Novelis Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

~~(in millions)~~


	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2022		2021		2022		2021
Net income	$	12	$	262	$	501	$	739
Other comprehensive income (loss):
Currency translation adjustment	215		6		(146)		(28)
Net change in fair value of effective portion of cash flow hedges	(158)		162		645		(43)
Net change in pension and other benefits	(6)		7		9		17
Other comprehensive income (loss) before income tax effect	51		175		508		(54)
Income tax (benefit) provision related to items of other comprehensive income (loss)	(38)		43		167		(5)
Other comprehensive income (loss), net of tax	89		132		341		(49)
Comprehensive income	101		394		842		690
Comprehensive income (loss) attributable to noncontrolling interests, net of tax	—		1		(1)		1
Comprehensive income attributable to our common shareholder	$	101	$	393	$	843	$	689

Three Months Ended December 31,
2017 2016
Net income $ 105
$ 64
Other comprehensive income (loss):
Currency translation adjustment 58
(140 )
Net change in fair value of effective portion of cash flow hedges (36 ) (24 )
Net change in pension and other benefits 3
26
Other comprehensive income (loss) before income tax effect 25
(138 )
Income tax benefit, net, related to items of other comprehensive income (loss) (10 ) —
Other comprehensive income (loss), net of tax 35
(138 )
Comprehensive income (loss) 140
(74 )
Less: Comprehensive (loss) income attributable to noncontrolling interests, net of tax (16 ) 2
Comprehensive income (loss) attributable to our common shareholder $ 156
$ (76 )

Nine Months Ended December 31,
2017 2016
Net income (loss) $ 513
$ (1 )
Other comprehensive income (loss):
Currency translation adjustment 149
(129 )
Net change in fair value of effective portion of cash flow hedges (33 ) (22 )
Net change in pension and other benefits 8
55
Other comprehensive income (loss) before income tax effect 124
(96 )
Income tax (benefit) provision, net, related to items of other comprehensive income (6 ) 8
Other comprehensive income (loss), net of tax 130
(104 )
Comprehensive income (loss) 643
(105 )
Less: Comprehensive (loss) income attributable to noncontrolling interests, net of tax (16 ) 3
Comprehensive income (loss) attributable to our common shareholder $ 659
$ (108 )

~~See accompanying notes to the condensed consolidated financial statements.~~

~~Novelis Inc.~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)~~

~~(in millions, except number of shares)~~

December 31,
2017 March 31,
2017
ASSETS
Current assets
Cash and cash equivalents $ 757
$ 594
Accounts receivable, net

— third parties (net of uncollectible accounts of $6 as of December 31, 2017 and March 31, 2017) 1,331
1,067
— related parties 253
60
Inventories 1,572
1,333
Prepaid expenses and other current assets 120
137
Fair value of derivative instruments 115
113
Assets held for sale 3
3
Total current assets 4,151
3,307
Property, plant and equipment, net 3,073
3,357
Goodwill 607
607
Intangible assets, net 420
457
Investment in and advances to non–consolidated affiliates 831
451
Deferred income tax assets 90
86
Other long–term assets

— third parties 93
94
— related parties 10
15
Total assets $ 9,275
$ 8,374
LIABILITIES AND SHAREHOLDER’S EQUITY (DEFICIT)

Current liabilities

Current portion of long–term debt $ 136
$ 121
Short–term borrowings 116
294
Accounts payable

— third parties 1,909
1,722
— related parties 206
51
Fair value of derivative instruments 192
151
Accrued expenses and other current liabilities
607
580
Total current liabilities 3,166
2,919
Long–term debt, net of current portion 4,352
4,437
Deferred income tax liabilities 137
98
Accrued postretirement benefits 813
799
Other long–term liabilities 241
198
Total liabilities 8,709
8,451
Commitments and contingencies

Shareholder’s equity (deficit)

Common stock, no par value; unlimited number of shares authorized;
1,000 shares issued and outstanding as of December 31, 2017 and March 31, 2017 —
—
Additional paid–in capital 1,404
1,404
Accumulated deficit (389 ) (918 )
Accumulated other comprehensive loss (415 ) (545 )
Total equity (deficit) of our common shareholder 600
(59 )
Noncontrolling interests (34 ) (18 )
Total equity (deficit) 566
(77 )
Total liabilities and equity (deficit) $ 9,275
$ 8,374

~~See accompanying notes to the condensed consolidated financial statements.~~

~~Novelis Inc.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)~~

~~(in millions)~~

Nine Months Ended December 31,
2017 2016
OPERATING ACTIVITIES
Net income (loss) $ 513
$ (1 )
Adjustments to determine net cash provided by operating activities:

Depreciation and amortization 267
267
Loss (gain) on unrealized derivatives and other realized derivatives in investing activities, net 4
(23 )
Gain on assets held for sale —
(2 )
(Gain) loss on sale of business (318 ) 27
Loss on sale of assets 4
4
Impairment charges 15
—
Loss on extinguishment of debt —
112
Deferred income taxes 41
15
Amortization of fair value adjustments, net —
7
Equity in net loss of non-consolidated affiliates 1
8
Loss on foreign exchange remeasurement of debt 3
—
Amortization of debt issuance costs and carrying value adjustments 15
10
Other, net (1 ) 1
Changes in assets and liabilities including assets and liabilities held for sale (net of effects from divestitures):

Accounts receivable (403 ) (108 )
Inventories (175 ) (200 )
Accounts payable 221
59
Other current assets 24
(3 )
Other current liabilities 12
(55 )
Other noncurrent assets (4 ) (17 )
Other noncurrent liabilities 18
50
Net cash provided by operating activities 237
151
INVESTING ACTIVITIES

Capital expenditures (136 ) (138 )
Proceeds from sales of assets, third party, net of transaction fees and hedging 1
2
Proceeds (outflows) from the sale of a business 314
(2 )
Proceeds from investment in and advances to non-consolidated affiliates, net 9
12
Outflows from related party loans receivable, net —
(3 )
(Outflows) proceeds from the settlement of derivative instruments, net (18 ) 7
Net cash provided by (used in) investing activities 170
(122 )
FINANCING ACTIVITIES

Proceeds from issuance of long-term and short-term borrowings —
2,770
Principal payments of long-term and short-term borrowings (138 ) (2,676 )
Revolving credit facilities and other, net (140 ) (20 )
Debt issuance costs (5 ) (139 )
Net cash used in financing activities (283 ) (65 )
Net increase (decrease) in cash and cash equivalents 124
(36 )
Effect of exchange rate changes on cash 39
(15 )
Cash and cash equivalents — beginning of period 594
556
Cash and cash equivalents — end of period $ 757
$ 505

