 4. Mine Safety Disclosures	27
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	27
Item 6. Selected Financial Data	27
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	59
Item 8. Financial Statements and Supplementary Data	61
Item 9. Changes In and Disagreements With Accountants On Accounting and Financial Disclosure	129
Item 9A. Controls and Procedures	129
Item 9B. Other Information	129
PART III
Item 10. Directors, Executive Officers and Corporate Governance	130
Item 11. Executive Compensation	135
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	151
Item 13. Certain Relationships and Related Transactions and Director Independence	151
Item 14. Principal Accountant Fees and Services	152
PART IV
Item 15. Exhibits and Financial Statement Schedules	153

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND MARKET DATA

This document contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about the industry in which we operate, and beliefs and assumptions made by our management. Such statements include, in particular, statements about our plans, strategies and prospects under the headings “Item 1. Business,” “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate” and variations of such words and similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements in this Annual Report on Form 10-K include, but are not limited to, our expectations with respect to the impact of metal price movements on our financial performance; the effectiveness of our hedging programs and controls; and our future borrowing availability. These statements are based on beliefs and assumptions of Novelis’ management, which in turn are based on currently available information. These statements are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. We do not intend, and we disclaim any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.

This document also contains information concerning our markets and products generally, which is forward-looking in nature and is based on a variety of assumptions regarding the ways in which these markets and product categories will develop. These assumptions have been derived from information currently available to us and to the third party industry analysts quoted herein. This information includes, but is not limited to, product shipments and share of production. Actual market results may differ from those predicted. We do not know what impact any of these differences may have on our business, our results of operations, financial condition, and cash flow. Factors that could cause actual results or outcomes to differ from the results expressed or implied by forward-looking statements include, among other things:


•	relationships with, and financial and operating conditions of, our customers, suppliers and other stakeholders;


•	changes in the prices and availability of aluminum (or premiums associated with aluminum prices) or other materials and raw materials we use;


•	fluctuations in the supply of, and prices for, energy in the areas in which we maintain production facilities;


•	our ability to access financing to fund current operations and for future capital requirements;


•	the level of our indebtedness and our ability to generate cash;


•	lowering of our ratings by a credit rating agency;


•	changes in the relative values of various currencies and the effectiveness of our currency hedging activities;


•	union disputes and other employee relations issues;


•	factors affecting our operations, such as litigation (including product liability claims), environmental remediation and clean-up costs, breakdown of equipment and other events;


•	changes in general economic conditions, including deterioration in the global economy;


•	changes in the fair value of derivative instruments or the failure of counterparties to our derivative instruments to honor their agreements;


•	the capacity and effectiveness of our metal hedging activities;


•	availability of production capacity;


•	impairment of our goodwill, other intangible assets, and long-lived assets;


•	loss of key management and other personnel, or an inability to attract such management and other personnel;


•	risks relating to future acquisitions or divestitures;


•	our inability to successfully implement our growth initiatives;


•	changes in interest rates that have the effect of increasing the amounts we pay under our senior secured credit facilities, other financing agreements and our defined benefit pension plans;


•	risks relating to certain joint ventures and subsidiaries that we do not entirely control;


•	the effect of new derivatives legislation on our ability to hedge risks associated with our business;


•	competition from other aluminum rolled products producers as well as from substitute materials such as steel, glass, plastic and composite materials;


•	cyclical demand and pricing within the principal markets for our products as well as seasonality in certain of our customers’ industries;


•	economic, regulatory and political factors within the countries in which we operate or sell our products, including changes in duties or tariffs; and


•	changes in government regulations, particularly those affecting taxes and tax rates, health care reform, climate change, environmental, health or safety compliance.

The above list of factors is not exhaustive. These and other factors are discussed in more detail under “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

In this Annual Report on Form 10-K, unless otherwise specified, the terms “we,” “our,” “us,” “Company,” “Novelis” and “Novelis Group” refer to Novelis Inc., a company incorporated in Canada under the Canadian Business Corporations Act (CBCA) and its subsidiaries. References herein to “Hindalco” refer to Hindalco Industries Limited. In October 2007, Rio Tinto Group purchased all of the outstanding shares of Alcan Inc. References herein to “Alcan” refer to Rio Tinto Alcan Inc.

Exchange Rate Data

We prepare our financial statements in United States (U.S.) dollars. As of December 31, 2008, the Federal Reserve Bank of New York ceased the practice of maintaining and publishing historical exchange rates. From December 31, 2008 onward, we have used the CitiFX Benchmark, published by Citibank, for exchange rate information published daily as of 16:00 Greenwich Mean Time (GMT) (11:00 A.M. Eastern Standard Time).

The following table sets forth exchange rate information expressed in terms of Canadian dollars per U.S. dollar at the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. As noted above, the years ended March 31, 2013, 2012, 2011 and 2010 include exchange data from Citibank as of 16:00 GMT. The rates set forth below may differ from the actual rates used in our accounting processes and in the preparation of our consolidated financial statements.



Period	At Period End	Average Rate(A)	High	Low
Year Ended March 31, 2009	1.2579	1.1247	1.2694	0.9938
Year Ended March 31, 2010	1.0144	1.0848	1.1881	1.0144
Year Ended March 31, 2011	0.9709	1.0206	1.0663	0.9709
Year Ended March 31, 2012	0.9973	0.9922	1.0433	0.9510
Year Ended March 31, 2013	1.0160	1.0030	1.0334	0.9601


(A)	For periods after December 31, 2008, this represents the average of the 16:00 GMT buying rates on the last day of each month during the period. For periods before December 31, 2008, we used the average of the 17:00 GMT buying rates(12:00 P.M. Eastern Standard Time) on the last day of each month during the period.

All dollar figures herein are in U.S. dollars unless otherwise indicated.

Commonly Referenced Data

As used in this Annual Report, “aluminum rolled products shipments” or “flat rolled product shipments” refers to aluminum rolled products shipments to third parties. References to “total shipments” or “shipments” include aluminum rolled products as well as certain other non-rolled product shipments, primarily ingot, scrap and primary remelt. The term “aluminum rolled products” is synonymous with the terms “flat rolled products” and “FRP” commonly used by manufacturers and third party analysts in our industry. All tonnages are stated in metric tonnes. One metric tonne is equivalent to 2,204.6 pounds. One kilotonne (kt) is 1,000 metric tonnes.

Our business is conducted under a conversion model that allows us to pass through increases or decreases in the price of aluminum to our customers. Nearly all of our products have a price structure with two components: (i) a pass through aluminum price based on the LME plus local market premiums and (ii) a “conversion premium.” The use of the term “conversion premium” in this Annual Report, refers to the conversion costs plus a margin we charge our customers to produce the rolled product which reflects, among other factors, the competitive market conditions for that product, exclusive of the pass through aluminum price.

PART I

Item 1. Business

Overview

We are the world’s leading aluminum rolled products producer based on shipment volume in fiscal 2013, with flat rolled product shipments during that period of approximately 2,786 kt. We are also the global leader in the recycling of aluminum. We are the only company of our size and scope focused solely on aluminum rolled products markets and capable of local supply of technologically sophisticated aluminum products in all four major industrialized continents, North America, South America, Europe and Asia. We had “Net sales” of approximately $10 billion for the year ended March 31, 2013.

Our History

Organization and Description of Business

Novelis Inc. was formed in Canada on September 21, 2004. On May 15, 2007, the Company was acquired by Hindalco through its indirect wholly-owned subsidiary. All of our common shares are indirectly held by Hindalco. We produce aluminum sheet and light gauge products primarily for use in the beverage can, automotive, specialties (including transportation, consumer electronics, and architecture) and foil markets. We also have recycling operations in many of our plants to recycle aluminum, such as used-beverage cans (UBCs). As of March 31, 2013, we had manufacturing operations in nine countries on four continents: North America, South America, Asia and Europe, through 25 operating facilities, including recycling operations in ten of these plants. In addition to aluminum rolled products plants, our South American businesses include primary aluminum smelting and power generation facilities.

Amalgamation of AV Aluminum Inc. and Novelis Inc.

Effective September 29, 2010, in connection with an internal restructuring transaction and pursuant to articles of amalgamation under the Canadian Business Corporations Act, we were amalgamated (the Amalgamation) with our direct parent AV Aluminum Inc., a Canadian corporation (AV Aluminum), to form an amalgamated corporation named Novelis Inc., also a Canadian corporation.

As a result of the Amalgamation, we and AV Aluminum continued our corporate existence, the amalgamated Novelis Inc. remains liable for all of our and AV Aluminum’s obligations, and we continue to own all of our respective property. Since AV Aluminum was a holding company whose sole asset was the shares of the pre-amalgamated Novelis, our business, management, board of directors and corporate governance procedures following the Amalgamation are identical to those of Novelis immediately prior to the Amalgamation. Novelis Inc., like AV Aluminum, remains an indirect, wholly-owned subsidiary of Hindalco. We have retrospectively recast all periods presented to reflect the amalgamated companies.

The Amalgamation had no impact on our consolidated balance sheets, consolidated statements of operations or our consolidated statements of cash flows for any periods presented.

Our Industry

The aluminum rolled products market represents the global supply of and demand for aluminum sheet, plate and foil produced either from sheet ingot or continuously cast roll-stock in rolling mills operated by independent aluminum rolled products producers and integrated aluminum companies alike.

Aluminum rolled products are semi-finished aluminum products that constitute the raw material for the manufacture of finished goods ranging from automotive structures and body panels to food and beverage cans. There are two major types of manufacturing processes for aluminum rolled products differing mainly in the process used to achieve the initial stage of processing:


•	hot mills — that require sheet ingot, a rectangular slab of aluminum, as starter material; and


•	continuous casting mills — that can convert molten metal directly into semi-finished sheet.

Both processes require subsequent rolling, which we call cold rolling, and finishing steps such as annealing, coating, leveling or slitting to achieve the desired thicknesses, width and metal properties. Most customers receive shipments in the form of aluminum coil, a large roll of metal, which can be fed into their fabrication processes.

There are two sources of input material: (1) primary aluminum, such as molten metal, re-melt ingot and sheet ingot; and (2) recycled aluminum, such as recyclable material from fabrication processes, which we refer to as recycled process material, used beverage cans (UBCs), other post-consumer aluminum and post-industrial scrap.

Primary aluminum and sheet ingot can generally be purchased at prices set on the London Metal Exchange (LME), plus a premium that varies by geographic region of delivery, alloying material, form (ingot or molten metal) and purity.

Recycled aluminum is also an important and growing source of input material. Aluminum is infinitely recyclable and recycling it requires approximately 5% of the energy needed to produce primary aluminum. As a result, in regions where aluminum is widely used, manufacturers and customers are active in setting up collection processes in which UBCs and other recyclable aluminum are collected for re-melting and reuse. Manufacturers may also enter into agreements with customers who return recycled process material and pay to have it re-melted and rolled into the same product again, known as tolling.

Recycled aluminum is purchased at a discount as compared to the price of prime aluminum. The spread between the prices for recycled aluminum and the price of prime aluminum varies by the type of scrap, quality of the scrap, geographic region, and other market factors.

Industry End-use Markets

Aluminum rolled products companies produce and sell a wide range of aluminum rolled products, which can be grouped into five end-use markets based upon similarities in end-use: (1) packaging; (2) transportation; (3) consumer electronics (4) architectural and (5) industrial and other. Within each end-use market, aluminum rolled products are manufactured with a variety of alloy mixtures; a range of tempers (hardness), gauges (thickness) and widths; and various coatings and finishes. Large customers typically have customized needs resulting in the development of close relationships with their supplying mills and close technical development relationships.

Aluminum, because of its light weight, recyclability and formability, has a wide variety of uses in packaging and other end-use markets. The recyclability of aluminum enables it to be used, collected, melted and returned to the original product form an unlimited number of times, unlike paper or polyethylene terephthalate (PET) plastic, which deteriorate with every iteration of recycling.

Packaging. Aluminum has a wide variety of uses in packaging, including beverage cans, food cans, screw caps used in the beverage industry and household foil. Beverage cans are the second largest aluminum rolled products application (behind foil), accounting for approximately 23% of total worldwide shipments in the calendar year ended December 31, 2012, according to market data from Commodity Research Unit International Limited (CRU), an independent business analysis and consultancy group. In addition to their recyclability, aluminum beverage cans offer advantages in fabricating efficiency and product shelf life. Fabricators are able to produce and fill beverage cans at very high speeds, and non-porous aluminum cans provide longer shelf life than PET plastic containers. Additionally, the use of aluminum to package beverages such as craft beer is increasing, as aluminum does not allow in sunlight and therefore extends the shelf life of the product. Aluminum cans are light, stackable and use space efficiently, making them convenient and cost efficient to ship.

Beverage can sheet is sold in coil form for the production of can bodies, ends and tabs. The material can be ordered as rolled, degreased, pre-lubricated, pre-treated and/or lacquered. Typically, can makers define their own specifications for material to be delivered in terms of alloy, gauge, width and surface finish.

Household foil is another packaging application and it includes home and institutional aluminum foil wrap sold as a branded or generic product. Known in the industry as packaging foil, it is manufactured in thicknesses ranging from 11 microns to 23 microns. Container foil is used to produce semi-rigid containers such as pie plates and take-out food trays and is usually ordered in a range of thicknesses from 60 microns to 200 microns.

Transportation. Aluminum rolled products are used in vehicle structures as well as automotive body panel applications, including hoods, deck lids, fenders and lift gates. These uses typically result from co-operative efforts between aluminum rolled products manufacturers and their customers that yield tailor-made solutions for specific requirements in alloy selection, fabrication procedure, surface quality and joining. There has been recent growth in certain geographic markets in automotive body panel applications due to the lighter weight, better fuel economy and improved emissions performance associated with these applications and we expect increased growth in this end-use market as automotive companies continue to explore opportunities for ways to reduce the weight (lightweighting) of automobiles as a result of environmental regulations around emissions and fuel economy.

Heat exchangers, such as radiators and air conditioners, are an important application for aluminum rolled products in the truck and automobile categories of the transportation end-use market. Original equipment manufacturers also use aluminum sheet with specially treated surfaces and other specific properties for interior and exterior applications. Newly developed alloys are being used in transportation tanks and rigid containers that allow for safer and more economical transportation of hazardous and corrosive materials.

Aluminum is also used in aerospace applications, as well as in the construction of ships’ hulls, superstructures and passenger rail cars because of its strength, light weight, formability and corrosion resistance.

Consumer Electronics. Aluminum’s lightweight characteristics, high formability, ability to conduct electricity and dissipate heat and to offer corrosion resistance makes it useful in a wide variety of electronic applications. Uses of aluminum rolled products in electronics include flat screen televisions, personal computers, laptops, mobile devices, and digital music players.

Architectural. Construction is the largest application within this end-use market. Aluminum rolled products developed for the construction industry are often decorative and non-flammable, offer insulating properties, are durable and corrosion resistant, and have a high strength-to-weight ratio. Aluminum siding, gutters, and downspouts comprise a significant amount of construction volume. Other applications include doors, windows, awnings, canopies, facades, roofing and ceilings.

Industrial and Other. Industrial applications include heat exchangers, process and electrical machinery, lighting fixtures, and insulation. Other uses of aluminum rolled products in consumer durables include microwaves, coffee makers, air conditioners and cooking utensils.

Market Structure

The aluminum rolled products industry is characterized by economies of scale, significant capital investments required to achieve and maintain technological capabilities and demanding customer qualification standards. The service and efficiency demands of large customers have encouraged consolidation among suppliers of aluminum rolled products.

While our customers tend to be increasingly global, many aluminum rolled products tend to be produced and sold on a regional basis. The regional nature of the markets is influenced in part by the fact that not all mills are equipped to produce all types of aluminum rolled products. In addition, individual aluminum rolling mills generally supply a limited range of products for end-use markets, and seek to maximize profits by producing high volumes of the highest margin mix per mill hour given available capacity and equipment capabilities.

Competition

The aluminum rolled products market is highly competitive. We face competition from a number of companies in all of the geographic regions and end-use markets in which we operate. Our primary competitors are as follows:



North America		Asia
Alcoa, Inc. (Alcoa)		Alcoa
Aleris International, Inc. (Aleris)		Furukawa-Sky Aluminum Corp.
Tri-Arrows Aluminum Inc. (Tri-Arrows)		Kobe Steel Ltd.
Norandal Aluminum		Nanshan Aluminum
Constellium		Sumitomo Light Metal Company, Ltd.
Wise Metal Group LLC		Chinalco Group

Europe		South America
Alcoa		Alcoa
Aleris		Companhia Brasileira de Alumínio
Hydro A.S.A.
Constellium (formerly Alcan)

The factors influencing competition vary by region and end-use market, but generally we compete on the basis of our value proposition, including price, product quality, the ability to meet customers’ specifications, range of products offered, lead times, technical support and customer service. In some end-use markets, competition is also affected by fabricators’ requirements that suppliers complete a qualification process to supply their plants. This process can be rigorous and may take many months to complete. As a result, obtaining business from these customers can be a lengthy and expensive process. However, the ability to obtain and maintain these qualifications can represent a competitive advantage.

In addition to competition from others within the aluminum rolled products industry, we, as well as the other aluminum rolled products manufacturers, face competition from non-aluminum material producers, as fabricators and end-users have, in the past, demonstrated a willingness to substitute other materials for aluminum. In the packaging (primarily beverage and food cans) end-use market, aluminum rolled products’ primary competitors are glass, PET plastic, and in some regions,

steel. In the transportation end-use market, aluminum rolled products compete mainly with steel and composites. Aluminum competes with wood, plastic, cement and steel in building products applications. Factors affecting competition with substitute materials include price, ease of manufacture, consumer preference and performance characteristics.

Key Factors Affecting Supply and Demand

The following factors have historically affected the supply of aluminum rolled products:

Production Capacity and Alternative Technology. In the aluminum rolled products industry, the addition of production capacity requires large capital investments and significant plant construction or expansion, and typically requires long lead-time equipment orders. Advances in technological capabilities allow aluminum rolled products producers to better align product portfolio and supply with industry demand. In addition, there are lower cost ways to enter the industry such as continuous casting, which offers the ability to increase capacity in smaller increments than is possible with hot mill additions. This enables production capacity to better adjust to small year-over-year increases in demand, however the continuous casting process results in the production of a more limited range of products.

Trade. Some trade flows do occur between regions despite shipping costs, import duties and the need for localized customer support. Higher value-added, specialty products such as plate and some foils are more likely to be traded internationally, especially if demand in certain markets exceeds local supply. With respect to less technically demanding applications, emerging markets with low cost inputs may export commodity aluminum rolled products to larger, more mature markets, as we have seen with China. Accordingly, regional changes in supply, such as plant expansions, have some impact on the worldwide supply of aluminum rolled products.

The following factors have historically affected the demand for aluminum rolled products:

Economic Growth. We believe that economic growth is currently the single largest driver of aluminum rolled products demand. In mature markets, growth in demand has typically correlated closely with growth in industrial production.

In many emerging markets such as Brazil, growth in demand typically exceeds industrial production growth largely because of expanding infrastructures, capital investments and rising incomes that often accompany economic growth in these markets.

Substitution Trends. Manufacturers’ willingness to substitute other materials for aluminum in their products and competition from substitution materials suppliers also affect demand. We see strong substitution trends towards aluminum and away from other packaging materials in the beverage can market globally, except for North America which is already a mature market. We also see this significant and important trend in other product categories such as the automotive industry. As automotive manufacturers look for ways to meet fuel efficiency regulations and reduce carbon emissions, they need to lightweight their vehicles. As a result of aluminum’s durability, strength and weight, automobile manufacturers are substituting aluminum for heavier alternatives such as steel and iron. Consequently, demand for flat rolled aluminum products has increased.

Seasonality. During our third fiscal quarter, we typically experience seasonal slowdowns resulting in lower shipment volumes. This is a result of declines in overall production output due primarily to holidays and cooler weather in North America and Europe, our two largest operating regions. We also experience downtime at our mills and customers’ mills due to scheduled plant maintenance and are impacted to a lesser extent by the seasonal downturn in construction.

Sustainability. Growing awareness of environmentalism and demand for recyclable products has increased the demand for aluminum rolled products. Unlike other commonly recycled materials such as paper or PET plastic, aluminum can be recycled an unlimited number of times without affecting the quality of the product. Additionally, the recycling process uses 95% less energy than is required to produce primary aluminum from mining and smelting, with an equivalent reduction in greenhouse gas emissions.

Our Business Strategy

Our primary objective is to deliver customer and shareholder value by being the most technologically advanced, innovative and profitable aluminum rolled products company in the world. We intend to achieve this objective through the following areas of focus:

Operate as “One Novelis” — a Fully-integrated Global Company

We intend to continue to build on our focused business model to operate as “One Novelis.” The term “One Novelis” refers to our goal of becoming a truly integrated, global company driven by a singular focus. An important part of the One Novelis concept is our highly-focused, pass-through business model that utilizes our manufacturing excellence, our risk management expertise, our value-added conversion premium-based pricing, and, more importantly, our growing ability to leverage our global assets according to a single, corporate-wide vision. We believe this integrated approach is the foundation for the effective execution of our strategy across the Novelis system.

We strive to service our customers in a consistent, global manner through seamless alignment of goals, methods and metrics across the organization to improve communication and by implementation of strategic initiatives. These initiatives have resulted in solid operating margins and performance, and we will continue to take actions to ensure we are aligned to best leverage our operations globally.

Focus on Our Core Premium Products to Drive Enhanced Profitability

We will focus on capturing the global growth we see in our premium product markets of beverage can, automotive and specialties markets. We plan to continue improving our product mix and margins by leveraging our world-class assets and technical capabilities. Our management approach helps us to systematically identify opportunities to improve the profitability of our operations through product portfolio analysis. This ensures that we focus on growing in attractive market segments, while also taking actions to exit unattractive ones. During fiscal year 2013 we sold three foil plants in Europe in order to focus on our premium products. We will continue to focus on our core products while investing in emerging growth markets.

Pursue Organic Growth Through Capital Investments in Emerging Growth Markets

We are investing heavily in increasing our capacity, particularly in high growth emerging markets. Our international presence positions us well to capture additional growth opportunities in targeted aluminum rolled products. In particular, we believe Asia and South America have high growth potential in areas such as beverage cans and specialties. Additionally, we believe there is strong automotive growth potential worldwide. While our existing manufacturing and operating presence positions us well to capture this growth, we are making incremental capital expenditures in these areas. The following table summarizes our significant global expansion projects, the estimated capacity and estimated or actual commission date.



Location	Description of Expansion	Estimated Capacity (at full capacity)	Actual or estimated Commission Date
North America
Oswego, NY	Automotive sheet finishing plant	200 kt	Mid CY2013
Europe
Nachterstedt, Germany	Recycling expansion	250 kt	Mid CY2014
Asia
Ulsan & Yeongju, South Korea	Rolling expansion	350 kt	Mid CY2013
Yeongju, South Korea	Recycling expansion	265 kt	October 2012
Changzhou, China	Automotive sheet finishing plant	120 kt	End CY2014
South America
Pinda, Brazil	Rolling expansion	220 kt	December 2012
Pinda, Brazil	Can coating line	100 kt	End CY2013
Pinda, Brazil	Recycling expansion	190 kt	End CY2013

Promote Sustainability with Aggressive Targets and Stakeholder Engagement

In August 2012, we released our second annual Sustainability Report, which detailed the progress Novelis has made against the sustainability targets announced in 2011. The report was rated a level A by the Global Reporting Initiative™ (GRI) and also included our progress to implement the United Nations Global Compact ten principles. Overall, we have made positive improvements in regards to our company's 10 sustainability targets, with reductions in our greenhouse gas emissions, energy use, waste to landfill, and water usage. We have also continued to make strong progress on the amount of recycled content in our products, and over this past fiscal year the average increased from 39% to 43%. We continue to collaborate with our customers and other stakeholders to raise awareness of the significant life cycle benefits of using aluminum in products, such as lightweighting and recycling. From the increased use of aluminum in automobiles to a high-recycled content can, sustainability is driving our product research and innovation. We are also engaging with the communities where we operate

through charitable investments and volunteering to try to help address local issues, particularly in the areas of math and science education, safety and recycling. Around the world, we are working on increasing recycling rates through our support of recycling programs and education, as well as seeking ways to expand our recycling business into other scrap markets in addition to can. Also in fiscal year 2013 we launched the first phase of our Supplier Code of Conduct to promote sustainability throughout our supply chain. From the significant number of plant expansion projects to the growth and advancement of products our aluminum is used in, we are undergoing a business transformation that truly aligns our business model with our sustainability strategy.

Maintaining a competitive cost structure

We are focused on managing our costs by pursuing a standardized focus on our core operations globally. To achieve this objective, we continue working to standardize our manufacturing processes and the associated upstream and downstream production elements where possible while still allowing the flexibility to respond to local market demands. In addition, we have implemented numerous restructuring initiatives, including the shutdown or sale of facilities, staff rationalization and other activities, all of which have led to significant cost savings that we will benefit from for years to come. We plan to focus on maintaining a competitive cost structure, even as we invest in expansions, and intend to continuously evaluate and implement initiatives to improve operational efficiencies across our plants globally.

Our Operating Segments

Due in part to the regional nature of supply and demand of aluminum rolled products and in order to best serve our customers, we manage our activities on the basis of geographical areas and are organized under four operating segments: North America; Europe; Asia and South America. Each segment manufactures aluminum sheet and light gauge products.

The table below shows “Net sales” and total shipments by segment. For additional financial information related to our operating segments, see Note 20 — Segment, Geographical Area, Major Customer and Major Supplier Information to our accompanying audited consolidated financial statements.



Net sales in millions	Year Ended March 31,
Shipments in kilotonnes	2013		2012		2011
Consolidated
Net sales	$	9,812	$	11,063	$	10,577
Total shipments	2,930		2,982		3,097
North America(A)
Net sales	$	3,405	$	3,967	$	3,760
Total shipments	1,012		1,079		1,123
Europe(A)
Net sales	$	3,181	$	3,840	$	3,589
Total shipments	919		965		980
Asia(A)
Net sales	$	1,762	$	1,830	$	1,866
Total shipments	562		536		581
South America(A)
Net sales	$	1,391	$	1,278	$	1,214
Total shipments	471		417		420


(A)	"Net sales" and "Total shipments" by segment include intersegment sales and the results of our affiliates on a proportionately consolidated basis, which is consistent with the way we manage our business segments.

The following is a description of our operating segments as of March 31, 2013:

North America

Headquartered in Atlanta, Georgia, North America operates 10 aluminum rolled products facilities, including two fully dedicated recycling facilities and two facilities with recycling operations, and manufactures a broad range of aluminum sheet and light gauge products. End-use markets for this segment include beverage and food cans, containers and packaging, automotive and other transportation applications, architectural and other industrial applications. The majority of North

America’s volumes are directed towards the beverage and food can sheet market. The beverage can end-use market is technically demanding to supply and pricing is competitive.

We believe we have a competitive advantage in this market due to our low-cost and technologically advanced manufacturing facilities and technical support capability. Recycling is important in the manufacturing process and we have five facilities in North America that re-melt post-consumer aluminum and recycled process material. Most of the recycled material is from UBCs and the material is cast into sheet ingot for North America’s two can sheet production plants (at our Logan plant in Russellville, Kentucky and our Oswego, New York plant).

In response to the lightweighting trend in the automotive industry, we are expanding our Oswego, NY facility to increase our North American finishing capacity for the transportation end-use market. In August 2012, we closed our Saguenay Works plant in Quebec, Canada. The closure was driven by the need to right-size production capacity in North America, along with the increasing logistic costs and structural challenges facing this location. During fiscal year 2013 we withdrew from the UBC recycling joint venture with Alcoa Inc., known as Evermore Recycling LLC (Evermore Recycling), and established a new organization for the procurement of UBC's in North America, which allows us to more seamlessly operate a global recycling network and strategy.

Europe

Headquartered in Zurich, Switzerland, Europe operates nine operating plants, including one fully dedicated recycling facility and two facilities with recycling operations, and manufactures a broad range of sheet and foil products. End-use markets for this segment include beverage and food can, automotive, architectural and industrial products, foil and technical products and lithographic sheet. Beverage and food can represent the largest end-use market in terms of shipment volume by Europe. Europe has six aluminum rolled products facilities, two foil and packaging facilities, one fully dedicated recycling facility, distribution centers in Italy, and sales offices in several European countries. Operations include our 50% joint venture interest in Aluminium Norf GmbH (Alunorf), which is the world’s largest aluminum rolling and remelt facility. Alunorf supplies high quality can stock, foilstock and feeder stock for finishing at our other European operations.

We are building a fully integrated recycling facility at our Nachterstedt, Germany plant. Additionally, we commissioned a new continuous casting line in Pieve, Italy in December 2012, which includes a specially designed recycling furnace that can remove paint and plastic coatings from scrap aluminum.

In March 2009, we announced the closure of our aluminum sheet mill in Rogerstone, South Wales, U.K. and ceased operations in April 2009. We sold the land for the Rogerstone facility during fiscal year 2012 and we sold other assets to Hindalco during fiscal year 2011. The Company ceased operations associated with the Bridgnorth, U.K. foil rolling and laminating operations at the end of April 2011 and subsequently sold the land and buildings at the Bridgnorth site. Additionally, we sold certain pieces of equipment from the Bridgnorth plant to Hindalco during fiscal 2012 and 2011. In March 2012, we made a decision to restructure our lithographic sheet operations in our Göttingen, Germany plant, which included the shutdown of one of our lithographic sheet lines.

In June 2012, we completed the sale of three European aluminum foil and packaging plants to Eurofoil, a unit of American Industrial Acquisition Corporation (AIAC). The transaction included foil rolling operations in Rugles, France; Dudelange, Luxembourg; and Berlin, Germany. The transaction represents another step in aligning our global growth strategy on the premium markets of beverage cans, automobiles and specialty products.

Asia

Headquartered in Seoul, South Korea, Asia operates three manufacturing facilities, including two facilities with recycling operations, and manufactures a broad range of sheet and light gauge products. End-use markets include beverage and food cans, electronics, architectural, industrial and other products, automotive and foil. The beverage can market represents the largest end-use market in terms of volume. Recycling is an important part of our operations with recycling facilities at both the Ulsan, South Korea and Yeongju, South Korea plants. We believe that Asia is well-positioned to benefit from further economic development in China as well as other parts of Asia.

In response to the growing demand in the broader Asia region, we are expanding our aluminum rolling and recycling operations in South Korea, which includes both hot rolling and cold rolling operations. The move is designed to rapidly bring to market high-quality aluminum rolling capacity aligned with the projected needs of a growing customer base. The expansion includes the construction of a state-of-the-art recycling center primarily for used aluminum beverage cans and a casting operation. Additionally we are constructing an aluminum automotive sheet finishing plant in China. In June 2013 we plan to commission our first recycling center in Vietnam, which will handle the procurement, cleaning and baling of UBCs.

South America

Headquartered in Sao Paulo, Brazil, South America operates two rolling plants, including one facility with recycling operations, along with one primary aluminum smelter and hydroelectric power plants, all of which are located in Brazil. South America manufactures aluminum rolled products, including can stock, industrial sheet and light gauge. The main markets are beverage and food can, specialty, industrial, foil and other packaging and transportation end-use applications. Beverage can represents the largest end-use application in terms of shipment volume. Our operations in South America include a smelter used by our Brazilian aluminum rolled products operations, with any excess production being sold on the market in the form of aluminum billets, and hydroelectric power plants which we use to generate a portion of our own power requirements. We also have mining rights located in Brazil which we are currently not exploring and alumina refinery assets that we are not operating, that are classified as held for sale as of March 31, 2013.

In response to the growing demand for our products in South America, we expanded our aluminum rolling operations to increase capacity at our Pindamonhangaba (Pinda) facility. Additionally, we are installing a new coating line for beverage can end stock and expanding our recycling capacity in our Pinda facility.

In light of the alumina and aluminum pricing environment, we closed our Aratu facility in Candeias, Brazil in December 2010. During fiscal year 2012, we ceased production of converter foil (9 microns thickness or less) for flexible packaging and stopped production of one rolling mill at our Santo André plant in Brazil, due to overcapacity in the foil market and increased competition from low-cost countries. In March 2013, we shut down one of our two primary aluminum smelter lines in Brazil. The closure is another step in aligning our global growth strategy on the premium markets of beverage cans, automobiles and specialty products. Additionally, during the year ended March 31, 2013, we decided to sell our bauxite mining rights and certain alumina assets and related liabilities in Brazil to our parent company, Hindalco. We expect the transaction to close in the first quarter of fiscal year 2014.

Financial Information About Geographic Areas

Certain financial information about geographic areas is contained in Note 20— Segment, Geographical Area, Major Customer and Major Supplier Information to our accompanying audited consolidated financial statements.

Raw Materials and Suppliers

The raw materials that we use in manufacturing include primary aluminum, recycled aluminum, sheet ingot, alloying elements and grain refiners. Our smelters also use alumina, caustic soda and calcined petroleum coke and resin. These raw materials are generally available from several sources and are not generally subject to supply constraints under normal market conditions. We also consume considerable amounts of energy in the operation of our facilities.

Aluminum

We obtain aluminum from a number of sources, including the following:

Primary Aluminum Sourcing. We purchased or tolled approximately 1,900 kt of primary aluminum in fiscal 2013 in the form of sheet ingot, standard ingot and molten metal, approximately 40% of which we purchased from Alcan.

Primary Aluminum Production. We produced approximately 24 kt of our own primary aluminum requirements in fiscal 2013 through our smelter and related facilities in Brazil.