~~See accompanying notes to the condensed consolidated financial statements.~~

~~Novelis Inc.~~

~~CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY (DEFICIT) (unaudited)~~

~~(in millions, except number of shares)~~

Equity (Deficit) of our Common Shareholder
Common Stock
Additional
Paid-in Capital
Retained Earnings/ (Accumulated Deficit)
Accumulated
Other
Comprehensive
Loss (AOCI)

Non-
controlling Interests
Total (Deficit)/ Equity
Shares Amount
Balance as of March 31, 2016 1,000
$ —
$ 1,404
$ (963 ) $ (500 ) $ —
$ (59 )
Net loss attributable to our common shareholder —
—
—
(2 ) —
—
(2 )
Net income attributable to noncontrolling interests —
—
—
—
—
1
1
Currency translation adjustment included in AOCI —
—
—
—
(129 ) —
(129 )
Change in fair value of effective portion of cash flow hedges, net of tax benefit of $8 million included in AOCI —
—
—
—
(14 ) —
(14 )
Change in pension and other benefits, net of tax provision of $16 million included in AOCI —
—
—
—
37
2
39
Sale of subsidiary shares to a third party —
—
—
—
—
(22 ) (22 )
Balance as of December 31, 2016 1,000
$ —
$ 1,404
$ (965 ) $ (606 ) $ (19 ) $ (186 )

Equity (Deficit) of our Common Shareholder
Common Stock
Additional
Paid-in Capital
Retained Earnings/ (Accumulated Deficit)
Accumulated
Other
Comprehensive
Loss (AOCI)

Non-
controlling Interests
Total (Deficit)/ Equity
Shares Amount
Balance as of March 31, 2017 1,000
$ —
$ 1,404
$ (918 ) $ (545 ) $ (18 ) $ (77 )
Net income attributable to our common shareholder —
—
—
529
—
—
529
Net loss attributable to noncontrolling interests —
—
—
—
—
(16 ) (16 )
Currency translation adjustment included in AOCI —
—
—
—
149
—
149
Change in fair value of effective portion of cash flow hedges, net of tax benefit of $9 million included in AOCI —
—
—
—
(24 ) —
(24 )
Change in pension and other benefits, net of tax provision of $3 million included in AOCI —
—
—
—
5
—
5
Balance as of December 31, 2017 1,000
$ —
$ 1,404
$ (389 ) $ (415 ) $ (34 ) $ 566
____________________

See accompanying notes to the condensed consolidated financial statements.

Novelis Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)


in millions, except number of shares	December 31, 2022		March 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	1,126	$	1,070
Accounts receivable, net
— third parties (net of allowance for credit losses of $6 as of December 31, 2022, and March 31, 2022)	1,887		2,590
— related parties	161		222
Inventories	3,048		3,038
Prepaid expenses and other current assets	195		195
Fair value of derivative instruments	236		377
Assets held for sale	3		5
Current assets of discontinued operations	—		6
Total current assets	6,656		7,503
Property, plant and equipment, net	4,658		4,624
Goodwill	1,075		1,081
Intangible assets, net	588		623
Investment in and advances to non-consolidated affiliates	846		832
Deferred income tax assets	140		158
Other long-term assets
— third parties	285		274
— related parties	2		1

Total assets	$	14,250	$	15,096

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt	$	84	$	26
Short-term borrowings	896		529
Accounts payable
— third parties	2,725		3,869
— related parties	294		320
Fair value of derivative instruments	164		959
Accrued expenses and other current liabilities	737		774
Current liabilities of discontinued operations	—		21
Total current liabilities	4,900		6,498
Long-term debt, net of current portion	4,875		4,967
Deferred income tax liabilities	295		158
Accrued postretirement benefits	640		669
Other long-term liabilities	289		295

Total liabilities	10,999		12,587
Commitments and contingencies
Shareholder's equity:
Common stock, no par value; Unlimited number of shares authorized; 1,000 shares issued and outstanding as of December 31, 2022, and March 31, 2022	—		—
Additional paid-in capital	1,208		1,308
Retained earnings	2,316		1,814
Accumulated other comprehensive loss	(279)		(620)
Total equity of our common shareholder	3,245		2,502
Noncontrolling interests	6		7
Total equity	3,251		2,509
Total liabilities and equity	$	14,250	$	15,096

____________________

See accompanying notes to the condensed consolidated financial statements. Refer to Note 4 – Consolidation for information on our consolidated VIE.

Novelis Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


	Nine Months Ended December 31,
in millions	2022		2021
OPERATING ACTIVITIES
Net income	$	501	$	739
Net loss from discontinued operations	(2)		(62)
Net income from continuing operations	$	503	$	801
Adjustments to determine net cash provided by operating activities:
Depreciation and amortization	405		405
(Gain) loss on unrealized derivatives and other realized derivatives in investing activities, net	(19)		17

Gain on sale of business	—		(15)
Loss on sale of assets, net	1		5
Impairment charges	5		—
Loss on extinguishment of debt, net	—		63
Deferred income taxes, net	(7)		75
Equity in net income of non-consolidated affiliates	(14)		(8)
Gain on foreign exchange remeasurement of debt	(8)		(6)
Amortization of debt issuance costs and carrying value adjustments	12		14
Other, net	—		6
Changes in assets and liabilities including assets and liabilities held for sale (net of effects from divestitures):
Accounts receivable	669		(702)
Inventories	(96)		(1,036)
Accounts payable	(1,061)		843
Other assets	(4)		24
Other liabilities	(65)		17




Net cash provided by operating activities – continuing operations	321		503
Net cash (used in) provided by operating activities – discontinued operations	(12)		12
Net cash provided by operating activities	$	309	$	515
INVESTING ACTIVITIES
Capital expenditures	$	(462)	$	(287)

Acquisition of business and other investments, net of cash acquired	(4)		—
Proceeds from sales of assets, third party, net of transaction fees and hedging	2		—
Proceeds from the sale of a business	3		9
(Outflows) proceeds from investment in and advances to non-consolidated affiliates, net	(37)		1
Proceeds (outflows) from the settlement of derivative instruments, net	5		(11)
Other	15		11
Net cash used in investing activities - continuing operations	(478)		(277)