Aluminum Products Recycling. We operate facilities in several plants to recycle post-consumer aluminum, such as UBCs collected through recycling programs. In addition, we have agreements with several of our large customers where we have a closed-looped system whereby we take recycled processed material from their fabricating activity and re-melt, cast and roll it to re-supply these customers with aluminum sheet. Other sources of recycled material include lithographic plates, and products with longer lifespans, like cars and buildings, which are starting to become high volume sources of recycled material. We purchased or tolled approximately 1,200 kt of recycled material inputs in fiscal 2013 and are making recycling investments in Europe, Korea and South America to increase the amount of recycled material we use as raw materials.

The materials that we recycle are remelted, cast and then used in our operations. The net effect of all recycling activities is that approximately 43% of our total aluminum rolled product shipments in fiscal 2013 were made with recycled material inputs.

Energy

We use several sources of energy in the manufacture and delivery of our aluminum rolled products. In fiscal 2013, natural gas and electricity represented approximately 94% of our energy consumption by cost. We also use fuel oil and transport fuel. The majority of energy usage occurs at our casting centers, at our smelter in South America and during the hot rolling of aluminum. Our cold rolling facilities require relatively less energy. We purchase our natural gas on the open market, which subjects us to market pricing fluctuations. We have in the past and may continue to seek to stabilize our future exposure to natural gas prices through the purchase of derivative instruments. Natural gas prices in Europe, Asia and South America have historically been more stable than in the United States.

A portion of our electricity requirements are purchased pursuant to long-term contracts in the local regions in which we operate. A number of our facilities are located in regions with regulated prices, which affords relatively stable costs. We have fixed pricing on some of our energy supply arrangements. When the market price of energy is above the fixed price within the contract, we are subject to the credit risk of the counterparty in terms of fulfilling the contract to its term, including those favorable contracts which were existent at the date of Hindalco's purchase of Novelis and for which an intangible asset was recorded in purchase accounting.

In South America, we own and operate hydroelectric facilities that met approximately 73% of our total electricity requirements for our smelter operations in fiscal 2013. Subsequent to the closure of one of our smelter lines in March 2013, we estimate the hydroelectric facilities will meet 100% of our total electricity requirements for our remaining smelter operations. We have a mixture of self-generated electricity, long term and shorter term contracts. We may continue to face challenges renewing our South American energy supply contracts at rates which enable profitable operation of our full smelter capacity.

Our Customers

Although we provide products to a wide variety of customers in each of the markets that we serve, we have experienced consolidation trends among our customers in many of our key end-use markets. In fiscal 2013, approximately 51% of our total “Net sales” were to our ten largest customers, most of whom we have been supplying for more than 20 years. To address consolidation trends, we focus significant efforts on developing and maintaining close working relationships with our customers and end-users. Our major customers include:



Beverage and Food Cans		Automotive
Anheuser-Busch, Incorporated		Audi Worldwide Company
Affiliates of Ball Corporation		BMW AG
Can-Pack S.A.		Daimler AG
Various bottlers of the Coca-Cola System		Ford Motor Company
Crown Cork & Seal Company		General Motors LLC
Rexam plc		Hyundai Motor Company
		Jaguar Land Rover
		Volvo Group

Construction, Industrial and Other		Electronics
AGFA Graphics N.V.		LG International Corporation
Amcor Limited		Samsung Electronics Co., Ltd
Lotte Aluminum Co. Ltd.
Pactiv Corporation
Ryerson Inc.
Tetra Pak International SA

Our single largest end-use market is beverage can sheet. We sell can sheet directly to beverage makers and bottlers as well as to can fabricators that sell the cans they produce to bottlers. In certain cases, we operate under umbrella agreements with beverage makers and bottlers under which they direct their can fabricators to source their requirements for beverage can body, end and tab stock from us. One of our beverage can sheet customers is Coca-Cola Bottlers’ Sales and Services (CCBSS). We have a multi-year agreement with CCBSS to supply beverage can sheet, including can end, body and tab sheet to the various producers of beverage cans for Coca-Cola in North America, where we are Coca-Cola’s primary supplier.

The table below shows our “Net sales” to Rexam Plc (Rexam), Anheuser-Busch, Incorporated (Anheuser-Busch), and Affiliates of Ball Corporation, our three largest customers, as a percentage of total “Net sales.”



	Year Ended March 31,
	2013		2012		2011
Rexam	15	%	14	%	15	%
Anheuser-Busch	11	%	10	%	13	%
Affiliates of Ball Corporation	10	%	10	%	8	%

Distribution and Backlog

We have two principal distribution channels for the end-use markets in which we operate: direct sales to our customers and sales to distributors.



	Year Ended March 31,
	2013		2012		2011
Direct sales as a percentage of total “Net sales”	93	%	93	%	92	%
Distributor sales as a percentage of total “Net sales”	7	%	7	%	8	%

Direct Sales

We supply various end-use markets all over the world through a direct sales force that operates from individual plants or sales offices, as well as from regional sales offices in 23 countries. The direct sales channel typically involves very large, sophisticated fabricators and original equipment manufacturers. Longstanding relationships are maintained with leading companies in industries that use aluminum rolled products. Supply contracts for large global customers generally range from one to five years in length and historically there has been a high degree of renewal business with these customers. Given the customized nature of products and in some cases, large order sizes, switching costs are significant, thus adding to the overall consistency of the customer base.

We also use third party agents or traders in some regions to complement our own sales force. These agents provide service to our customers in countries where we do not have local expertise. We tend to use third party agents in Asia more frequently than in other regions.

Distributors

We also sell our products through aluminum distributors, particularly in North America and Europe. Customers of distributors are widely dispersed, and sales through this channel are highly fragmented. Distributors sell mostly commodity or less specialized products into many end-use markets in small quantities, including the construction and industrial markets. We collaborate with our distributors to develop new end-use markets and improve the supply chain and order efficiencies.

Backlog

We believe that order backlog is not a material aspect of our business.

Research and Development

The table below summarizes our “Research and development expenses” in our plants and modern research facilities, which includes mini-scale production lines equipped with hot mills, can lines and continuous casters (in millions).



	Year Ended March 31,
	2013		2012		2011
Research and development expenses	$	46	$	44	$	40

We conduct research and development activities at our plants in order to satisfy current and future customer requirements, improve our products and reduce our conversion costs. Our customers work closely with our research and development professionals to improve their production processes and market options. We have approximately 180 employees dedicated to research and development, located in many of our plants and research centers. We opened a global research and development center in Kennesaw, GA that became operational in mid calendar year 2012. The center offers state of the art

research and development capabilities to help Novelis meet the global long-term demand for aluminum used for the automotive, beverage can and specialty markets. To reach the Company’s sustainability commitments, a key focus is to help increase the amount of recycled metal content across all product lines while meeting performance requirements.

Our Employees

The table below summarizes our approximate number of employees by region.



Employees	North America	Europe	Asia	South America	Total
March 31, 2013	3,120	4,320	1,770	1,760	10,970
March 31, 2012	3,100	5,210	1,600	1,710	11,620

Approximately 63% of our employees are represented by labor unions and their employment conditions are governed by collective bargaining agreements. As of March 31. 2013, approximately 2,000 of our employees were covered under collective bargaining agreements that expire within one year. We consider our employee relations to be satisfactory. Collective bargaining agreements are negotiated on a site, regional or national level, and are of different durations.

Intellectual Property

In connection with our spin-off, Alcan has assigned or licensed to Novelis a number of important patents, trademarks and other intellectual property rights owned or previously owned by Alcan and required for our business. Ownership of certain intellectual property that is used by both us and Alcan is owned by one of us, and licensed to the other. Certain specific intellectual property rights, which have been determined to be exclusively useful to us or which were required to be transferred to us for regulatory reasons, have been assigned to us with no license back to Alcan.

We actively review intellectual property arising from our operations and our research and development activities and, when appropriate, we apply for patents in the appropriate jurisdictions, including the United States and Canada. We currently hold patents and patent applications on approximately 175 different items of intellectual property. While these patents and patent applications are important to our business on an aggregate basis, no single patent or patent application is deemed to be material to our business.

We have applied for or received registrations for the “Novelis” word trademark and the Novelis logo trademark in approximately 50 countries where we have significant sales or operations. Novelis uses the Aditya Birla Rising Sun logo under license from Aditya Birla Management Corporation Private Limited.

We have also registered the word “Novelis” and several derivations thereof as domain names in numerous top level domains around the world to protect our presence on the world wide web.

Environment, Health and Safety

We own and operate numerous manufacturing and other facilities in various countries around the world. Our operations are subject to environmental laws and regulations from various jurisdictions, which govern, among other things, air emissions, wastewater discharges, the handling, storage and disposal of hazardous substances and wastes, the remediation of contaminated sites, post-mining reclamation and restoration of natural resources, and employee health and safety. Future environmental regulations may be expected to impose stricter compliance requirements on the industries in which we operate. Additional equipment or process changes at some of our facilities may be needed to meet future requirements. The cost of meeting these requirements may be significant. Failure to comply with such laws and regulations could subject us to administrative, civil or criminal penalties, obligations to pay damages or other costs, and injunctions and other orders, including orders to cease operations.

We are involved in proceedings under the U.S. Comprehensive Environmental Response, Compensation, and Liability Act, also known as CERCLA or Superfund, or analogous state provisions regarding our liability arising from the usage, storage, treatment or disposal of hazardous substances and wastes at a number of sites in the United States, as well as similar proceedings under the laws and regulations of the other jurisdictions in which we have operations, including Brazil and certain countries in the European Union. Many of these jurisdictions have laws that impose joint and several liability, without regard to fault or the legality of the original conduct, for the costs of environmental remediation, natural resource damages, third party claims, and other expenses. In addition, we are, from time to time, subject to environmental reviews and investigations by relevant governmental authorities.

We have established procedures for regularly evaluating environmental loss contingencies, including those arising from environmental reviews and investigations and any other environmental remediation or compliance matters. We believe we have a reasonable basis for evaluating these environmental loss contingencies, and we also believe we have made reasonable estimates for the costs that are reasonably possible for these environmental loss contingencies. Accordingly, we have established liabilities based on our reasonable estimates for the currently anticipated costs associated with these environmental matters. Management has determined that the currently anticipated costs associated with these environmental matters will not, individually or in the aggregate, materially impair our operations or materially adversely affect our financial condition.

Our expenditures for environmental protection (including estimated and probable environmental remediation costs as well as general environmental protection costs at our facilities) and the betterment of working conditions in our facilities were $26 million in fiscal 2013, of which $13 million was expensed and $13 million capitalized. We expect these expenditures will be approximately $25 million in fiscal 2014, of which we estimate $14 million will be expensed and $11 million capitalized. Generally, expenses for environmental protection are recorded in “Cost of goods sold (exclusive of depreciation and amortization).” However, significant remediation costs that are not associated with on-going operations are recorded in “Other (income) expense, net” or "Restructuring charges, net."

Available Information

We are subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended (Exchange Act) and, as a result, we file periodic reports and other information with the SEC. We make these filings available on our website free of charge, the URL of which is http://www.novelis.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains a website (http://www.sec.gov) that contains our annual, quarterly and current reports and other information we file electronically with the SEC. You can read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Information on our website does not constitute part of this Annual Report on Form 10-K.

Item 1A. Risk Factors

In addition to the factors discussed elsewhere in this report, you should consider the following factors, which could materially affect our business, financial condition or results of operations in the future. The following factors, among others, could cause our actual results to differ from those projected in any forward looking statements we make.

Certain of our customers are significant to our revenues, and we could be adversely affected by changes in the business or financial condition of these significant customers or by the loss of their business.

Our ten largest customers accounted for approximately 51 %, 51% and 50% of our total “Net sales” for the year ended March 31, 2013, 2012 and 2011, respectively, with Rexam Plc, a leading global beverage can maker, and its affiliates representing approximately 15%, 14% and 15% of our total “Net sales” in the respective periods. A significant downturn in the business or financial condition of our significant customers could materially adversely affect our results of operations and cash flows. In addition, if our existing relationships with significant customers materially deteriorate or are terminated in the future, and we are not successful in replacing business lost from such customers, our results of operations and cash flows could be adversely affected. Some of the longer term contracts under which we supply our customers, including under umbrella agreements such as those described under “Business - Our Customers,” are subject to renewal, renegotiation or re-pricing at periodic intervals or upon changes in competitive supply conditions. Our failure to successfully renew, renegotiate or re-price such agreements could result in a reduction or loss in customer purchase volume or revenue, and if we are not successful in replacing business lost from such customers, our results of operations and cash flows could be adversely affected. The markets in which we operate are competitive and customers may seek to consolidate supplier relationships or change suppliers to obtain cost savings and other benefits.

Our results and short term liquidity can be negatively impacted by timing differences between the prices we pay under purchase contracts and metal prices we charge our customers.

Most of our purchase and sales contracts are based on the LME price for high grade aluminum, and there are typically timing differences between the pricing periods for purchases and sales where purchase prices tend to be fixed and paid earlier than sales prices. This creates a price exposure that we call “metal price lag.” We use derivative instruments to synthetically preserve our conversion margins and manage our metal price lag exposure. We sell short-term LME aluminum forward contracts to reduce our exposure to fluctuating metal prices associated with the period of time between the pricing of our purchases of inventory and the pricing of the sale of that inventory to our customers. We also purchase forward contracts simultaneous with our sales contracts with customers that contain fixed metal prices. These LME aluminum forward contracts

directly hedge the economic risk of future metal price fluctuations to synthetically ensure we sell metal for the same price at which we purchase metal. We settle these derivative contracts in advance of collecting from our customers, which could positively or negatively impact our short-term liquidity position.

Our operations consume energy and our profitability and cash flows may decline if energy costs were to rise, or if our energy supplies were interrupted.

We consume substantial amounts of energy in our rolling, casting and smelter operations. The factors that affect our energy costs and supply reliability tend to be specific to each of our facilities. A number of factors could materially adversely affect our energy position including:


•	increases in costs of natural gas;


•	significant increases in costs of supplied electricity or fuel oil related to transportation;


•	interruptions in energy supply due to equipment failure or other causes;


•	the inability to extend energy supply contracts upon expiration on economical terms; and


•	the inability to pass through energy costs in certain sales contracts.

In addition, global climate change may increase our costs for energy sources, supplies or raw materials. See We may be affected by global climate change or by legal, regulatory or market responses to such change. If energy costs were to rise, or if energy supplies or supply arrangements were disrupted, our profitability and cash flows could decline.

A deterioration of our financial position or a downgrade of our ratings by a credit rating agency could increase our borrowing costs and our business relationships could be adversely affected.

A deterioration of our financial position or a downgrade of our ratings for any reason could increase our borrowing costs and have an adverse effect on our business relationships with customers, suppliers and hedging counterparties. From time to time, we enter into various forms of hedging activities against currency, interest rate, energy or metal price fluctuations. Financial strength and credit ratings are important to the availability and pricing of these hedging and trading activities. As a result, any downgrade of our credit ratings or changes to our level of indebtedness may make it more difficult or costly for us to engage in these activities in the future.

Adverse changes in currency exchange rates could negatively affect our financial results or cash flows and the competitiveness of our aluminum rolled products relative to other materials.

Our businesses and operations are exposed to the effects of changes in the exchange rates of the U.S. dollar, the euro, the British pound, the Brazilian real, the Canadian dollar, the Korean won and other currencies. We have implemented a hedging policy that attempts to manage currency exchange rate risks to an acceptable level based on management's judgment of the appropriate trade-off between risk, opportunity and cost; however, this hedging policy may not successfully or completely eliminate the effects of currency exchange rate fluctuations which could have a material adverse effect on our financial results and cash flows.

We prepare our consolidated financial statements in U.S. dollars, but a portion of our earnings and expenditures are denominated in other currencies, primarily the euro, the Korean won and the Brazilian real. Changes in exchange rates will result in increases or decreases in our operating results and may also affect the book value of our assets located outside the U.S.

Most of our facilities are staffed by a unionized workforce, and union disputes and other employee relations issues could materially adversely affect our financial results.

Approximately 63% of our employees are represented by labor unions under a large number of collective bargaining agreements with varying durations and expiration dates. We may not be able to satisfactorily renegotiate our collective bargaining agreements when they expire. In addition, existing collective bargaining agreements may not prevent a strike or work stoppage at our facilities in the future.

We could be adversely affected by disruptions of our operations.

Breakdown of equipment or other events, including catastrophic events such as war or natural disasters, leading to production interruptions at our plants could have a material adverse effect on our financial results and cash flows. Further, because many of our customers are, to varying degrees, dependent on planned deliveries from our plants, those customers that have to reschedule their own production due to our missed deliveries could pursue claims against us and reduce their future business with us. We may incur costs to correct any of these problems, in addition to facing claims from customers. Further, our reputation among actual and potential customers may be harmed, resulting in a loss of business. While we maintain insurance policies covering, among other things, physical damage, business interruptions and product liability, these policies would not cover all of our losses.

Our operations have been and will continue to be exposed to various business and other risks, changes in conditions and events beyond our control in countries where we have operations or sell products.

We are, and will continue to be, subject to financial, political, economic and business risks in connection with our global operations. We have made investments and carry on production activities in various emerging markets, including China, Brazil, Korea and Malaysia, and we market our products in these countries, as well as certain other countries in Asia, the Middle East and emerging markets in South America. While we anticipate higher growth or attractive production opportunities from these emerging markets, they also present a higher degree of risk than more developed markets. In addition to the business risks inherent in developing and servicing new markets, economic conditions may be more volatile, legal and regulatory systems less developed and predictable, and the possibility of various types of adverse governmental action more pronounced. In addition, inflation, fluctuations in currency and interest rates, competitive factors, civil unrest and labor problems could affect our revenues, expenses and results of operations. Our operations could also be adversely affected by acts of war, terrorism or the threat of any of these events as well as government actions such as controls on imports, exports and prices, tariffs, new forms of taxation, or changes in fiscal regimes and increased government regulation in the countries in which we operate or service customers. Unexpected or uncontrollable events or circumstances in any of these markets could have a material adverse effect on our financial results and cash flows.

In addition, although relations between the Republic of Korea (which we refer to as Korea) and the Democratic People's Republic of Korea (which we refer to as North Korea) have been tense throughout Korea's modern history, recently tensions have increased dramatically. There can be no assurance that the level of tension on the Korean peninsula will not escalate further in the future. Attacks may occur on Korea, including on areas in which we operate, which could have a material adverse affect on our operations. If military hostilities continue or increase between North Korea and Korea or the United States, the region could become further destabilized and our operations could be halted, and any such hostilities could have a material adverse effect on our operations.

Economic conditions could negatively affect our financial condition and results of operations.

Our financial condition and results of operations depend significantly on worldwide economic conditions. Uncertainty about current or future global economic conditions poses a risk as our customers may postpone purchases in response to tighter credit and negative financial news, which could adversely impact demand for our products. In addition, there can be no assurance that actions we may take in response to economic conditions will be sufficient to counter any continuation or reoccurrence of any downturn or disruption. A significant global economic downturn or disruptions in the financial markets could have a material adverse effect on our financial condition and results of operations.

Our results of operations, cash flows and liquidity could be adversely affected if we were unable to purchase derivative instruments or if counterparties to our derivative instruments fail to honor their agreements.

We use various derivative instruments to manage the risks arising from fluctuations in aluminum prices, exchange rates, energy prices and interest rates. If for any reason we were unable to purchase derivative instruments to manage these risks, our results of operations, cash flows and liquidity could be adversely affected. In addition, we may be exposed to losses in the future if the counterparties to our derivative instruments fail to honor their agreements. In particular, deterioration in the financial condition of our counterparties and any resulting failure to pay amounts owed to us or to perform obligations or services owed to us could have a negative effect on our business and financial condition. Further, if major financial institutions continue to consolidate and are forced to operate under more restrictive capital constraints and regulations, there could be less liquidity in the derivative markets, which could have a negative effect on our ability to hedge and transact with creditworthy counterparties.

New derivatives legislation could have an adverse impact on our ability to hedge risks associated with our business and on the cost of our hedging activities.

We use over-the-counter (OTC) derivatives products to hedge our metal commodity risks and our interest rate and currency risks. Recent legislation has been adopted to increase the regulatory oversight of the OTC derivatives markets and impose restrictions on certain derivative transactions, which could affect the use of derivatives in hedging transactions. We expect further regulations to be adopted pursuant to this legislation that will identify further swaps which are subject to the clearing and exchange trading requirements. If future regulations subject us to additional capital or margin requirements or other restrictions on our trading and commodity positions, they could have an adverse effect on our ability to hedge risks associated with our business and on the cost of our hedging activities.

Our goodwill, other intangible assets and other long-lived assets could become impaired, which could require us to take non-cash charges against earnings.

We assess, at least annually and potentially more frequently, whether the value of our goodwill has been impaired. We assess the recoverability of finite-lived other intangible assets and other long-lived assets whenever events or changes in circumstances indicate that we may not be able to recover the asset's carrying amount. Any impairment of goodwill, other intangible assets, or long-lived assets as a result of such analysis would result in a non-cash charge against earnings, which charge could materially adversely affect our reported results of operations.

A significant and sustained decline in our future cash flows, a significant adverse change in the economic environment or slower growth rates could result in the need to perform additional impairment analysis in future periods. If we were to conclude that a write-down of goodwill or other intangible assets is necessary, then we would record such additional charges, which could materially adversely affect our results of operations.

As part of our ongoing evaluation of our operations, we may undertake additional restructuring efforts in the future which could in some instances result in significant severance-related costs, environmental remediation expenses and impairment and other restructuring charges.

We recorded “Restructuring charges, net” of $45 million and $60 million for the year ended March 31, 2013 and 2012, respectively, and $(3) million and $111 million “(Gain)/ loss on assets held for sale” for the year ended March 31, 2013 and 2012, respectively. During these periods, we announced, among others, the following restructuring actions and programs:


•	the shutdown of a potline at our Ouro Preto smelter in Minas Gerais, Brazil;


•	the restructuring of our lithographic sheet European business, which resulted in closing one line in our Göttingen, Germany plant in March 2012;


•	the shutdown of our Saguenay Works plant in Quebec, Canada;


•	the sale of three of our European foil operations in Rugles, France; Dudelange, Luxembourg; and Berlin, Germany; and


•	the cessation of foil rolling activities and part of the packaging business at our facility located in Bridgnorth, U.K. in fiscal 2012.

We may take additional restructuring actions in the future. Any additional restructuring efforts could result in significant severance-related costs, environmental remediation expenses, impairment charges, restructuring charges and related costs and expenses, which could adversely affect our profitability and cash flows.

We may not be able to successfully develop and implement new technology initiatives.

We have invested in, and are involved with, a number of technology and process initiatives. Several technical aspects of these initiatives are still unproven, and the eventual commercial outcomes cannot be assessed with any certainty. Even if we are successful with these initiatives, we may not be able to deploy them in a timely fashion. Accordingly, the costs and benefits from our investments in new technologies and the consequent effects on our financial results may vary from present expectations.

Issues arising during the implementation of our enterprise resource planning system could affect our operating results and ability to manage our business effectively.

During fiscal year 2013, we implemented a new enterprise resource planning (ERP) system in two of our North America plants and in our corporate headquarters, which resulted in temporary business interruptions that adversely impacted our North America operating results. As we implement the new ERP system in a number of locations, we may continue to experience temporary business interruptions that could adversely impact our operating results and our ability to report accurate quarterly results in a timely manner and comply with existing covenants in all our debt agreements. There is no assurance that the new ERP will operate as designed, which could result in an adverse impact on our operating results, cash flows and financial condition.

Security breaches and other disruptions to our information technology networks and systems could interfere with our operations, and could compromise the confidentiality of our proprietary information.

We rely upon information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of business and manufacturing processes and activities. Additionally, we collect and store sensitive data, including intellectual property, proprietary business information, as well as personally identifiable information of our employees, in data centers and on information technology networks. The secure operation

of these information technology networks, and the processing and maintenance of this information is important to our business operations and strategy. Despite security measures and business continuity plans, our information technology networks and systems may be vulnerable to damage, disruptions or shutdowns due to attacks by hackers or breaches due to errors or malfeasance by employees, contractors and others who have access to our networks and systems, or other disruptions during the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures or natural disasters or other catastrophic events. The occurrence of any of these events could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disrupt operations and reduce the competitive advantage we hope to derive from our investment in new or proprietary business initiatives.

Loss of our key management and other personnel, or an inability to attract and retain such management and other personnel, could adversely impact our business.

We employ all of our senior executive officers and other highly-skilled key employees on an at-will basis, and their employment can be terminated by us or them at any time, for any reason and without notice, subject, in certain cases, to severance payment rights. Competition for qualified employees among companies that rely heavily on engineering and technology is intense, and if our highly skilled key employees leave us, we may be unable to promptly attract and retain qualified replacement personnel, which could result in our inability to improve manufacturing operations, conduct research activities successfully, develop marketable products, execute expansion projects, and compete effectively for our share of the growth in key markets.

Future acquisitions or divestitures may adversely affect our financial results.

As part of our strategy for growth, we may pursue acquisitions, divestitures or strategic alliances, which may not be completed or, if completed, may not be ultimately beneficial to us. There are numerous risks commonly encountered in strategic transactions, including the risk that we may not be able to complete a transaction that has been announced, effectively integrate businesses acquired or generate the cost savings and synergies anticipated. Failure to do so could have a material adverse effect on our financial results.

Capital investments in organic growth initiatives may not produce the returns we anticipate.

A significant element of our strategy is to invest in opportunities to increase the production capacity of our operating facilities through modifications of and investments in existing facilities and equipment and to evaluate other investments in organic growth in our target markets. These projects involve numerous risks and uncertainties, including the risk that actual capital investment requirements exceed projected levels, that our forecasted demand levels prove to be inaccurate, that we do not realize the production increases or other benefits anticipated, that we experience scheduling delays in connection with the commencement or completion of the project, that the project disrupts existing plant operations causing us to temporarily lose a portion of our available production capacity, or that key management devotes significant time and energy focused on one or more initiatives that divert attention from other business activities.

We could be required to make unexpected contributions to our defined benefit pension plans as a result of adverse changes in interest rates and the capital markets.

Most of our pension obligations relate to funded defined benefit pension plans for our employees in the U.S., the U.K. and Canada, unfunded pension benefits in Germany and lump sum indemnities payable to our employees in France, Italy, Korea and Malaysia upon retirement or termination. Our pension plan assets consist primarily of funds invested in listed stocks and bonds. Our estimates of liabilities and expenses for pensions and other postretirement benefits incorporate a number of assumptions, including expected long-term rates of return on plan assets and interest rates used to discount future benefits. Our results of operations, liquidity or shareholder's equity in a particular period could be adversely affected by capital market returns that are less than their assumed long-term rate of return or a decline of the rate used to discount future benefits.

If the assets of our pension plans do not achieve assumed investment returns for any period, such deficiency could result in one or more charges against our earnings for that period. In addition, changing economic conditions, poor pension investment returns or other factors may require us to make unexpected cash contributions to the pension plans in the future, preventing the use of such cash for other purposes.

We face risks relating to certain joint ventures and subsidiaries that we do not entirely control.

Some of our activities are, and will in the future be, conducted through entities that we do not entirely control or wholly-own. These entities include our Norf, Germany; and Logan, Kentucky joint ventures, as well as our majority-owned Malaysian subsidiary. Our Malaysian subsidiary is a public company whose shares are listed for trading on the Bursa Malaysia. Under the governing documents, agreements or securities laws applicable to or stock exchange listing rules relative to certain of these joint ventures and subsidiaries, our ability to fully control certain operational matters may be limited. Further, in some cases we do not have rights to prevent a joint venture partner from selling its joint venture interests to a third party.

Hindalco and its interests as equity holder may conflict with the interests of the holders of our senior notes in the future.

Novelis is an indirectly wholly-owned subsidiary of Hindalco. As a result, Hindalco may exercise control over our decisions to enter into any corporate transaction or capital restructuring and has the ability to approve or prevent any transaction that requires the approval of our shareholder. Hindalco may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in its judgment, could enhance its equity investment, even though such transactions might involve risks to holders of our Senior Notes.

Additionally, Hindalco operates in the aluminum industry and may from time to time acquire and hold interests in businesses that compete, directly or indirectly, with us. Hindalco has no obligation to provide us with financing and is able to sell their equity ownership in us at any time.

If we are unable to obtain sufficient quantities of primary aluminum, recycled aluminum, sheet ingot and other raw materials used in the production of our products, our ability to produce and deliver products or to manufacture products using the desired mix of metal inputs could be adversely affected.

The supply risks relating to our metal inputs vary by input type. Our sheet ingot requirements have historically been supplied, in part, by Rio Tinto Alcan pursuant to agreements with us. For the year ended March 31, 2013, we purchased the majority of our third party sheet ingot requirements from Rio Tinto Alcan's primary metal group. If Rio Tinto Alcan or any other significant supplier of sheet ingot is unable to deliver sufficient quantities of this material on a timely basis, our production may be disrupted and our net sales, profitability and cash flows could be materially adversely affected. Although aluminum is traded on the world markets, developing alternative suppliers of sheet ingot could be time consuming and expensive.

Certain of our manufacturing operations rely on UBCs and other types of aluminum scrap for a portion of our base metal inputs. Competition for UBCs is significant, and while we believe we will be able to obtain sufficient quantities to meet our production needs, if we are unable to do so, we could be required to purchase more expensive metal inputs which could have an adverse effect on our profitability and cash flows.

Remelt ingot, which is traded on the LME, may become subject to supply risk created by supply and demand anomalies associated with speculative financing transactions. In a period of rapidly rising demand, restrictions on access to metal that is stored in LME warehouses or restrained in financing transactions could create shortages in the spot market which could interfere with supplies to our facilities and limit production.

We face significant price and other forms of competition from other aluminum rolled products producers, which could hurt our results of operations and cash flows.

Generally, the markets in which we operate are highly competitive. We compete primarily on the basis of our value proposition, including price, product quality, ability to meet customers' specifications, range of products offered, lead times, technical support and customer service. Some of our competitors may benefit from greater capital resources, have more efficient technologies, have lower raw material and energy costs and may be able to sustain longer periods of price competition. In particular, we face increased competition from producers in China, which have significantly lower production costs and pricing. This lower pricing could erode the market prices of our products in the Chinese market and elsewhere.

In addition, our competitive position within the global aluminum rolled products industry may be affected by, among other things, consolidation among our competitors, exchange rate fluctuations that may make our products less competitive in relation to the products of companies based in other countries (despite the U.S. dollar-based input cost and the marginal costs of shipping) and economies of scale in purchasing, production and sales, which accrue to the benefit of some of our competitors. For example, the price gap between the Shanghai Futures Exchange (SHFE) and the LME may make products manufactured in China with SHFE prices for aluminum more competitive compared to our products manufactured in Asia with LME prices for aluminum.

Increased competition could cause a reduction in our shipment volumes and profitability or increase our expenditures, either of which could have a material adverse effect on our financial results and cash flows.

The end-use markets for certain of our products are highly competitive and customers are willing to accept substitutes for our products.

The end-use markets for certain aluminum rolled products are highly competitive. Aluminum competes with other materials, such as steel, plastics, composite materials and glass, among others, for various applications, including in beverage and food cans, electronics and automotive end-use markets. In the past, customers have demonstrated a willingness to substitute other materials for aluminum. For example, changes in consumer preferences in beverage containers have increased the use of PET plastic containers and glass bottles in recent years. These trends may continue. The willingness of customers to accept substitutes for aluminum products could have a material adverse effect on our financial results and cash flows.

We are subject to a broad range of environmental, health and safety laws and regulations, and we may be exposed to substantial environmental, health and safety costs and liabilities.

We are subject to a broad range of environmental, health and safety laws and regulations in the jurisdictions in which we operate. These laws and regulations impose stringent environmental, health and safety protection standards and permitting requirements regarding, among other things, air emissions, wastewater storage, treatment and discharges, the use and handling of hazardous or toxic materials, waste disposal practices, the remediation of environmental contamination, post-mining reclamation and working conditions for our employees. Some environmental laws, such as Superfund and comparable laws in U.S. states and other jurisdictions worldwide, impose joint and several liability for the cost of environmental remediation, natural resource damages, third party claims, and other expenses, without regard to the fault or the legality of the original conduct.

The costs of complying with these laws and regulations, including participation in assessments and remediation of contaminated sites and installation of pollution control facilities, have been, and in the future could be, significant. In addition, these laws and regulations may also result in substantial environmental liabilities associated with divested assets, third party locations and past activities. In certain instances, these costs and liabilities, as well as related action to be taken by us, could be accelerated or increased if we were to close, divest of or change the principal use of certain facilities with respect to which we may have environmental liabilities or remediation obligations. Currently, we are involved in a number of compliance efforts, remediation activities and legal proceedings concerning environmental matters, including certain activities and proceedings arising under Superfund and comparable laws in U.S. states and other jurisdictions worldwide in which we have operations.

We have established liabilities for environmental remediation activities where appropriate. However, the cost of addressing environmental matters (including the timing of any charges related thereto) cannot be predicted with certainty, and these liabilities may not ultimately be adequate, especially in light of changing interpretations of laws and regulations by regulators and courts, the discovery of previously unknown environmental conditions, the risk of governmental orders to carry out additional compliance on certain sites not initially included in remediation in progress, our potential liability to remediate sites for which provisions have not been previously established and the adoption of more stringent environmental laws including, for example, the possibility of increased regulation of the use of bisphenol-A, a chemical component commonly used in the coating of aluminum cans. Such future developments could result in increased environmental costs and liabilities, which could have a material adverse effect on our financial condition, results or cash flows. Furthermore, the failure to comply with our obligations under the environmental laws and regulations could subject us to administrative, civil or criminal penalties, obligations to pay damages or other costs, and injunctions or other orders, including orders to cease operations. In addition, the presence of environmental contamination at our properties could adversely affect our ability to sell property, receive full value for a property or use a property as collateral for a loan.