Net cash used in investing activities	$	(478)	$	(277)
FINANCING ACTIVITIES
Proceeds from issuance of long-term and short-term borrowings	$	—	$	1,670
Principal payments of long-term and short-term borrowings	(380)		(2,034)
Revolving credit facilities and other, net	749		39
Debt issuance costs	(6)		(25)

Return of capital to our common shareholder	(100)		(100)
Net cash provided by (used in) financing activities - continuing operations	263		(450)

Net cash provided by (used in) financing activities	$	263	$	(450)
Net increase (decrease) in cash, cash equivalents and restricted cash	94		(212)
Effect of exchange rate changes on cash	(39)		7
Cash, cash equivalents and restricted cash – beginning of period	1,084		1,027
Cash, cash equivalents and restricted cash – end of period	$	1,139	$	822

Cash and cash equivalents	$	1,126	$	808
Restricted cash (included in other long-term assets)	13		14


Cash, cash equivalents and restricted cash – end of period	$	1,139	$	822

Supplemental Disclosures:


Accrued capital expenditures as of December 31	$	125	$	67
Leased assets obtained in exchange for new operating lease liabilities	27		12

____________________

See accompanying notes to the condensed consolidated financial statements.

Novelis Inc.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (unaudited)


	Equity of our Common Shareholder
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
in millions, except number of shares	Shares	Amount
Balance as of March 31, 2021	1,000	$	—	$	1,408	$	860	$	(366)	$	(16)	$	1,886
Net income attributable to our common shareholder	—	—		—		739		—		—		739

Currency translation adjustment included in other comprehensive income (loss)	—	—		—		—		(28)		—		(28)
Change in fair value of effective portion of cash flow hedges, net of tax benefit of $11 included in other comprehensive income (loss)	—	—		—		—		(32)		—		(32)
Change in pension and other benefits, net of tax provision of $6 included in other comprehensive income (loss)	—	—		—		—		10		1		11
Return of capital to our common shareholder	—	—		(100)		—		—		—		(100)
Balance as of December 31, 2021	1,000	$	—	$	1,308	$	1,599	$	(416)	$	(15)	$	2,476

	Equity of our Common Shareholder
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
	Shares	Amount
Balance as of March 31, 2022	1,000	$	—	$	1,308	$	1,814	$	(620)	$	7	$	2,509
Net income attributable to our common shareholder	—	—		—		502		—		—		502
Net loss attributable to noncontrolling interests	—	—		—		—		—		(1)		(1)
Currency translation adjustment included in other comprehensive income (loss)	—	—		—		—		(146)		—		(146)
Change in fair value of effective portion of cash flow hedges, net of tax provision of $165 included in other comprehensive income (loss)	—	—		—		—		480		—		480
Change in pension and other benefits, net of tax provision of $2 included in other comprehensive income (loss)	—	—		—		—		7		—		7
Return of capital to our common shareholder	—	—		(100)		—		—		—		(100)
Balance as of December 31, 2022	1,000	$	—	$	1,208	$	2,316	$	(279)	$	6	$	3,251

	Equity of our Common Shareholder
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
	Shares	Amount
Balance as of September 30, 2021	1,000	$	—	$	1,308	$	1,337	$	(547)	$	(16)	$	2,082
Net income attributable to our common shareholder	—	—		—		262		—		—		262

Currency translation adjustment included in other comprehensive income (loss)	—	—		—		—		6		—		6
Change in fair value of effective portion of cash flow hedges, net of tax provision of $42 included in other comprehensive income (loss)	—	—		—		—		120		—		120
Change in pension and other benefits, net of tax provision of $1 included in other comprehensive income (loss)	—	—		—		—		5		1		6

Balance as of December 31, 2021	1,000	$	—	$	1,308	$	1,599	$	(416)	$	(15)	$	2,476

	Equity of our Common Shareholder
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
	Shares	Amount
Balance as of September 30, 2022	1,000	$	—	$	1,208	$	2,304	$	(368)	$	6	$	3,150
Net income attributable to our common shareholder	—	—		—		12		—		—		12

Currency translation adjustment included in other comprehensive income (loss)	—	—		—		—		215		—		215
Change in fair value of effective portion of cash flow hedges, net of tax benefit of $37 included in other comprehensive income (loss)	—	—		—		—		(121)		—		(121)
Change in pension and other benefits, net of tax benefit of $1 included in other comprehensive income (loss)	—	—		—		—		(5)		—		(5)

Balance as of December 31, 2022	1,000	$	—	$	1,208	$	2,316	$	(279)	$	6	$	3,251

____________________

See accompanying notes to the condensed consolidated financial statements.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

References herein to ~~“Novelis,”~~"Novelis," the ~~“Company,” “we,” “our,”~~"Company," "we," "our," or ~~“us”~~"us" refer to Novelis Inc. and its subsidiaries unless the context specifically indicates otherwise. References herein to ~~“Hindalco”~~"Hindalco" refer to Hindalco Industries Limited. Hindalco acquired Novelis in May 2007. ~~All of the common shares of~~Effective September 1, 2022, Novelis ~~are owned directly by~~Inc. and AV Metals, Inc. (which, prior to such date, was our sole shareholder and ~~indirectly~~a wholly owned subsidiary of AV Minerals (Netherlands) N.V.) completed a plan of arrangement, pursuant to which AV Metals, Inc. merged with and into Novelis Inc., with Novelis Inc. surviving the merger. As of the effectiveness of the plan of arrangement, we are a direct, wholly owned subsidiary of AV Minerals (Netherlands) N.V. Prior to the effectiveness of the plan of arrangement, AV Metals, Inc. was a holding company, with its assets being comprised solely of its investment in Novelis, and without any operations. The plan of arrangement was a combination of entities under common control and resulted in a change in the reporting entity. The opening balance of additional paid-in capital has been increased and that of retained earnings reduced by ~~Hindalco Industries Limited.~~$4 million in the earliest period presented.

Organization and Description of Business

We produce aluminum plate, sheet, and light gauge products for use in the packaging market, which includes beverage and food ~~cans~~can and foil products, as well as for use in the automotive, transportation, aerospace, electronics, architectural, and industrial product markets. ~~We have recycling operations in many of our plants to recycle post-consumer aluminum, such as used beverage cans and post-industrial aluminum, such as class scrap.~~ As of December 31, ~~2017,~~2022, we had manufacturing operations in ~~ten~~nine countries on four continents: North America, South America, Asia, and Europe, through 2433 operating facilities, ~~including~~which may include any combination of hot or cold rolling, finishing, casting, or recycling capabilities. We have recycling operations in ~~eleven~~15 of ~~these plants.~~our operating facilities to recycle post-consumer aluminum, such as UBCs, and post-industrial aluminum, such as class scrap.