Some of our current and potential operations are located or could be located in or near communities that may regard such operations as having a detrimental effect on their social and economic circumstances. Community objections could have a material adverse impact upon the profitability or, in extreme cases, the viability of an operation.

We use a variety of hazardous materials and chemicals in our rolling processes, as well as in our smelting operations in Brazil and in connection with maintenance work on our manufacturing facilities. Because of the nature of these substances or related residues, we may be liable for certain costs, including, among others, costs for health-related claims or removal or re-treatment of such substances. Certain of our current and former facilities incorporate asbestos-containing materials, a hazardous substance that has been the subject of health-related claims for occupational exposure. In addition, although we have developed environmental, health and safety programs for our employees, including measures to reduce employee exposure to hazardous substances, and conduct regular assessments at our facilities, we are currently, and in the future may be, involved in claims and litigation filed on behalf of persons alleging injury predominantly as a result of occupational exposure to substances or other hazards at our current or former facilities. It is not possible to predict the ultimate outcome of these claims and lawsuits due to the unpredictable nature of personal injury litigation. If these claims and lawsuits, individually or in the aggregate, were finally resolved against us, our results of operations and cash flows could be adversely affected.

We may be exposed to significant legal proceedings or investigations.

From time to time, we are involved in, or the subject of, disputes, proceedings and investigations with respect to a variety of matters, including environmental, health and safety, product liability, employee, tax, personal injury, contractual and other matters as well as other disputes and proceedings that arise in the ordinary course of business. Certain of these matters are discussed in the preceding risk factor. Any claims against us or any investigations involving us, whether meritorious or not, could be costly to defend or comply with and could divert management's attention as well as operational resources. Any such dispute, litigation or investigation, whether currently pending or threatened or in the future, may have a material adverse effect on our financial results and cash flows.

Product liability claims against us could result in significant costs or negatively impact our reputation and could adversely affect our business results and financial condition.

We are sometimes exposed to warranty and product liability claims. There can be no assurance that we will not experience material product liability losses arising from individual suits or class actions alleging product liability defects or related claims in the future and that these will not have a negative impact on us. We generally maintain insurance against many product liability risks, but there can be no assurance that this coverage will be adequate for any liabilities ultimately incurred. In addition, there is no assurance that insurance will continue to be available on terms acceptable to us. A successful claim that exceeds our available insurance coverage could have a material adverse effect on our financial results and cash flows.

We may be affected by global climate change or by legal, regulatory, or market responses to such change.

There is a growing concern over climate change, which has led to new and proposed legislative and regulatory initiatives, such as cap-and-trade systems and additional limits on emissions of greenhouse gases. New laws enacted could directly and indirectly affect our customers and suppliers (through an increase in the cost of production or their ability to produce satisfactory products) or our business (through an impact on our inventory availability, cost of sales, operations or demand for the products we sell), which could result in an adverse effect on our financial condition, results of operations and cash flows. Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us, our customers or our suppliers. Also, we rely on natural gas, electricity, fuel oil and transport fuel to operate our facilities. Any increased costs of these energy sources because of new laws could be passed along to us and our customers and suppliers, which could also have a negative impact on our profitability.

Income tax payments may ultimately differ from amounts currently recorded by the Company. Future tax law changes may materially increase the Company's prospective income tax expense.

We are subject to income taxation in many jurisdictions. Judgment is required in determining our worldwide income tax provision and accordingly there are many transactions and computations for which our final income tax determination is uncertain. We are routinely audited by income tax authorities in many tax jurisdictions. Although we believe the recorded tax estimates are reasonable, the ultimate outcome from any audit (or related litigation) could be materially different from amounts reflected in our income tax provisions and accruals. Future settlements of income tax audits may have a material effect on earnings between the period of initial recognition of tax estimates in the financial statements and the point of ultimate tax audit settlement. Additionally, it is possible that future income tax legislation in any jurisdiction to which we are subject may be enacted that could have a material impact on our worldwide income tax provision beginning with the period that such legislation becomes effective.

Our substantial indebtedness could adversely affect our business.

We have a relatively high degree of leverage. As of March 31, 2013, we had $4.9 billion of indebtedness outstanding. Our substantial indebtedness and interest expense could have important consequences to our company and holders of notes, including:


•	limiting our ability to borrow additional amounts for working capital, capital expenditures or other general corporate purposes;


•	increasing our vulnerability to general adverse economic and industry conditions, including volatility in LME aluminum prices;


•	limiting our ability to capitalize on business opportunities and to react to competitive pressures and adverse changes in government regulation; and


•	limiting our ability or increasing the costs to refinance indebtedness.

The covenants in our senior secured credit facilities and the indentures governing our Senior Notes impose operating and financial restrictions on us.

Our senior secured credit facilities and the indentures governing our senior notes impose certain operating and financial restrictions on us. These restrictions limit our ability and the ability of our restricted subsidiaries, among other things, to:


•	incur additional debt and provide additional guarantees;


•	pay dividends and make other restricted payments, including certain investments;


•	create or permit certain liens;


•	make certain asset sales;


•	use the proceeds from the sales of assets and subsidiary stock;


•	create or permit restrictions on the ability of our restricted subsidiaries to pay dividends or make other distributions to us;


•	engage in certain transactions with affiliates;


•	enter into sale and leaseback transactions; and


•	consolidate, merge or transfer all or substantially all of our assets or the assets of our restricted subsidiaries.

See Note 11 - Debt for additional discussion.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our executive offices are located in Atlanta, Georgia. In June of 2012, we opened a global research and development center in Kennesaw, Georgia. This center offers state-of-the-art research and development capabilities to help us better partner and innovate with our customers to ensure we are able to capture the global long-term FRP demand for the automotive, beverage can and specialties markets.

The total number of operating facilities within our operating segments as of March 31, 2013 is shown in the table below, including operating facilities that we jointly own and operate with third parties.



	Total Operating Facilities	Facilities with recycling operations
North America	10	4
Europe	9	3
Asia	3	2
South America	3	1
Total	25	10

The following tables provide information, by operating segment, about the plant locations, processes and major end-use markets/applications for the aluminum rolled products, recycling and primary metal facilities we operated during all or part of the year ended March 31, 2013.

North America



Location	Plant Processes	Major End-Use Markets
Berea, Kentucky	Recycling, sheet ingot casting	Recycled ingot
Burnaby, British Columbia	Finishing	Foil containers
Fairmont, West Virginia	Cold rolling, finishing	Foil, HVAC material
Greensboro, Georgia	Recycling, sheet ingot casting	Recycled ingot
Kingston, Ontario	Cold rolling, finishing	Automotive, construction/industrial
Russellville, Kentucky (A)	Hot rolling, cold rolling, finishing, recycling	Can stock
Oswego, New York	Sheet ingot casting, hot rolling, cold rolling, recycling, brazing, finishing	Can stock, automotive, construction/industrial, semi-finished coil
Saguenay, Quebec (B)	Continuous casting	Semi-finished coil
Terre Haute, Indiana	Cold rolling, finishing	Foil
Toronto, Ontario	Finishing	Foil, foil containers
Warren, Ohio	Coating	Can end stock


(A)	We own 40% of the outstanding common shares of Logan Aluminum Inc. (Logan), but we have made equipment investments such that our portion of Logan’s total machine hours has provided us approximately 55% of Logan’s total production.


(B)	In August 2012, we closed our Saguenay Works plant in Quebec, Canada. It is included in the table of operating facilities as it was operated by Novelis during part of the year ended March 31, 2013.

Our Oswego, New York facility operates modern equipment used for recycling beverage cans and other scrap metals, ingot casting, hot rolling, cold rolling and finishing. Oswego produces can stock as well as building and industrial products. Oswego also provides feedstock to our Kingston, Ontario facility, which produces heat-treated automotive sheet and products for construction and industrial applications, and to our Terre Haute, Indiana and Fairmont, West Virginia facilities, which produce foil and light-gauge sheet. Our expansion project at our Oswego, NY facility is scheduled to be operational in mid calendar year 2013.

Our Russellville, Kentucky facility (referred to herein as Logan) is a processing joint venture between us and Tri-Arrows Aluminum Inc. (Tri-Arrows). Logan, which was built in 1985, is the newest and largest rolling mill in North America. Logan is a dedicated manufacturer of aluminum sheet products for the can stock market and operates modern and high-speed equipment for ingot casting, hot-rolling, cold-rolling and finishing. A portion of the can end stock is coated at North America’s Warren, Ohio facility, in addition to Logan’s on-site coating assets. Together with Tri-Arrows, we operate Logan as a production cooperative, with each party supplying its own primary metal inputs for conversion at the facility. The converted product is then returned to the supplying party at cost. Logan does not own any of the primary metal inputs or any of the converted products. All of the fixed assets at Logan are directly owned by us and Tri-Arrows in varying ownership percentages or solely by each party.

We share control of the management of Logan with Tri-Arrows through a board of directors with seven voting members of which we appoint four members and Tri-Arrows appoints three members. Management of Logan is led jointly by two executive officers who are subject to approval by at least five members of the board of directors.

Our Burnaby, British Columbia and Toronto, Ontario facilities spool and package household foil products and report to our foil business unit based in Toronto, Ontario.

Along with our recycling center in Oswego, New York, we own two other fully dedicated recycling facilities in North America, located in Berea, Kentucky and Greensboro, Georgia. Each offers a modern, cost-efficient process to recycle UBCs and other aluminum scrap into sheet ingot to supply our hot mills in Logan and Oswego.

Europe



Location	Plant Processes	Major End-Use Markets
Berlin, Germany (C)	Converting	Packaging
Bresso, Italy	Finishing, painting	Painted sheet, architectural
Dudelange, Luxembourg (C)	Continuous casting, foil rolling, finishing, recycling	Foil
Göttingen, Germany	Cold rolling, finishing, painting	Can end, can tab, food can, lithographic, painted sheet
Latchford, U.K.	Recycling, sheet ingot casting	Sheet ingot from recycled metal
Ludenscheid, Germany	Foil rolling, finishing, converting	Foil, packaging
Nachterstedt, Germany	Cold rolling, finishing, painting	Automotive, can end, industrial, painted sheet, architectural
Norf, Germany (A)	Sheet ingot casting, hot rolling, cold rolling, recycling	Can stock, foilstock, feeder stock for finishing operations
Ohle, Germany	Cold rolling, finishing, converting	Foil, packaging
Pieve, Italy	Continuous casting, cold rolling, finishing, recycling	Coil for Bresso, industrial
Rugles, France (C)	Continuous casting, foil rolling, finishing, recycling	Foil
Sierre, Switzerland (B)	Sheet ingot casting, hot rolling, cold rolling, finishing	Automotive sheet, industrial


(A)	Operated as a 50/50 joint venture between us and Hydro Aluminum Deutschland GmbH (Hydro).


(B)	By contract, Novelis must reserve a significant portion of the total production capacity of the Sierre hot mill to produce aluminum plate for Constellium.


(C)	During fiscal year 2013 we finalized the sale of three European aluminum foil and packaging plants which included the operations in Rugles, France; Dudelange, Luxembourg; and Berlin, Germany. These plants are included in the table of operating facilities as they were operated by Novelis during part of the year ended March 31, 2013.

Aluminium Norf GmbH (Alunorf) in Germany, a 50/50 production-sharing joint venture between us and Hydro, is a large scale, modern manufacturing hub for several of our operations in Europe, and is the largest aluminum rolling mill and remelting operation in the world. Norf supplies hot coil for further processing through cold rolling to some of our other plants, including Göttingen and Nachterstedt in Germany and provides foilstock to our plants in Ohle and Ludenscheid in Germany. Together with Hydro, we operate Alunorf as a production cooperative, with each party supplying its own primary metal inputs for transformation at the facility. The transformed product is then transferred back to the supplying party on a pre-determined cost-plus basis. We own 50% of the equity interest in Norf and Hydro owns the other 50%. We share control of the management of Alunorf with Hydro through a jointly-controlled shareholders’ committee. Management of Alunorf is led jointly by two managing executives, one nominated by us and one nominated by Hydro.

Our Göttingen plant has a paint line as well as lines for can end and food sheet. Our Nachterstedt plant cold rolls and finishes mainly automotive sheet and can end stock. The Pieve plant, located near Milan, Italy, mainly produces continuous cast coil that is cold rolled into paintstock and sent to the Bresso, Italy plant for painting and some specialty finishing.

The Sierre hot rolling plant in Switzerland and the Nachterstedt plant in Germany are Europe’s leading producers of automotive sheet in terms of shipments. Sierre also supplies plate stock to Constellium.

Our recycling operation in Latchford, United Kingdom is the only major recycling plant in Europe dedicated to UBCs.

We are investing in our Nachterstedt, Germany site to build a fully integrated recycling facility, which will be the most sophisticated plant of its kind with capabilities to recycle up to 18 different types of scrap.

Asia



Location	Plant Processes	Major End-Use Markets
Bukit Raja, Malaysia(A)	Continuous casting, cold rolling, coating	Construction/industrial, heavy and light gauge foils
Ulsan, South Korea(B)	Sheet ingot casting, hot rolling, cold rolling, recycling, finishing	Can stock, construction/industrial, electronics, foilstock, and recycled material
Yeongju, South Korea(B)	Sheet ingot casting, hot rolling, cold rolling, recycling, finishing	Can stock, construction/industrial, electronics, foilstock and recycled material


(A)	Ownership of the Bukit Raja plant corresponds to our 59% equity interest in Aluminium Company of Malaysia Berhad.


(B)	We hold a 99% equity interest in the legal entity that owns the Ulsan and Yeongju plants.

Our Korean subsidiary, in which we hold a 99% interest, was formed through acquisitions in 1999 and 2000. Since the acquisitions, product capability has been developed to address higher value and more technically advanced markets such as can sheet. We hold a 59% equity interest in the Aluminum Company of Malaysia Berhad, a publicly traded company that operates from Bukit Raja, Selangor, Malaysia.

Novelis Asia also operates recycling furnaces at both its Ulsan and Yeongju facilities in South Korea for the conversion of customer and third-party recycled aluminum. In response to the growing demand for our products, we are expanding our rolling and recycling operations in South Korea. We are also constructing an aluminum automotive sheet finishing plant in China.

South America



Location	Plant Processes	Major End-Use Markets
Pindamonhangaba (Pinda), Brazil	Sheet ingot casting, hot rolling, cold rolling, recycling, finishing	Can stock, construction/industrial, foilstock, recycled ingot
Santo Andre, Brazil	Foil rolling, finishing	Foil
Ouro Preto, Brazil	Smelting	Primary aluminum (extrusion billets)

Our Pinda rolling and recycling facility in Brazil has an integrated process that includes recycling, sheet ingot casting, hot mill and cold mill operations. A leased coating line produces painted products, including can end stock. Pinda supplies foilstock to our Santo Andre foil plant, which produces converter, household and container foil, among others.

Pinda is the largest aluminum rolling and recycling facility in South America in terms of shipments and the only facility in South America capable of producing can body and end stock. Pinda recycles primarily UBCs, and is engaged in tolling recycled metal for our customers. In response to the growing demand for our products in South America, we are expanding our aluminum rolling operations in Pinda. Additionally, we are installing a new coating line for beverage can end stock and expanding the recycling capacity in our Pinda facility.

We operate primary aluminum smelting operations at our Ouro Preto, Brazil facility and hydroelectric power generation operations throughout Brazil. Our owned power generation supplied approximately 73% of our smelter needs in fiscal 2013. Subsequent to the closure of one of our smelter lines in March 2013, we estimate the hydroelectric facilities will meet 100% of our total electricity requirements for our remaining smelter operations. We own alumina refining assets that we are currently not operating and mining rights in the Ouro Preto, Cataguases and Carangola regions that are not currently being explored and both are classified as held for sale as of March 31, 2013.

Item 3. Legal Proceedings

We are a party to litigation incidental to our business from time to time. For additional information regarding litigation to which we are a party, see Note 19 — Commitments and Contingencies to our accompanying audited consolidated financial statements, which are incorporated by reference into this item.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

There is no established public trading market for the Company’s common stock. Hindalco owns all of the Company’s common stock through an indirect wholly-owned subsidiary. None of the equity securities of the Company are authorized for issuance under any equity compensation plan.

Dividends are at the discretion of the board of directors and will depend on, among other things, our financial resources, cash flows generated by our business, our cash requirements, restrictions under the instruments governing our indebtedness, being in compliance with the appropriate indentures and covenants under the instruments that govern our indebtedness that would allow us to legally pay dividends and other relevant factors.

On December 17, 2010, we paid $1.7 billion to our shareholder as a return of capital.

Item 6. Selected Financial Data

The selected consolidated financial data should be read in conjunction with our consolidated financial statements for the respective periods and the related notes included elsewhere in this Form 10-K.

All of our common shares were indirectly held by Hindalco; thus, earnings per share data are not reported. Amounts in the table below are in millions.



	Year Ended March 31,
	2013		2012		2011		2010		2009 (A)
Net sales	$	9,812	$	11,063	$	10,577	$	8,673	$	10,177
Net income (loss) attributable to our common shareholder	$	202	$	63	$	116	$	405	$	(1,910	)
Return of capital(B)	$	—	$	—	$	1,700	$	—	$	—



	March 31,
	2013		2012		2011		2010		2009
Total assets	$	8,522	$	8,021	$	8,296	$	7,762	$	7,567
Long-term debt (including current portion)	$	4,464	$	4,344	$	4,086	$	2,596	$	2,559
Short-term borrowings	$	468	$	18	$	17	$	75	$	264
Cash and cash equivalents	$	301	$	317	$	311	$	437	$	248
Total equity	$	239	$	123	$	445	$	1,869	$	1,419


(A)	Net income (loss) attributable to our common shareholder for the year ended March 31, 2009 includes non-cash pre-tax impairment charges of $1.5 billion, and certain non-recurring expenses that were incurred related to the acquisition by Hindalco.


(B)	On December 17, 2010, we paid $1.7 billion to our shareholder as a return of capital.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW AND REFERENCES

Novelis is the world's leading aluminum rolled products producer based on shipment volume in fiscal 2013. We produce aluminum sheet and light gauge products for use in the packaging market, which includes beverage and food can and foil products, as well as for use in the transportation, electronics, architectural and industrial product markets. We are also the world's largest recycler of aluminum and have recycling operations in many of our plants to recycle both post-consumer aluminum and post-industrial aluminum. As of March 31, 2013, we had manufacturing operations in nine countries on four continents, which include 25 operating plants, and recycling operations in ten of these plants. In addition to aluminum rolled products plants, our South American businesses include primary aluminum smelting and power generation facilities. We are the only company of our size and scope focused solely on the aluminum rolled products markets and capable of local supply of technologically sophisticated products in all of these geographic regions, but with the global footprint to service global customers.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Annual Report, particularly in “Special Note Regarding Forward-Looking Statements and Market Data” and “Risk Factors.”

HIGHLIGHTS

Fiscal 2013 was another transformational year for Novelis, as we invested $775 million primarily into our ongoing global rolling, finishing and recycling expansion projects. We commissioned two expansion projects in late fiscal 2013, which will increase our global rolling and recycling capacity, and we broke ground on two new facilities. In fiscal 2013, we continued to optimize our global footprint and product portfolio through these expansion projects and the closure or divestiture of underperforming or noncore assets; including our Saguenay Works plant in Quebec, Canada, three foil and packaging plants in Europe, and a smelter pot line in Brazil.

We experienced some unexpected challenges during the year in North America, including a fire in one of our plants in the fourth quarter, disruptions in our operations due to the implementation of a new enterprise resource planning (ERP) system in two plants in the third quarter, and operational production and supply chain issues related to transferring our Saguenay plant capacity to other North America plants in the first quarter of fiscal 2013. We are experiencing pricing pressures in North America, Europe, and Asia, which negatively impacted our conversion premiums during fiscal 2013 compared to the prior year. The unfavorable economic conditions in Europe have negatively impacted the Asian manufacturing industries which rely heavily on exports. Despite these challenges, shipments of our flat rolled products declined only 2% from 2,838 kt in fiscal 2012 to 2,786 kt in fiscal 2013, driven by declines in North America and Europe, offset by an increase in shipments in our Asia and South America regions. South America had a solid year reporting both record shipments and "Segment income." Additionally, we reported record shipments of our products for the automotive industry in fiscal 2013.

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We invested $775 million globally for the year ended March 31, 2013, which primarily relates to our expansion projects in Oswego, New York; Yeongju, South Korea; Ulsan, South Korea; and Pinda, Brazil; and the implementation of a new ERP system. In December 2012, we commissioned our Pinda facility rolling expansion in Brazil, which will result in approximately 220 kt of additional rolling capacity annually once the facility is operating at full capacity. The expansion of our recycling facility in Yeongju, South Korea became operational in October 2012 and will increase our annual recycling capacity by approximately 265 kt when the facility is operating at full capacity. We also broke ground on two strategic expansion projects during the fiscal year: an aluminum automotive sheet finishing plant in Changzhou, China and a new recycling center at our Nachterstedt, Germany facility.

•

“Net sales” for fiscal 2013 were $9.8 billion, a decrease of 11% compared to $11.1 billion for fiscal 2012. "Cost of goods sold (exclusive of depreciation and amortization)" for fiscal 2013 was $8.5 billion, a decrease of 13% compared to $9.7 billion for fiscal 2012. These decreases were primarily the result of lower average aluminum prices which declined by 15%, a decline in shipments of our flat rolled products by 2%, and lower conversion premiums and conversion costs in Europe due to the sale of three foil and packaging plants in June 2012. The decline in "Cost of goods sold (exclusive of depreciation and amortization)" was partially offset by higher conversion costs in North America due to the production and supply chain issues discussed above.

•

We reported "Net income" of $203 million in fiscal 2013, compared to $90 million in fiscal 2012. Included in "Net income" are pre-tax unrealized gains on undesignated derivative instruments of $14 million in fiscal 2013 and losses of $62 million in fiscal 2012 which were recorded in our statement of operations in periods prior to the offsetting impact of the hedged exposure. Also included in "Net income" was a pre-tax gain on assets held for sale of $3 million in fiscal 2013 compared to loss of $111 million in fiscal 2012 related to the sale of three Europe foil and packaging plants. We reported an income tax provision of $83 million in fiscal 2013 compared to $39 million in fiscal 2012.


•	Cash flow provided by operations was $203 million for fiscal 2013 compared to $556 million for fiscal 2012. The decline is due to the lower "Segment income" and unfavorable changes in working capital.


•	We reported available liquidity of $760 million as of March 31, 2013, which is down compared to $1.0 billion as of March 31, 2012. The decline is primarily attributable to the significant investments that we are making to fund our strategic expansion projects and lower cash flow provide by operations.

BUSINESS AND INDUSTRY CLIMATE

We are experiencing pricing pressures and increased competition, which are negatively impacting our profitability. The pricing pressures and competition are notable in our North America, Europe, and Asia regions. One factor contributing to the competitive landscape in Asia is the significantly higher local market premium that we must pay for the purchases of aluminum in Asia. Aluminum prices averaged $1,976 per metric tonne during fiscal 2013 compared to $2,318 per metric tonne during fiscal 2012. We realized an increase in the benefits from the utilization of scrap in fiscal 2013 compared to prior year due to favorable discounts we received on the procurement of scrap, partially offset by the decline in average aluminum prices. Demand for our premium product categories has remained strong, particularly our products for the automotive industry which are growing as a result of trends toward lighter weight vehicles. We reported record shipments of our products for the automotive industry in fiscal 2013.

Key Sales and Shipment Trends



(in millions, except shipments which are in kt)
	Three Months Ended												Year Ended			Three Months Ended												Year Ended
	June 30, 2011			Sept 30, 2011			Dec 31, 2011			Mar 31, 2012			Mar 31, 2012			Jun 30, 2012			Sept 30, 2012			Dec 31, 2012			Mar 31, 2013			Mar 31, 2013
Net sales	$	3,113		$	2,880		$	2,462		$	2,608		$	11,063		$	2,550		$	2,441		$	2,321		$	2,500		$	9,812
Percentage increase (decrease) in net sales versus comparable previous year period	23		%	14		%	(4		)%	(12		)%	5		%	(18		)%	(15		)%	(6		)%	(4		)%	(11		)%
Rolled product shipments:
North America	288			274			248			254			1,064			266			269			216			239			990
Europe	237			227			183			229			876			233			218			192			218			861
Asia	152			131			117			124			524			136			142			141			143			562
South America	90			88			100			97			375			89			92			107			107			395
Eliminations	—			—			—			(1		)	(1		)	(2		)	(2		)	(9		)	(9		)	(22		)
Total	767			720			648			703			2,838			722			719			647			698			2,786
Beverage and food cans	462			437			404			419			1,722			432			449			423			437			1,741
All other rolled products	305			283			244			284			1,116			290			270			224			261			1,045
Total	767			720			648			703			2,838			722			719			647			698			2,786

The following summarizes the percentage increase (decrease) in rolled product shipments versus the comparable previous year period:
North America	4		%	(4		)%	(5		)%	(9		)%	(4		)%	(8		)%	(2		)%	(13		)%	(6		)%	(7		)%
Europe	2		%	—		%	(12		)%	(5		)%	(4		)%	(2		)%	(4		)%	5		%	(5		)%	(2		)%
Asia	4		%	(2		)%	(21		)%	(18		)%	(10		)%	(11		)%	8		%	21		%	15		%	7		%
South America	—		%	(3		)%	3		%	(2		)%	(1		)%	(1		)%	5		%	7		%	10		%	5		%
Total	3		%	(2		)%	(9		)%	(9		)%	(4		)%	(6		)%	—		%	—		%	(1		)%	(2		)%
Beverage and food cans	9		%	2		%	(5		)%	(8		)%	(1		)%	(6		)%	3		%	5		%	4		%	1		%
All other rolled products	(5		)%	(8		)%	(16		)%	(11		)%	(10		)%	(5		)%	(5		)%	(8		)%	(8		)%	(6		)%
Total	3		%	(2		)%	(9		)%	(9		)%	(4		)%	(6		)%	—		%	—		%	(1		)%	(2		)%

Business Model and Key Concepts

Conversion Business Model

Most of our business is conducted under a conversion model, which allows us to pass through increases or decreases in the price of aluminum to our customers. Nearly all of our products have a price structure with two components: (i) a pass-through aluminum price based on the London Metal Exchange (LME) plus local market premiums and (ii) a “conversion premium” to produce the rolled product which reflects, among other factors, the competitive market conditions for that product.

Metal Price Lag and Related Hedging Activities

Increases or decreases in the average price of aluminum directly impact “Net sales,” “Cost of goods sold (exclusive of depreciation and amortization)” and working capital. The timing of these impacts varies based on contractual arrangements with customers and metal suppliers in each region. These timing impacts are referred to as metal price lag. Metal price lag exists due to: 1) certain customer contracts containing fixed forward price commitments which result in exposure to changes in metal prices for the period of time between when our sales price fixes and the sale actually occurs, and 2) the period of time between the pricing of our purchases of metal, holding and processing the metal, and the pricing of the sale of finished inventory to our customers.

We use derivative instruments to synthetically preserve our conversion margins and manage the timing differences associated with metal price lag. We sell short-term LME aluminum forward contracts to reduce our exposure to fluctuating metal prices associated with the period of time between the pricing of our purchases of inventory and the pricing of the sale of that inventory to our customers. We also purchase forward contracts simultaneous with our sales contracts with customers that contain fixed metal prices. These LME aluminum forward contracts directly hedge the economic risk of future metal price fluctuations to synthetically ensure we sell metal for the same price at which we purchase metal.

LME Aluminum Prices

The average (based on the simple average of the monthly averages) and closing prices based upon the LME prices for aluminum for the years ended March 31, 2013, 2012, and 2011 are as follows:



							Percent Change
	Year Ended March 31,						Year Ended March 31, 2013 versus		Year Ended March 31, 2012 versus
	2013		2012		2011		March 31, 2012		March 31, 2011
London Metal Exchange Prices
Aluminum (per metric tonne, and presented in U.S. dollars):
Closing cash price as of beginning of period	$	2,099	$	2,600	$	2,288	(19	)%	14	%
Average cash price during period	$	1,976	$	2,318	$	2,257	(15	)%	3	%
Closing cash price as of end of period	$	1,882	$	2,099	$	2,600	(10	)%	(19	)%

We elect to apply hedge accounting to better match the recognition of gains or losses on certain derivative instruments with the recognition of the underlying exposure being hedged in the statement of operations. For undesignated metal derivatives, there are timing differences between the recognition of unrealized gains or losses on the derivatives and the recognition of the underlying exposure in the statement of operations. The recognition of unrealized gains and losses on undesignated metal derivative positions typically precedes inventory cost recognition, customer delivery, revenue recognition, and the realized gains or losses on the derivatives. The timing difference between the recognition of unrealized gains and losses on undesignated metal derivatives and cost or revenue recognition impacts “Income before income taxes” and “Net income.” Gains and losses on metal derivative contracts are not recognized in “Segment income” until realized.

Average aluminum prices were lower in fiscal 2013 compared to fiscal 2012 and were higher in fiscal 2012 compared to fiscal 2011. The fluctuating prices resulted in $5 million of net unrealized gains and $25 million of net unrealized losses on undesignated metal derivatives in fiscal 2013 and fiscal 2012, respectively. The reduction in volatility in our unrealized gains and losses is attributable to Company's implementation of hedge accounting for our derivative transactions.

The benefit we receive from utilizing UBCs and scrap are influenced by LME aluminum prices and the spread between the market price for UBCs and scrap compared to the price of prime aluminum, as well as consumption levels. Average aluminum prices were $342 per metric tonne lower in fiscal 2013 compared to fiscal 2012. The discounts off prime we received to procure UBCs and scrap were more favorable in fiscal 2013 compared to fiscal 2012 which more than offsets the unfavorable impact of lower aluminum prices.

Energy swaps

We use natural gas and electricity swaps to manage our exposure to fluctuating energy prices in North America. During fiscal 2013, we recorded $19 million of unrealized gains on undesignated energy swaps compared to $25 million in fiscal 2012.

Foreign Currency and Related Hedging Activities

We operate a global business and conduct business in various currencies around the world. We have exposure to foreign currency risk as fluctuations in foreign exchange rates impact our operating results as we translate the operating results from various functional currencies into the U.S. dollar reporting currency at the current average rates. We also record foreign exchange remeasurement gains and losses when business transactions are denominated in currencies other than the functional currency of that operation. The following table presents the exchange rates as of the end of each period and the average of the month-end exchange rates for the years ended March 31, 2013, 2012, and 2011:



	Exchange Rate as of March 31,			Average Exchange Rate Year Ended March 31,
	2013	2012	2011	2013	2012	2011
U.S. dollar per Euro	1.282	1.335	1.419	1.289	1.385	1.325
Brazilian real per U.S. dollar	2.014	1.823	1.627	2.017	1.696	1.718
South Korean won per U.S. dollar	1,112	1,138	1,107	1,115	1,111	1,151
Canadian dollar per U.S. dollar	1.016	0.997	0.971	1.003	0.992	1.021

During fiscal 2013, the U.S. dollar strengthened against the Euro, the Brazilian real, and the Canadian dollar and weakened compared to the South Korean won. Although the U.S. dollar weakened against the South Korean won as of March 31, 2013 compared to March 31, 2012, the average exchange rate for fiscal 2013 and fiscal 2012 was relatively flat. In Europe, the stronger U.S. dollar compared to the Euro resulted in unfavorable foreign exchange translation in fiscal 2013 operating results when compared to fiscal 2012, as these operations are recorded in their local currency and translated into the U.S. dollar reporting currency. In South Korea, changes in the foreign currency caused a favorable foreign exchange translation in fiscal 2013 operating results when compared to fiscal 2012. In Brazil, the U.S. dollar is the functional currency due to predominantly U.S. dollar selling prices while our costs are predominately based in the Brazilian real. The stronger U.S. dollar compared to the Brazilian real resulted in a favorable remeasurement of our operating costs into the U.S. dollar in fiscal 2013 compared to fiscal 2012.

We use foreign exchange forward contracts and cross-currency swaps to manage our exposure to changes in exchange rates. These exposures arise from recorded assets and liabilities, firm commitments and forecasted cash flows denominated in currencies other than the functional currency of certain operations, which includes capital expenditures and net investments in foreign subsidiaries.

The impact of foreign exchange remeasurement, net of the related hedges, was a $10 million gain in fiscal 2013 due primarily to Brazilian real denominated liabilities being remeasured to the U.S. dollar, partially offset by our hedging losses on these liabilities. For other foreign currency hedging programs, the unrealized gains or losses on undesignated derivatives will be recognized in the statement of operations prior to the hedged transaction. The movement of currency exchange rates during the fiscal 2013 and fiscal 2012 resulted in $14 million and $15 million of unrealized losses on undesignated foreign currency derivatives, respectively, which were not recognized in the same period as the hedged transaction.

Results of Operations

Year Ended March 31, 2013 Compared with the Year Ended March 31, 2012

Our performance in fiscal 2013 was negatively impacted by pricing pressures from competitors, supply chain disruptions due to the implementation of a new ERP system in two North America plants, as well as production challenges and softer demand. Shipments of our flat rolled products declined to 2,786 kt for the year ended March 31, 2013, compared to 2,838 kt in prior year. “Net sales” were 11% lower primarily driven by a 15% decline in average aluminum prices and a decline in our flat rolled product volumes by 2%.