The ~~March 31, 2017~~ condensed consolidated balance sheet data as of March 31, 2022, was derived from the March 31, 2022, audited financial statements but does not include all disclosures required by ~~accounting principles generally accepted in the United States of America (U.S. GAAP).~~U.S. GAAP. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes in our ~~Annual Report on~~2022 Form ~~10-K for the year-ended March 31, 2017 filed with the United States Securities and Exchange Commission (SEC) on May 10, 2017.~~10-K. Management believes that all adjustments necessary for the fair statement of results, consisting of normally recurring items, have been included in the unaudited condensed consolidated financial statements for the interim periods presented.

Consolidation Policy

Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the assets, liabilities, revenues, and expenses of all ~~wholly-owned~~wholly owned subsidiaries, majority-owned subsidiaries over which we exercise control, and entities in which we have a controlling financial interest or are deemed to be the primary beneficiary. We eliminate ~~all significant~~ intercompany accounts and transactions from our condensed consolidated financial statements.

We use the equity method to account for our investments in entities that we do not control but ~~where we~~ have the ability to exercise significant influence over operating and financial policies. Consolidated "~~Net~~net income ~~(loss)~~ attributable to our common shareholder" includes our share of ~~Net~~the net income (loss) of these entities. The difference between consolidation and the equity method impacts certain of our financial ratios because of the presentation of the detailed line items reported in the condensed consolidated financial statements for consolidated entities, compared to a two-line presentation of ~~"Investment~~investment in and advances to non-consolidated ~~affiliates"~~affiliates and ~~"Equity~~equity in net ~~loss~~income of non-consolidated affiliates."

Use of Estimates and Assumptions

The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The principal areas of judgment relate to (1) ~~the fair value of derivative financial instruments; (2)~~ impairment of goodwill; ~~(3) impairment of long lived assets and other intangible assets; (4) impairment and assessment of consolidation of equity investments; (5)~~(2) actuarial assumptions related to pension and other postretirement benefit plans; ~~(6)~~(3) tax uncertainties and valuation allowances; and ~~(7)~~(4) assessment of loss contingencies, including environmental and litigation liabilities. Future events and their effects cannot be predicted with certainty, and accordingly, our accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of our condensed consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained, and as our operating environment changes. We evaluate and update our assumptions and estimates on an ongoing basis and may employ outside experts to assist in our evaluations. Actual results could differ from the estimates we have used.

~~Revision~~Risks & Uncertainty resulting from COVID-19

Beginning late in the fourth quarter of ~~Previously Issued Financial Statements~~fiscal 2020 and carrying into fiscal 2023, the COVID-19 pandemic and its unprecedented negative economic implications have affected production and sales across a range of industries around the world.

During the preparation of the Form 10-Q for the three months ended June 30, 2017, we identified a misclassification between "Prepaid expenses and other current assets" and “Accrued expenses other current liabilities” accounts that understated these balances for the periods ended March 31, 2017, December 31, 2016, and September 30, 2016 of $26 million, $21 million, and $16 million, respectively. In addition, we identified a misclassification between “Deferred income tax assets” and “Deferred income tax liabilities” of $4 million that understated these balances as of March 31, 2017. These items impacted the

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

Our global operations, similar to those of many other large, multi-national corporations, have encountered higher costs and have felt this impact on customer demand, disruptions to our supply chain, interruptions to our production, and delays of shipments to our customers.

~~"Other current assets"~~While much of our customer demand and ~~"Other current liabilities" line items line items within total "Operating Activities". However, there is no~~shipments have recovered in the majority of our end markets, the overall extent of the impact ~~to "Net cash provided by~~of the COVID-19 pandemic on our operating ~~activities" within the consolidated statements of cash flows.~~

~~In our statement of~~results, cash flows, ~~within~~liquidity, and financial condition will depend on certain developments, including the ~~operating section, to correct the presentation of certain non-cash items, we revised "Loss (gain) on foreign exchange remeasurement of debt"~~duration and ~~"Other current liabilities" in the presentation~~spread of the ~~prior year~~outbreak (including the emergence of variants of the virus) and its impact on our customers, employees, suppliers, and other partners. We believe this will be primarily driven by ~~$41 million. This revision has no~~the severity and duration of the COVID-19 pandemic, the COVID-19 pandemic's impact on the ~~condensed consolidation statement~~U.S. and global economies, and the timing, scope, and effectiveness of ~~operations,~~federal, state, and local governmental responses, including the ~~condensed consolidated balance sheets~~revision of governmental quarantine or other public health measures, medical remedies, and preventative measures, especially in response to new COVID-19 variants.

Although we have made our best estimates based on current information, the ~~key metrics related~~effects of the COVID-19 pandemic on our business may result in future changes to our estimates and assumptions based on its duration and on the emergence of new variants. Actual results could materially differ from the estimates and assumptions developed by management. If so, we may be subject to future impairment charges as well as changes to recorded reserves and valuations.

Risks & Uncertainties resulting from Inflation, Supply Chain Disruptions and Geopolitical Instability

The first three quarters of fiscal 2023 were marked by global economic uncertainty, capital markets disruption, and supply chain interruptions, which have been impacted by inflationary cost pressures, the ongoing COVID-19 pandemic, and geopolitical instability due to the ~~condensed consolidated statements~~military conflict between Russia and Ukraine. We have experienced increased inflationary cost pressures to date in fiscal 2023 resulting from global supply chain disruptions impacting the availability and price of materials and services including energy, freight, coatings, and alloys, such as magnesium. Geopolitical instability exacerbated inflationary cost pressures, which are expected to continue for the foreseeable future. We have not experienced significant direct impacts from the Russia-Ukraine conflict, as we do not have operations nor significant sales in either Russia or Ukraine. However, we have experienced indirect impacts, as the conflict has driven up energy prices globally, beginning in the fourth quarter of fiscal 2022, and we expect these costs will remain elevated until energy prices stabilize. To date, our operations have not been materially impacted by labor shortages, and we remain able to procure the necessary raw materials, parts, and equipment due to our diverse, global supplier network. We believe we are positioned to maintain production levels necessary to service our customers in the near term. However, we cannot predict how long energy and other operating input prices will remain inflated, supply chains will continue to experience disruptions, or potential future financial impacts. We have been able to mitigate a portion of the higher inflationary cost impact through a combination of hedging, passing through a portion of higher costs to customers, favorable pricing environments, and increased recycled inputs. There is no assurance that we will continue to be able to mitigate these higher costs in the future.

The overall extent of the impact of these factors on our operating results, cash ~~flows.~~flows, liquidity, and financial condition will depend on certain developments, including the duration of the current inflationary environment, supply chain disruptions, end market demand, and the Russia-Ukraine conflict. Although we have made our best estimates based on the current information, the effects of these factors on our business may result in future changes to our estimates and assumptions based on their duration. Actual results could materially differ from the estimates and assumptions developed by management. If so, we may be subject to future impairment charges as well as changes to recorded reserves and valuations.

Recently Adopted Accounting Standards

We ~~assessed the materiality of the misstatements and concluded that these misstatements were~~did not material to the Company’s previously issued financial statements and that amendments of previously filed reports were therefore not required. However, we elected to revise the previously reported amounts in both the March 31, 2017 consolidated balance sheet and consolidated statement of cash flows by the amounts above.

~~Reclassification~~

~~A reclassification of a prior period amount has been made to conform to the presentation adopted for the current period.~~

~~For~~adopt any new accounting pronouncements during the nine months ended December 31, ~~2016, we reclassified $27 million from "Other (income) expense, net" to "(Gain) loss~~2022, that had a material impact on ~~the sale of a business, net" in the condensed~~our consolidated ~~statement~~financial condition, results of operations, to conform with the current period presentation. This reclassification had no impact on “Income before income taxes,” “Net income (loss) attributable to our common shareholder,” the condensed consolidated balance sheets or ~~condensed consolidated statements of~~ cash ~~flows during the respective periods. Refer to Note 13 — Other (income) expense, net for further details.~~

flows.

Recently Issued Accounting Standards (Not Yet Adopted)

In ~~August 2017,~~September 2022, the ~~FASB~~Financial Accounting Standards Board (FASB) issued ASU ~~2017-12,~~ ~~Derivatives~~2022-04, Liabilities—Supplier Finance Programs (Topic 405-50) - Disclosure of Supplier Finance Program Obligations. This ASU requires quantitative and ~~Hedging (Topic 815): Targeted Improvements~~qualitative disclosures about the key terms of supplier finance programs, an annual rollforward of obligations to ~~Accounting for Hedging Activities. The amendments in this update better align an entity’s risk management objectives, activities~~finance providers, and ~~financial~~interim disclosure of obligations as of each reporting ~~for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The guidance~~period presented. This ASU is effective for ~~public business~~all entities for ~~interim and annual periods~~fiscal years beginning after December 15, ~~2018. Early adoption is permitted and we intend~~2022, on a retrospective basis, including interim periods within those fiscal years, except for the requirement to early adopt during the fourth quarter of fiscal 2018. We believe that the impact to Novelis will primarily result from the following changes to the guidance: election to hedge a specific component of non-financial risk, the entire change in the fair value of the hedging instrument will be deferred to OCI, elimination of hedge accounting ineffectiveness in earnings, reclassification of AOCI to earnings in the same line item impacted by the hedged item, and operational simplification of hedge effectiveness requirements.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting~~. This update was issued to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change to the terms or conditions of a share-based payment award. An entity may change the terms or conditions of a share-based payment award for many different reasons, and the nature and effect of the change can vary significantly. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The guidancedisclose rollforward information, which is effective prospectively for ~~public business entities for interim and annual periods~~fiscal years beginning after December 15, ~~2017.~~2023. Early adoption is permitted. We ~~will adopt this standard during~~are currently reviewing the ~~first quarter of Fiscal 2019. Adoption~~provisions of this ~~standard is~~ASU but do not ~~expected to~~expect this guidance will have ana material impact on our consolidated ~~results of operations.~~

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.~~ This update was issued primarily to improve the presentation of net periodic pension and other postretirement benefit costs. The new guidance requires entities to (1) disaggregate the current service cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in thefinancial condition, results of operations, ~~and (2) present the~~or cash flows.

There are no other ~~components elsewhere in the results of operations and outside of income from operations if~~recent accounting pronouncements pending adoption that subtotal is presented. The guidance is effective for public business entities for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. Currently, all postretirement costs (FAS 87, FAS 106 and FAS 112) fall within the line item “Selling, general and administrative expenses” within the consolidated results of operations. We are currently evaluating thewe expect will have a material impact ~~of this standard~~ on our consolidated financial ~~position and~~condition, results of ~~operations.~~operations, or cash flows.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

2. DISCONTINUED OPERATIONS

~~In February 2017,~~On April 14, 2020, we closed the ~~FASB issued ASU 2017-06,~~ Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965), Employee Benefit Plan Master Trust Reporting (“ASU 2017-06”)~~. This update primarily impacted the reporting by an employee benefit plan (a plan)~~acquisition of Aleris for ~~its interest in~~$2.8 billion. As a ~~master trust. The amendments in this update require all plans to disclose (1) their master trust’s other asset and liability balances and (2) the dollar amount~~result of the ~~plan’s interest~~antitrust review processes in ~~each~~the European Union, the U.S., and China, which were required for approval of ~~those balances. The amendments~~the acquisition, we were obligated to divest Aleris' European and North American automotive assets, including the Duffel and Lewisport plants, respectively.

On September 30, 2020, we completed the sale of Duffel to Liberty House Group through its subsidiary, ALVANCE, the international aluminum business of the GFG Alliance. Upon closing, we received €210 million ($246 million as of September 30, 2020) in ~~this update are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. Adoption~~cash and a €100 million ($117 million as of ~~this standard is not expected~~September 30, 2020) receivable that was deemed to ~~have an impact on our consolidated financial position or~~be contingent consideration subject to the results of ~~operations.~~a binding arbitration proceeding under German law.

~~In February 2017,~~We accounted for this contingent consideration at fair value and marked to fair value on a quarterly basis. As of June 30, 2021, Novelis marked all outstanding receivables related to the ~~FASB issued ASU 2017-05,~~ ~~Other Income-Gains and Losses from the Derecognition~~sale of ~~Non-financial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Non-financial Assets. The amendments in this update include (i) clarification that non-financial assets within the scope of ASC 610-20 may include non-financial assets transferred within a legal entity~~Duffel to ~~a counterparty; (ii) clarification that~~ an entity should allocate consideration to each distinct asset by applying the guidance in ASC 606 on allocating the transaction price to performance obligations; and (iii) a requirement for entities to derecognize a distinct non-financial asset or distinct in substance non-financial asset in a partial sale transaction when it does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with ASC 810, and transfers control of the asset in accordance with ASC 606. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. Adoption of this standard is expected to have an immaterial impact on our consolidated financial position and results of operations.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, accounting guidance, which removes Step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the~~estimated fair value of €45 million ($53 million), which resulted in a ~~reporting unit~~loss of €51 million ($61 million) recorded in loss from discontinued operations, net of tax.