“Cost of goods sold (exclusive of depreciation and amortization)” declined $1.3 billion, or 13%, due primarily due to lower average aluminum prices and an overall decline in shipments, partially offset by higher costs associated with the production and supply chain disruptions we experienced in North America. Our metal input costs declined $1.0 billion, which reflects the lower average aluminum prices and lower volumes.

"Net sales" and "Cost of goods sold (exclusive of depreciation and amortization)" include the sale of three European foil and packaging plants for fiscal 2012 and the first three months of fiscal 2013 until they were sold in June 2012. The sale of the three plants reduced Europe's "Segment income" by $7 million in fiscal 2013 compared to prior year.

“Income before income taxes” for the year ended March 31, 2013 was $286 million, which compared to $129 million reported in the year ended March 31, 2012. In addition to the factors noted above, the following items affected “Income before income taxes:”


•	"Selling, general and administrative expenses" increased $15 million as a result of higher start-up costs related to our strategic expansion projects, higher costs of implementing a new ERP system and wage inflation and pension costs, offset by cost cutting initiatives we implemented in the second half of fiscal 2013 and lower employee incentives;


•	“Depreciation and amortization” declined by $37 million as a result of groups of our fixed assets reaching their fully depreciated balances and certain facilities being closed or divested in the past year;

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“Restructuring charges, net” of $45 million for the year ended March 31, 2013, related to severance and pension settlement charges we incurred in the closure of our Saguenay Works plant in Quebec, Canada; severance and moving charges related to the closure of a research and development center in Kingston, Ontario; severance and other shut-down costs associated with our pot-line closure in Brazil; and other severance charges in Europe. "Restructuring charges, net" of $60 million in the year ended March 31, 2012 related to an impairment on our Saguenay plant; severance across our European plants; and restructuring at our Santo Andre plant in Brazil; partially offset by the reversal of outstanding environmental contingencies of $21 million related to the final sale of the Rogerstone facility, which were assumed by the buyer;

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We estimated and recorded a $111 million “Loss on assets held for sale” for the year ended March 31, 2012 related to the planned sale of three foil and packaging plants in Rugles, France; Dudelange, Luxembourg; and Berlin, Germany. In June 2012, we completed the sale of the plants to Eurofoil, a unit of American Industrial Acquisition Corporation (AIAC), which resulted in a $3 million "Gain on assets held for sale" for the year ended March 31, 2013;


•	An $11 million "Gain on business interruption insurance recovery, net" for the year ended March 31, 2013, related to an insurance settlement for lost business as a result of a fire that completely destroyed a customer's plant, which is reported as "Other (income) expense, net"; and

•

Unrealized gains of $14 million for the year ended March 31, 2013 comprised of changes in fair value of undesignated derivatives other than foreign currency remeasurement hedging activities as compared to $62 million of losses in prior year, which is reported in "Other (income) expense, net." The reduction in this volatility is the result of the Company's implementation of hedge accounting for our derivative transactions.

Our effective tax rate for the year ended March 31, 2013 was 27%, compared to 27% for the year ended March 31, 2012.

"Net income attributable to noncontrolling interests" declined $26 million as we acquired outstanding shares of our South Korea subsidiary, increasing our ownership percentage to over 99%.

We reported “Net income attributable to our common shareholder” of $202 million for the year ended March 31, 2013 as compared to $63 million for the year ended March 31, 2012, primarily as a result of the factors discussed above.

Segment Review

We measure the profitability and financial performance of our operating segments based on “Segment income.” “Segment income” provides a measure of our underlying segment results that is in line with our portfolio approach to risk management. We define “Segment income” as earnings before (a) “depreciation and amortization”; (b) “interest expense and amortization of debt issuance costs”; (c) “interest income”; (d) unrealized gains (losses) on change in fair value of derivative instruments, net, except for foreign currency remeasurement hedging activities, which are included in segment income; (e) impairment of goodwill; (f) impairment charges on long-lived assets (other than goodwill); (g) gain or loss on extinguishment of debt; (h) noncontrolling interests’ share; (i) adjustments to reconcile our proportional share of “Segment income” from non-consolidated affiliates to income as determined on the equity method of accounting; (j) “restructuring charges, net”; (k) gains or losses on disposals of property, plant and equipment and businesses, net; (l) other costs, net; (m) litigation settlement, net of insurance recoveries; (n) sale transaction fees; (o) provision or benefit for taxes on income (loss) and (p) cumulative effect of accounting change, net of tax. Our presentation of “Segment income” on a consolidated basis is a non-GAAP financial measure. See “Non-GAAP Financial Measures” below for additional discussion about our use of total “Segment income.”

Adjustment to Eliminate Proportional Consolidation and Intersegment sales. The financial information for our segments includes the results of our affiliates on a proportionately consolidated basis, which is consistent with the way we manage our business segments. In order to reconcile the financial information for the segments shown in the tables below to the relevant U.S. GAAP-based measures, we must adjust proportional consolidation of each line item. See Note 8 — Consolidation and Note 9 — Investment in and Advances to Non-Consolidated Affiliates and Related Party Transactions for further information about these affiliates. Additionally, "Eliminations and other" include intersegment shipments and "Net sales" which eliminate in consolidation.

The tables below show selected segment financial information (in millions, except shipments which are in kt). For additional financial information related to our operating segments, see Note 20 — Segment, Major Customer and Major Supplier Information.



Selected Operating Results Year Ended March 31, 2013	North America		Europe		Asia		South America		Eliminations and other			Total
Net sales	$	3,405	$	3,181	$	1,762	$	1,391	$	73		$	9,812
Shipments
Rolled products	990		861		562		395		(22		)	2,786
Non-rolled products	22		58		—		76		(12		)	144
Total shipments	1,012		919		562		471		(34		)	2,930



Selected Operating Results Year Ended March 31, 2012	North America		Europe		Asia		South America		Eliminations and other			Total
Net sales	$	3,967	$	3,840	$	1,830	$	1,278	$	148		$	11,063
Shipments
Rolled products	1,064		876		524		375		(1		)	2,838
Non-rolled products	15		89		12		42		(14		)	144
Total shipments	1,079		965		536		417		(15		)	2,982

The following table reconciles changes in “Segment income” for the year ended March 31, 2012 to the year ended March 31, 2013 (in millions).



Changes in Segment income	North America			Europe(A)			Asia			South America			Total
Segment income - year ended March 31, 2012	$	407		$	284		$	181		$	181		$	1,053
Volume	(65		)	(15		)	22			16			(42		)
Conversion premium and product mix	50			(105		)	(18		)	(7		)	(80		)
Conversion costs(B)	(80		)	116			7			13			56
Metal price lag	14			6			(3		)	(2		)	15
Foreign exchange	7			(20		)	—			(3		)	(16		)
Primary metal production	—			—			—			6			6
Selling, general & administrative and research & development costs(C)	(19		)	3			(13		)	(2		)	(31		)
Other changes	10			(8		)	(2		)	—			—
Segment income - year ended March 31, 2013	$	324		$	261		$	174		$	202		$	961

(A)

Included in the Europe "Segment income" for the year ended March 31, 2012 and the three months ended June 30, 2012 were the operating results of three foil and packaging plants (Rugles, France; Dudelange, Luxembourg; and Berlin, Germany) that we sold on June 28, 2012. The change to "Segment income" attributable to these three foil plants for the year ended March 31, 2013 compared to the prior year was unfavorable by $7 million. The following table reconciles changes in “Segment income” for the year ended March 31, 2012 to the year ended March 31, 2013 (in millions), with the impact of the foil and packaging plants separately identified.



Changes in Segment income	Europe
Segment income - year ended March 31, 2012	$	284
Volume	19
Conversion premium and product mix	(25		)
Conversion costs	18
Metal price lag	6
Foreign exchange	(18		)
Primary metal production	—
Selling, general & administrative and research & development costs	(8		)
Other changes	(8		)
Net impact of three foil plants sold in fiscal 2013	(7		)
Segment income - year ended March 31, 2013	$	261


(B)	Conversion costs include expenses incurred in production such as direct and indirect labor, energy, freight, scrap usage, alloys and hardeners, coatings, alumina, melt loss, the benefit of UBCs and other metal costs. Fluctuations in this component reflect cost efficiencies (inefficiencies) during the period as well as cost (inflation) deflation.

(C)

Selling, general & administrative costs and research & development costs include costs incurred directly by each segment and all corporate related costs, which are allocated to each of our segments. These costs increased in fiscal 2013 compared to fiscal 2012 for the following reasons: 1) higher costs of implementing a new ERP system; 2) higher start-up costs associated with our various strategic investment projects; and 3) higher wage inflation and pension costs, partially offset by lower employee incentives and cost cutting initiatives implemented in the second half of fiscal 2013. Other significant fluctuations are discussed below.

North America

As of March 31, 2013, our North American operations manufactured aluminum sheet and light gauge products through 10 operating plants, including recycling operations in four plants. Important end-use applications include beverage cans, containers and packaging, automotive and other transportation applications and other industrial applications. The expansion project at our Oswego, NY facility is progressing well and is expected to be operational in mid calendar year 2013 and will result in approximately 200 kt of additional automotive finishing capacity annually when it is operating at full capacity. In August 2012, we closed our Saguenay Works plant in Quebec, Canada. The closure was driven by the need to right-size production capacity in North America, along with the increasing logistic costs and structural challenges facing this location. Effective August 31, 2012, the Company withdrew from the Evermore joint venture with Alcoa, Inc. and established a new organization for the procurement of UBCs in North America.

“Net sales” for the year ended March 31, 2013 were down $562 million, or 14%, as compared to the year ended March 31, 2012 reflecting lower volumes of our flat rolled products and lower average prices of aluminum. Shipments of our can and light gauge products were lower, partially offset by higher shipments of our automotive products. Our volumes were unfavorable in fiscal 2013 compared to fiscal 2012 due to lower shipments with a key customer, production and supply chain issues we experienced related to transferring our Saguenay plant capacity to other North America plants, and production and supply chain disruptions we experienced with our ERP implementation in the third quarter of fiscal 2013.

“Segment income” for the year ended March 31, 2013 was $324 million, down 20% as compared to the same period in the prior year, driven by lower volumes, higher conversion costs, and higher general and administrative costs, partially offset by favorable conversion premiums and favorable metal price lag. Our conversion costs were negatively impacted by higher freight and tolling costs, higher usage of sheet ingots due to the closure of our Saguenay plant and a reduction in the benefits from the utilization of scrap due to lower average aluminum prices and using less scrap metal in our production process. We also incurred an increase in costs and lost sales due to disruptions we experienced in our production and supply chain as a result of our ERP implementation, which negatively impacted our "Segment income" by approximately $40 million. We experienced disruptions in our Oswego plant during the fourth quarter of fiscal 2013 due to a fire, which negatively impacted our "Segment income" by approximately $9 million. Our conversion premiums were favorable in the first nine months of fiscal 2013 compared to prior year, but declined in the fourth quarter due to pricing pressures we are experiencing with the renewal of existing customers' supply contracts. Other changes to "Segment income" include the recognition of an $11 million gain in the third quarter of fiscal 2013 related to a business interruption insurance settlement, which was the result of lost business when one of our customer's plants was destroyed by a fire.

Europe

As of March 31, 2013, our European segment provided European markets, and to a lesser extent Asia, with value-added sheet and light gauge products through nine operating plants, including recycling operations in three plants. Europe serves a broad range of aluminum rolled product end-use markets in various applications including beverage and food can, automotive, lithographic, foil products and painted products. In May 2012, we made a decision to build a fully integrated recycling facility at our Nachterstedt, Germany plant, which will have an annual capacity of approximately 400 kt, when operating at full capacity. In June 2012, we completed the sale of three European aluminum foil and packaging plants to Eurofoil, a unit of American Industrial Acquisition Corporation (AIAC). The transaction included foil rolling operations in Rugles, France; Dudelange, Luxembourg; and Berlin, Germany. The transaction represents another step in aligning our global growth strategy on the premium markets of beverage cans, automobiles and specialty products.

“Net sales” for the year ended March 31, 2013 were down $659 million, or 17%, as compared to the year ended March 31, 2012 reflecting lower average prices of aluminum and lower shipments of flat rolled products. We experienced lower volumes due to the sale of the European foil and packaging plants in June 2012 and lower volumes in industrial and lithographic products, partially offset by higher volumes in our can and automotive products.

“Segment income” for the year ended March 31, 2013 was $261 million, down 8% compared to the same period in the prior year. Our fiscal 2013 "Segment income" was negatively impacted by the sale of the European foil and packaging plants in June 2012, when compared to fiscal 2012 "Segment income" by $7 million. Excluding the impact from the European foil and packaging plants, we experienced an unfavorable shift in product mix to products that have lower conversion premiums, the impact of a weaker euro compared to the U.S. dollar, and an increase in general and administrative costs, partially offset by higher volumes of our can and automotive products and lower conversion costs. The favorable change in conversion costs was the result of favorable discounts on the procurement of scrap metal. Conversion costs were also favorable due to lower tolling and contractor costs, partially offset by higher employment costs, higher natural gas costs, and higher freight costs.

Asia

As of March 31, 2013, our Asian segment operated three operating plants, including recycling operations in two plants, with production balanced between beverage and food can, specialty (including electronics), industrial and foil products. The expansion of our recycling facility in Yeongju, South Korea became operational in October 2012 and will increase our annual recycling capacity by approximately 265 kt when the facility is operating at full capacity. The expansion of our rolling capacity in South Korea is progressing well and expected to become operational mid-calendar year 2013, which is expected to result in approximately 350 kt of additional capacity annually when the facility is operating at full capacity. We broke ground on an aluminum automotive sheet finishing plant in Changzhou, China in October 2012, which will have annual capacity of approximately 120 kt. The automotive sheet finishing plant is expected to be operational in late calendar year 2014. In June 2013 we plan to commission our first recycling center in Ho Chi Minh City, Vietnam, which will handle the procurement, cleaning and baling of UBCs.

“Net sales” for the year ended March 31, 2013 were down $68 million, or 4%, as compared to the year ended March 31, 2012 reflecting lower average aluminum prices and lower conversion premiums, partially offset by higher shipments of flat rolled products. We experienced higher volumes in our can and automotive products, partially offset by a decline in foil stock products.

“Segment income” for the year ended March 31, 2013 was $174 million, down 4% compared to the same period of the prior year, driven by lower conversion premiums, unfavorable metal price lag, and higher general and administrative costs, partially offset by an increase in volumes and lower conversion costs. The local market premium on aluminum has increased significantly in Asia, which has put pressure on our conversion margins and we are experiencing more competition, primarily from FRP suppliers in China. General and administrative costs were higher compared to prior year, due to increased headcount for our new Vietnam recycling center, which will come on-line in June 2013, and our new heat treatment plant in China, which broke ground in October 2012. Conversion costs were favorable compared to prior year due to a higher usage of scrap and higher discounts off prime aluminum we paid for scrap metal, partially offset by higher prices for electricity, natural gas, and oil.

South America

As of March 31, 2013, our South American segment included three operating plants in Brazil, which includes one plant with recycling operations, one primary aluminum smelter and hydroelectric power generation facilities. Our South American operations produce various aluminum rolled products for the beverage and food can, construction and industrial and transportation end-use markets. Our Pinda facility expansion in Brazil was commissioned in December 2012 and will result in approximately 220 kt of additional capacity annually, when the facility is operating at full capacity. Additionally, we are installing a new coating line for beverage can end stock to increase our can coating capacity by approximately 100 kt annually and expanding our recycling capacity by approximately 190 kt in our Pinda facility which is expected to become operational at the end of calendar year 2013. In March 2013, we shut-down one of our two primary aluminum smelter lines in Brazil. The closure is another step in aligning our global growth strategy on the premium markets of beverage cans, automobiles and specialty products.

“Net sales” for the year ended March 31, 2013 were up $113 million, or 9%, as compared to the year ended March 31, 2012 reflecting higher shipments of our flat and non-flat rolled products, partially offset by lower average prices of aluminum. We experienced a favorable increase in our shipments of our can products, partially offset by declines in our products for industrial applications.

“Segment income” for South America was $202 million, up 12%, in the year ended March 31, 2013 compared to the same period in prior year, due to an increase in volumes, lower conversion costs and favorable impact of foreign currency rates on our primary business, partially offset by unfavorable conversion premiums, unfavorable metal price lag and higher general and administrative costs. Conversion costs were lower due to higher discounts off prime aluminum we paid for scrap metal, a reduction in melt loss, and reduced tolling costs, partially offset by higher labor and maintenance costs and less usage of scrap in our production process. Conversion premiums were unfavorable due to a decline in prices of our products for industrial applications.

Reconciliation of segment results to “Net income attributable to our common shareholder”

Costs such as depreciation and amortization, interest expense and unrealized gains (losses) on changes in the fair value of derivatives (except for derivatives used to manage our foreign currency remeasurement activities) are not utilized by our chief operating decision maker in evaluating segment performance. The table below reconciles income from reportable segments to “Net income attributable to our common shareholder” for the year ended March 31, 2013 and 2012 (in millions).