In June 2022, Duffel was acquired by American Industrial Partners Capital Fund VII, L.P. (together with its ~~carrying amount. Under~~affiliates, "AIP"). In December 2022, the ~~simplified model,~~Company reached a ~~goodwill impairment is calculated as~~settlement with AIP in order to reach a resolution to the ~~difference between~~dispute being arbitrated, among other matters. As part of the ~~carrying~~settlement, the contingent consideration balance was settled for €45 million ($46 million), consisting of €5 million ($5 million) in cash paid on the settlement date and a note in the amount of the reporting unit and its fair value, but not to exceed the carrying amount of goodwill allocated to that reporting unit. Early adoption is permitted. The guidance is effective for public business entities for interim and annual periods beginning after its annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Adoption of this standard is not expected to have an impact on our consolidated financial position, results of operations and statement of cash flows.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Clarifying the Definition of a Business (Topic 805)~~, which provides guidance on evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The new guidance amends ASC 805 to provide a more robust framework to use in determining when a set of assets and activities is a business. In addition, the amendments provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. We believe that the adoption of this standard will not have an impact on our consolidated financial position and results of operations.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230) - Statement of Cash Flows (Topic 230): Restricted Cash~~€40 million ($41 million). The ~~amendments~~note bears interest at the annual rate of 5% and matures on December 31, 2027, with interest and €0.2 million of principal payable semi-annually and the remainder of the principal payable at maturity. As a result of the settlement, the arbitration was dismissed in ~~this update apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230.~~January 2023. The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. Adoption of this standard issettlement did not ~~expected to~~ have a material impact on ~~our~~the Company's consolidated ~~financial position, results of operations and~~ statement of ~~cash flows.~~operations.

~~In October 2016,~~The resolution reached with AIP also included the ~~FASB issued ASU 2016-16,~~ ~~Accounting for Income Taxes: Intra-Entity Asset Transfers~~settlement of ~~Assets Other than Inventory. The new guidance eliminates the exception for all intra-entity sales~~certain assets and liabilities that were previously classified as current assets and current liabilities of assets other than inventory. The guidance will require the tax effects of intercompany transactions to be recognized currently and will likely impact reporting entities’ effective tax rates. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. We are currently evaluating the impact of this standarddiscontinued operations on our consolidated ~~financial position~~balance sheets. The settlement of such assets and ~~results~~liabilities did not have a material impact on the Company's consolidated statement of operations.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

3. INVENTORIES

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments~~. The new guidance applies to all entities that are required to present a statement of cash flows under Topic 230 and addresses specific cash flow items to provide clarification and reduce the diversity in presentation of these items. The guidance is effective for annual periods beginning after December 15, 2017 and interim periods within that year. Early adoption is permitted. Adoption of this standard is not expected to have a material impact on our consolidated financial position, results of operations and statement of cash flows.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~, which when effective will require organizations that lease assets (e.g., through "leases") to recognize assets and liabilities for the rights and obligations created by the leases on the balance sheet. A lessee will be required to recognize assets and liabilities for leases with terms that exceed twelve months. The standard will also require disclosures to help investors and financial statement users to better understand the amount, timing and uncertainty of cash flows arising from leases. The disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The guidance is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial position and results of operations.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~, which, when effective, will supersede the guidance in former ASC 605, Revenue Recognition. The new guidance requires entities to recognize revenue based on the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for these goods or services. The guidance is effective for annual periods beginning after December 15, 2016 and interim periods within that year. Early adoption is not permitted. In August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date, which provides an optional one-year deferralInventories consists of the effective date. Subsequent to these amendments, further clarifying amendments have been issued. We are currently evaluating the impact of the standard on our consolidated financial position, results of operations and disclosures. We have begun assessing our contracts and drafting policies to implement the new revenue standards and will be implementing this standard during the first quarter of fiscal year 2019.following.


in millions	December 31, 2022		March 31, 2022
Finished goods	$	786	$	677
Work in process	1,381		1,511
Raw materials	610		620
Supplies	271		230
Inventories	$	3,048	$	3,038

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

~~2. RESTRUCTURING AND IMPAIRMENT~~

~~“Restructuring and impairment, net” for the nine months ended December 31, 2017 and 2016 was $33 million and $4 million, respectively.~~

~~The following table summarizes our restructuring liability activity and other impairment charges (in millions).~~

Total restructuring
liabilities
Other restructuring charges (A) Total restructuring charges Other impairments (B)
Total
restructuring
and impairments, net
Balance as of March 31, 2017 $ 24

Expenses 18
$ 9
$ 27
$ 6
$ 33
Cash payments (5 )
Foreign currency (C) (1 )
Balance as of December 31, 2017 $ 36

~~_________________________~~


~~(A)~~	~~Other restructuring charges include period expenses that were not recorded through the restructuring liability.~~


~~(B)~~	~~Other impairment charges not related to restructuring activities.~~


~~(C)~~	~~This primarily relates to the remeasurement of Brazilian real denominated restructuring liabilities.~~

We plan to cease certain non-core operations at a facility in Europe resulting in $9 million of asset impairments and $16 million of severance and associated legal costs, which is expected to be paid in fiscal 2019.

As of December 31, 2017, $31 million of restructuring liabilities was included in "Accrued expenses and other current liabilities" and $5 million was included in "Other long-term liabilities" on our condensed consolidated balance sheet. As of December 31, 2017, there was a $17 million restructuring liability for the South America segment, $17 million for the Europe segment, $1 million for the North America segment and $1 million for the Asia segment. There were also $2 million and $3 million in payments for the Europe and South America segments, respectively, during the nine months ended December 31, 2017.

As of March 31, 2017, $16 million of restructuring liabilities was included in "Accrued expenses and other current liabilities" and $8 million was included in "Other long-term liabilities" on our condensed consolidated balance sheet.

~~For additional information on environmental charges see Note 15 — Commitments and Contingencies.~~

~~Novelis Inc.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - (Continued)~~

~~3. INVENTORIES~~

~~"Inventories" consist of the following (in millions).~~

December 31,
2017 March 31,
2017
Finished goods $ 417
$ 389
Work in process 733
576
Raw materials 263
213
Supplies 159
155
Inventories $ 1,572
$ 1,333

~~Novelis Inc.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - (Continued)~~

4. CONSOLIDATION

Variable Interest ~~Entities (VIE)~~Entity

We have a joint interest in Logan Aluminum Inc. (Logan) with Tri-Arrows Aluminum Inc. (Tri-Arrows). Logan processes metal received from Novelis and Tri-Arrows and charges the respective partner a fee to cover expenses. Logan is thinly capitalized and relies on the regular reimbursement of costs and expenses by Novelis and Tri-Arrows to fund its operations. This reimbursement is considered a variable interest as it constitutes a form of financing the activities of Logan. As Logan is dependent upon the investors for ongoing capital to support the operations of the entity, Logan is a variable interest entity ("VIE"). The entity that has a controlling financial interest in a VIE is referred to as the primary beneficiary and consolidates the VIE. An entity is deemed to have a controlling financial interest and is the primary beneficiary of a VIE if it has both the power to direct the activities of the VIE that most significantly impact the ~~VIE’s~~VIE's economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. ~~We have~~

Logan is a consolidated joint venture in which we hold 40% ownership. Our joint venture partner is Tri-Arrows. Logan processes metal received from Novelis and Tri-Arrows and charges the ~~ability~~respective partner a fee to ~~make decisions regarding Logan’s production~~cover expenses. Logan is a thinly capitalized VIE that relies on the regular reimbursement of costs and expenses from Novelis and Tri-Arrows to fund its operations. ~~We also have~~Novelis is considered the ~~ability to take the majority share of production and associated costs. These facts qualify us as Logan’s~~ primary beneficiary and ~~this entity is consolidated for all periods presented.~~consolidates Logan since it has the power to direct activities that most significantly impact Logan's economic performance, an obligation to absorb expected losses, and the right to receive benefits that could potentially be significant to the VIE.

Other than the contractually required reimbursements, we do not provide ~~other~~additional material support to Logan. Logan's creditors do not have recourse to our general credit. There are significant other assets used in the operations of Logan that are not part of the joint venture, as they are directly owned and consolidated by Novelis or Tri-Arrows.

The following table summarizes the carrying value and classification of assets and liabilities owned by the Logan joint venture and consolidated in our condensed consolidated balance ~~sheets (in millions).~~sheets.


	December 31, 2017		March 31, 2017
Assets
Current assets
in millions					in millions	December 31, 2022		March 31, 2022
ASSETS					ASSETS
Current assets:					Current assets:
Cash and cash equivalents	$	4	$	2	Cash and cash equivalents	$	5	$	3
Accounts receivable	29		29
Accounts receivable, net					Accounts receivable, net	10		50
Inventories	69		62		Inventories	134		115
Prepaid expenses and other current assets	1		2		Prepaid expenses and other current assets	6		8
Total current assets	103		95		Total current assets	155		176
Property, plant and equipment, net	21		25		Property, plant and equipment, net	38		22
Goodwill	12		12		Goodwill	12		12
Deferred income taxes	59		89
Deferred income tax assets					Deferred income tax assets	42		41
Other long-term assets	23		30		Other long-term assets	11		6
Total assets	$	218	$	251	Total assets	$	258	$	257
Liabilities
Current liabilities
LIABILITIES					LIABILITIES
Current liabilities:					Current liabilities:
Accounts payable	$	40	$	32	Accounts payable	$	62	$	53
Accrued expenses and other current liabilities	18		21		Accrued expenses and other current liabilities	25		28
Total current liabilities	58		53		Total current liabilities	87		81
Accrued postretirement benefits	217		224		Accrued postretirement benefits	147		153
Other long-term liabilities	3		3		Other long-term liabilities	6		2
Total liabilities	$	278	$	280	Total liabilities	$	240	$	236

Three Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016
Net sales $ 308
$ 95
$ 549
$ 340
Costs and expenses related to net sales 309
116
551
358
Provision for taxes on income (1 ) (7 ) (1 ) (6 )
Net loss $ —
$ (14 ) $ (1 ) $ (12 )
Purchases of tolling services from Alunorf $ 59
$ 47
$ 180
$ 170

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

The following table describes the period-end account balances that we had with these non-consolidated affiliates, shown as related party balances in the accompanying condensed consolidated balance sheets (in millions). We had no other material related party balances with Alunorf or UAL.

December 31,
2017 March 31,
2017
Accounts receivable-related parties $ 253
$ 60
Other long-term assets-related parties $ 10
$ 15
Accounts payable-related parties $ 206
$ 51

We earned less than $1 million of interest income on a loan due from Alunorf during each of the periods presented in "Other long-term assets-related parties" in the table above. We believe collection of the full receivable from Alunorf is probable; thus no allowance for loan loss was recorded as of ~~December 31, 2017~~ ~~and March 31, 2017.~~

We have guaranteed the indebtedness for a credit facility on behalf of Alunorf. The guarantee is limited to 50% of the outstanding debt, not to exceed 6 million euros. As of December 31, 2017, there were no amounts outstanding under our guarantee with Alunorf as there were no outstanding borrowings. We have also guaranteed the payment of early retirement benefits on behalf of Alunorf. As of December 31, 2017, this guarantee totaled $2 million.

Transactions with Hindalco

We occasionally have related party transactions with ~~our indirect parent company,~~ Hindalco. During the three and nine months ended December 31, ~~2017~~2022, and ~~2016, “Net sales” were~~2021, we recorded net sales of less than $1 million between Novelis and ~~Hindalco.~~Hindalco related primarily to sales of equipment and other services. As of December 31, ~~2017~~2022, and March 31, ~~2017,~~2022, there ~~were~~was $2 million and $1 million, respectively, of outstanding accounts receivable, net — related parties net of accounts payable — related parties related to transactions with Hindalco. During the three and nine months ended December 31, 2022, Novelis purchased less than $1 million in ~~"Accounts receivable, net - related parties" outstanding related to transactions with Hindalco.~~

~~During the nine months ended December 31, 2017, Novelis did not purchase any~~ raw materials from Hindalco. ~~There were $3~~

Return of Capital

We paid returns of capital to our common shareholder in the amount of $100 million during each of ~~raw material purchases from Hindalco that were fully paid for during~~ the ~~nine months ended December 31, 2016.~~second quarters of fiscal 2023 and 2022.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

6. DEBT

Debt ~~consisted~~consists of the ~~following (in millions).~~

following.