	Year Ended March 31,
	2013			2012
North America	$	324		$	407
Europe	261			284
Asia	174			181
South America	202			181
Total Segment income	961			1,053
Depreciation and amortization	(292		)	(329		)
Interest expense and amortization of debt issuance costs	(298		)	(305		)
Adjustment to eliminate proportional consolidation	(41		)	(49		)
Unrealized gains (losses) on change in fair value of derivative instruments, net	14			(62		)
Realized gains on derivative instruments not included in segment income	5			1
Loss on extinguishment of debt	(7		)	—
Restructuring charges, net	(45		)	(60		)
Gain (loss) on assets held for sale	3			(111		)
Other costs, net	(14		)	(9		)
Income before income taxes	286			129
Income tax provision	83			39
Net income	203			90
Net income attributable to noncontrolling interests	1			27
Net income attributable to our common shareholder	$	202		$	63

"Depreciation and amortization” declined by $37 million as a result of groups of our fixed assets reaching their fully depreciated balances and certain facilities being closed or divested in the past year. As disclosed in Note 2 - Restructuring Programs and Note 5 - Assets Held for Sale to our financial statements, the following facilities were either closed or divested in fiscal 2013 or fiscal 2012: a lithographic sheet line in Göttingen, Germany; the Saguenay Works facility in Quebec, Canada; one rolling mill in Santo Andre, Brazil; and three foil and packaging operations in Rugles, France; Dudelange, Luxembourg; and Berlin, Germany. As of March 31, 2013, all of these facilities have been either sold, scrapped or have been impaired to their estimated realizable values, which was close to zero.

“Adjustment to eliminate proportional consolidation” typically relates to depreciation and amortization and income taxes at our Aluminium Norf GmbH (Alunorf) joint venture. Income taxes related to our equity method investments are reflected in the carrying value of the investment and not in our consolidated “Income tax provision.”

“Unrealized gain (loss) on change in fair value of derivative instruments, net” is comprised of unrealized gains and losses on undesignated derivatives other than foreign currency remeasurement hedging activities. For the year ended March 31, 2013, we recorded a $14 million gain compared to a $62 million loss for the year ended March 31, 2012. The variance is the result of changes in the fair values of the derivative instruments and the implementation of hedge accounting.

Realized gains on derivative instruments not included in "Segment income" represents realized gains on foreign currency derivatives related to capital expenditures.

During the year ended March 31, 2013 we incurred a $7 million "Loss on extinguishment of debt" related refinancing transaction we completed on our Term Loan Facility.

Year Ended March 31, 2012 Compared with the Year Ended March 31, 2011

We reported strong operating results in fiscal 2012 despite the global market pressures we continue to experience. Our premium product portfolio, long-term customer base and business model enabled us to produce solid results for fiscal 2012. “Net sales” for the year ended March 31, 2012 increased $486 million, or 5%, as compared to fiscal 2011 as a result of improved conversion premiums on our flat rolled products and higher average aluminum prices, partially offset by a decline in volumes.

“Cost of goods sold (exclusive of depreciation and amortization)” for the year ended March 31, 2012 increased $516 million, or 6%, as compared to fiscal 2011, which reflects approximately $400 million of higher metal input costs, primarily as a result of the higher average aluminum prices, and higher costs for transportation, energy and contract labor.

“Income before income taxes” for the year ended March 31, 2012 was $129 million, a decrease of $114 million, or 47%, compared to fiscal 2011. In addition to the effects from operations discussed above, the following items affected “Income before income taxes”:


•	$329 million of “Depreciation and amortization” in fiscal 2012, which declined as compared to $404 million in fiscal 2011 as a result of groups of our fixed assets reaching their fully depreciated balances since our purchase by Hindalco and reduced depreciation as a result of certain facility shut-downs over the past several years;


•	$305 million of “Interest expense and amortization of debt issuance costs” in fiscal 2012 as compared to $207 million in fiscal 2011 as a result of our higher debt balances and amortization of debt issuance costs from refinancing our debt in the third quarter of fiscal 2011;


•	$111 million of “Loss on assets held for sale” in fiscal 2012 related to the planned sale of three foil plants in Europe. The transaction is a step in aligning our growth strategy on the higher-volume, premium markets of beverage cans, automobiles and electronics and specialty products;

•

$60 million of “Restructuring charges, net” in fiscal 2012 primarily related to an impairment on the planned closure of our Saguenay plant, severance across our European plants, severance related to the restructuring of our lithographic sheet operations in our Göttingen, Germany facility, and restructuring at our Santo Andre plant in Brazil, partially offset by the reversal the outstanding environmental contingencies of $21 million related to the final sale of the Rogerstone facility. The $34 million of “Restructuring charges, net” in fiscal 2011 related to the move of our North American headquarters to Atlanta, Georgia and the announced shutdowns of our Bridgnorth, UK and Aratu, Brazil facilities. These restructuring initiatives were implemented to align our operations with our global strategy of focusing on our core premium products and to optimize our global capacity;


•	$84 million of “Loss on extinguishment of debt” related to a series of refinancing transactions executed and recorded in fiscal 2011;


•	foreign currency (losses) gains, net of related derivatives, of $(11) million in fiscal 2012 compared to $1 million of gains in fiscal 2011;


•	unrealized losses related to changes in the fair value of undesignated derivatives, other than foreign currency remeasurement, was $62 million for fiscal 2012 as compared to unrealized losses of $64 million for fiscal 2011; and

•

realized gains of $130 million in fiscal 2012 were comprised of changes in fair value of undesignated derivatives other than foreign currency remeasurement as compared to $107 million of realized gains in fiscal 2011. These amounts are reported in “Other (income) expense, net” and offset year-over-year impacts of changes in metal prices, foreign currency exchange rates and other input costs on “Net sales” and “Cost of goods sold (exclusive of depreciation and amortization).”

We reported a $39 million “Income tax provision” in fiscal 2012 compared to $83 million in fiscal 2011. We reported “Net income attributable to our common shareholder” of $63 million for the year ended March 31, 2012 as compared to $116 million for the year ended March 31, 2011, primarily as a result of the factors discussed above.

Segment Review

(e) impairment of goodwill; (f) impairment charges on long-lived assets (other than goodwill); (g) gain or loss on extinguishment of debt; (h) noncontrolling interests’ share; (i) adjustments to reconcile our proportional share of “Segment income” from non-consolidated affiliates to income as determined on the equity method of accounting; (j) “restructuring charges, net”; (k) gains or losses on disposals of property, plant and equipment and businesses, net; (l) other costs, net; (m) litigation settlement, net of insurance recoveries; (n) sale transaction fees; (o) provision or benefit for taxes on income (loss) and (p) cumulative effect of accounting change, net of tax. Our presentation of “Segment income” on a consolidated basis is a non-GAAP financial measure. See “Non-GAAP Financial Measures” below for additional discussion about our use of total “Segment income.”



Selected Operating Results Year Ended March 31, 2012	North America		Europe		Asia		South America		Eliminations and other			Total
Net sales	$	3,967	$	3,840	$	1,830	$	1,278	$	148		$	11,063
Shipments
Rolled products	1,064		876		524		375		(1		)	2,838
Non-rolled products	15		89		12		42		(14		)	144
Total shipments	1,079		965		536		417		(15		)	2,982



Selected Operating Results Year Ended March 31, 2011	North America		Europe		Asia		South America		Eliminations and other			Total
Net sales	$	3,760	$	3,589	$	1,866	$	1,214	$	148		$	10,577
Shipments:
Rolled products	1,105		909		580		377		(2		)	2,969
Ingot products	18		71		1		43		(5		)	128
Total shipments	1,123		980		581		420		(7		)	3,097

The following table reconciles changes in “Segment income” for the year ended March 31, 2011 to the year ended March 31, 2012 (in millions).



Changes in Segment Income	North America			Europe			Asia			South America			Total
Segment income — year ended March 31, 2011	$	382		$	313		$	225		$	152		$	1,072
Volume	(24		)	(30		)	(37		)	(2		)	(93		)
Conversion premium and product mix	67			48			46			42			203
Conversion costs(A)	(23		)	(26		)	(38		)	(25		)	(112		)
Metal price lag	20			(28		)	—			(8		)	(16		)
Foreign exchange	(11		)	2			(16		)	28			3
Primary metal production	—			—			—			7			7
Selling, general & administrative and research & development costs	1			9			(2		)	(10		)	(2		)
Other changes	(5		)	(4		)	3			(3		)	(9		)
Segment income — year ended March 31, 2012	$	407		$	284		$	181		$	181		$	1,053


(A)	Conversion costs include expenses incurred in production such as direct and indirect labor, energy, freight, scrap usage, alloys and hardeners, coatings, alumina, melt loss, the benefit of UBCs and other metal costs. Fluctuations in this component reflect cost efficiencies (inefficiencies) during the period as well as cost (inflation) deflation.

North America

As of March 31, 2012, our North American operations manufactured aluminum sheet and light gauge products through 11 operating plants, including recycling operations in four plants. Important end-use applications include beverage cans, containers and packaging, automotive and other transportation applications and other industrial applications. Our expansion project at our Oswego, NY facility is scheduled to be operational in mid calendar year 2013. In March 2012, we made the decision to close our Saguenay Works plant in Quebec, Canada effective August 2012.

Our North American operations reported strong operating results in fiscal 2012 compared to prior year, although we experienced some softness in our can business and a decline in demand for our light gauge products. “Net sales” for the year ended March 31, 2012 was $4.0 billion, up 6% as compared to $3.8 billion for the year ended March 31, 2011. This reflects higher average aluminum prices and strong conversion premiums as a result of focusing on our core premium products, offset by a net decline of 41 kt in flat rolled shipments compared to prior year. The decline in shipments was primarily in our can and light gauge products, partially offset by higher shipments in our automotive products.

“Segment income” for the year ended March 31, 2012 was $407 million, up 7% as compared to prior year. This increase was primarily due to improved conversion premiums and favorable changes in metal price lag offset by higher conversion costs, lower volumes and the negative effects of changes in foreign currency exchange rates. The higher conversion costs were the result of unfavorable melt loss, higher outbound freight, repairs and maintenance, and subcontractor costs offset by favorable prices of scrap metal and an increase in the usage of lower priced UBCs.

Europe

As of March 31, 2012, our European segment provided European markets, and to a lesser extent Asia, with value-added sheet and light gauge products through 12 operating plants, including recycling operations in five plants. Europe serves a broad range of aluminum rolled product end-use markets in various applications including beverage and food can, automotive, lithographic, foil products and painted products. During the first quarter of fiscal 2012, we announced that we were investing to increase our recycling capacity at our Pieve, Italy facility, which became operational in late calendar year 2012. In May 2012, we made a decision to invest $250 million at our Nachterstedt, Germany facility to build a fully integrated recycling facility, which will have an annual capacity of approximately 400 kt. During the fourth quarter of fiscal 2012, we announced the planned sale of three European aluminum foil and packaging plants. The sale was finalized in mid calendar year 2012 and includes the operations in Rugles, France; Dudelange, Luxembourg; and Berlin, Germany. In March 2012, we made a decision to restructure our lithographic sheet business in our Göttingen, Germany plant, which resulted in the closure of one of our lithographic lines.

Our European segment reported solid operating results driven by our continued focus on our core premium products. Despite a challenging economic environment, we experienced an increase in flat rolled product shipments in our can and automotive products and improved conversion premiums for fiscal 2012 compared to fiscal 2011. We experienced declines in

volumes of our industrial, light gauge and foil products, which resulted in an overall net decline of 32 kt in our flat rolled product shipments in fiscal 2012 compared to fiscal 2011. “Net sales” for the year ended March 31, 2012 was $3.8 billion, up 7% compared to $3.6 billion for the year ended March 31, 2011. The increase in “Net sales” reflects higher average aluminum prices, improved conversion premiums due to the continued focus on our premium products, higher volumes of our automotive and can products, offset by a decline in our non-core product volumes.

“Segment income” for the year ended March 31, 2012 was $284 million, down 9% compared prior year, resulting from lower volumes, higher conversion costs, and the negative effects of metal price lag. Higher conversion costs compared to prior year resulted from an increase in the costs to process scrap and UBC, an increase in melt loss, and increases in utility costs and outbound freight, partially offset by favorable metal discounts and lower labor costs.

Asia

As of March 31, 2012, our Asian segment has three operating plants, including recycling operations in two plants, with production balanced between beverage and food can, specialty (including electronics) and foil end-use applications. The expansion of our rolling and recycling capacity in Yeongju, South Korea and Ulsan, South Korea is on schedule and expected to become operational at the end of calendar year 2013. During the fourth quarter of fiscal 2012, we announced plans to invest $100 million into an aluminum automotive heat treatment plant in China, which will have annual capacity of approximately 120 kt. Construction of the new facility began in the fall of 2012 and we expect the plant to be operational beginning in late calendar year 2014. During fiscal 2012, we completed the acquisition of 31.3 percent of the outstanding shares of our Korean subsidiary for $344 million raising our ownership of the Korean subsidiary to 99 percent.

“Net sales” for the year ended March 31, 2012 decreased $36 million, or 2%, as compared to fiscal 2011 reflecting lower volumes of our flat rolled products, offset by higher average aluminum prices and improved conversion premiums. We experienced a decline in our flat rolled product shipments of 56 kt, or 10%, in fiscal 2012 compared to fiscal 2011. The declines were impacted by the continued global macroeconomic uncertainties, which resulted in a slow-down of our electronics shipments to customers globally. Despite unseasonably cold and wet weather during part of the year, our can product shipments remained relatively flat compared to fiscal 2011. The declines in our volumes were offset by favorable product mix, which resulted in an increase in our conversion premium in fiscal 2012, compared to fiscal 2011.

“Segment income” for the year ended March 31, 2012 was $181 million, down 20% as compared to prior year due to higher conversion costs and lower volumes offset by improved conversion premiums. Conversion costs increased due to higher scrap prices, labor costs, fuel and utility costs and negative effects of increased melt loss. In fiscal 2011, we realized a $17 million gain on the settlement of currency exchange derivatives related to a U.S. dollar dominated debt that was repaid in the third quarter of fiscal 2011, which was recorded in “Foreign currency remeasurement gains, net” and positively impacted “Segment income” in fiscal 2011, but had no impact on fiscal 2012.

South America

As of March 31, 2012, our South American segment included three operating plants in Brazil, which includes one plant with recycling operations, one primary aluminum smelter and hydroelectric power generation facilities. Our South American operations produce various aluminum rolled products for the beverage and food can, construction and industrial and transportation end-use markets. The previously announced expansion of our Pinda facility in Brazil was commissioned at the end of calendar year 2012. Additionally, we have announced plans to install a new coating line for beverage can end stock and to expand recycling capacity in our Pindamonhangaba, Brazil facility.

Our South America operations had positive operating results for the year ended March 31, 2012, compared to prior year. “Net sales” increased $64 million, or 5%, as compared to fiscal 2011 primarily as a result of higher average aluminum prices and improved conversion premiums. Our flat rolled product shipments in fiscal 2012 remained relatively unchanged as compared to prior year.

“Segment income” for the year ended March 31, 2012 was $181 million, an increase of $29 million, or 19%, as compared to the prior year. Improved conversion premiums, the positive effects of changes in foreign currency exchange rates, and favorable variance in our primary metal production were partially offset by unfavorable metal price lag, higher UBC and scrap prices, increased melt loss, and higher costs for alloys and hardeners. Other changes include higher general and administrative costs.

Reconciliation of segment results to “Net income attributable to our common shareholder”

Costs such as depreciation and amortization, interest expense and unrealized gains (losses) on changes in the fair value of derivatives, except foreign currency derivatives on our foreign currency balance sheet exposures, are not utilized by our chief operating decision maker in evaluating segment performance. The table below reconciles “Segment income” from reportable segments to “Net income attributable to our common shareholder” for the year ended March 31, 2012 and 2011 (in millions).



	Year Ended March 31,
	2012			2011
North America	$	407		$	382
Europe	284			313
Asia	181			225
South America	181			152
Total Segment income	1,053			1,072
Depreciation and amortization	(329		)	(404		)
Interest expense and amortization of debt issuance costs	(305		)	(207		)
Unrealized gains (losses) on change in fair value of derivative instruments, net	(62		)	(64		)
Realized gains on derivative instruments not included in segment income	1			5
Adjustment to eliminate proportional consolidation	(49		)	(45		)
Loss on extinguishment of debt	—			(84		)
Restructuring charges, net	(60		)	(34		)
Loss on assets held for sale	(111		)	—
Other costs, net	(9		)	4
Income before income taxes	129			243
Income tax provision	39			83
Net income	90			160
Net income attributable to noncontrolling interests	27			44
Net income attributable to our common shareholder	$	63		$	116

Form: 10-K

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