December 31, 2017 March 31, 2017

Interest
Rates (A)
Principal
Unamortized
Carrying Value
Adjustments (B)

Carrying
Value
Principal
Unamortized
Carrying Value
Adjustments (B)

Carrying
Value
Third party debt:
Short-term borrowings 2.51 % $ 116
$ —
$ 116
$ 294
$ —
$ 294
Novelis Inc.
Floating rate Term Loan Facility, due June 2022 3.54 % 1,782
(46 ) 1,736
1,796
(53 ) 1,743
Novelis Corporation
5.875% Senior Notes, due September 2026 5.875 % 1,500
(22 ) 1,478
1,500
(23 ) 1,477
6.25% Senior Notes, due August 2024 6.25 % 1,150
(17 ) 1,133
1,150
(19 ) 1,131
Novelis Korea Limited
Bank loans, due through September 2020 (KRW 132 billion) 2.65 % 123
—
123
184
—
184
Novelis Switzerland S.A.
Capital lease obligation, due through December 2019 (Swiss francs (CHF) 14 million) 7.50 % 14
—
14
17
(1 ) 16
Novelis do Brasil Ltda.
BNDES loans, due through April 2021 (BRL 7 million) 6.02 % 2
—
2
4
—
4
Other
Capital Lease Obligations and Other debt, due through December 2020 4.84 % 2
—
2
3
—
3
Total debt 4,689
(85 ) 4,604
4,948
(96 ) 4,852
Less: Short term borrowings (116 ) —
(116 ) (294 ) —
(294 )
Current portion of long term debt (136 ) —
(136 ) (121 ) —
(121 )
Long-term debt, net of current portion $ 4,437
$ (85 ) $ 4,352
$ 4,533
$ (96 ) $ 4,437


	December 31, 2022								March 31, 2022
in millions	Interest Rates(1)		Principal		Unamortized Carrying Value Adjustments(2)		Carrying Value		Principal		Unamortized Carrying Value Adjustments(2)		Carrying Value
Short-term borrowings	4.77	%	$	896	$	—	$	896	$	529	$	—	$	529
Floating rate Term Loans, due January 2025	6.48	%	754		(8)		746		760		(11)		749
Floating rate Term Loans, due March 2028	6.73	%	492		(7)		485		495		(8)		487
3.25% Senior Notes, due November 2026	3.25	%	750		(8)		742		750		(10)		740
3.375% Senior Notes, due April 2029	3.375	%	533		(9)		524		556		(10)		546
4.75% Senior Notes, due January 2030	4.75	%	1,600		(22)		1,578		1,600		(25)		1,575
3.875% Senior Notes, due August 2031	3.875	%	750		(10)		740		750		(10)		740
China Bank Loans, due August 2027	4.55	%	66		—		66		76		—		76
1.8% Brazil Loan, due June 2023	1.80	%	30		—		30		30		—		30
1.8% Brazil Loan, due December 2023	1.80	%	20		—		20		20		—		20
Finance lease obligations and other debt, due through June 2028	2.28	%	28		—		28		30		—		30
Total debt			$	5,919	$	(64)	$	5,855	$	5,596	$	(74)	$	5,522
Less: Short-term borrowings			(896)		—		(896)		(529)		—		(529)
Less: Current portion of long-term debt			(84)		—		(84)		(26)		—		(26)
Long-term debt, net of current portion			$	4,939	$	(64)	$	4,875	$	5,041	$	(74)	$	4,967

~~_________________________~~

~~(A)~~

Interest rates are the stated rates of interest on the debt instrument (not the effective interest rate) as of December 31, 2017, and therefore, exclude the effects of related interest rate swaps and accretion/amortization of fair value adjustments as a result of purchase accounting in connection with Hindalco's purchase of Novelis and accretion/amortization of debt issuance costs related to refinancing transactions and additional borrowings. We present stated rates of interest because they reflect the rate at which cash will be paid for future debt service.


~~(B)~~	~~Amounts include unamortized debt issuance costs, fair value adjustments and debt discounts.~~

____________________

(1)Interest rates are the stated rates of interest on the debt instrument (not the effective interest rate) as of December 31, 2022, and therefore exclude the effects of accretion and amortization of debt issuance costs related to refinancing transactions and additional borrowings. We present stated rates of interest because they reflect the rate at which cash will be paid for future debt service.

~~Novelis Inc.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - (Continued)~~

(2)Amounts include unamortized debt issuance costs, fair value adjustments, and debt discounts.

Principal repayment requirements for our total debt over the next five years and thereafter using exchange rates as of

December 31, ~~2017 (for~~2022, for our debt denominated in foreign ~~currencies)~~currencies are as follows (in millions).


As of December 31, 2022	Amount
Short-term borrowings and current portion of long-term debt due within one year	$	980
2 years	31
3 years	757
4 years	774
5 years	26
Thereafter	3,351
Total	$	5,919

As of December 31, 2017 Amount
Short-term borrowings and current portion of long-term debt due within one year $ 252
2 years 38
3 years 21
4 years 18
5 years 1,710
Thereafter 2,650
Total $ 4,689
Short-Term Borrowings

~~Senior Secured Credit Facilities~~

As of December 31, ~~2017, the senior secured credit facilities~~2022, our short-term borrowings totaled $896 million, which consisted of ~~(i) a $1.8 billion secured term loan credit facility (Term Loan Facility) and (ii) a $1 billion asset based loan facility (ABL Revolver). As of December 31, 2017, $18~~$739 million of borrowings on our ABL Revolver, $106 million in short-term China loans (CNY 740 million), $50 million in short-term Brazil loans and $1 million in other short-term borrowings.

The short-term loan with Axis Bank Limited, IFSC Banking Unit, Gift City, matured in November 2022. We repaid the ~~Term Loan Facility is due within one year.~~

remaining principal balance of this loan in full at the maturity date.

Term Loan Facility

~~In September 2017,~~As of December 31, 2022, we ~~amended~~were in compliance with the covenants of our Term Loan Credit Agreement (the "Term Loan Amendment") to our $1.8 billion Credit Agreement (the "Term Loan Facility") dated as of January 10, 2017. The amendment modifies certain provisions of the Term Loan Facility to facilitate the closing of the transaction with Kobe Steel Ltd.Facility.

The Term Loan Facility matures on June 2, 2022, and is subject to 0.25% quarterly amortization payments. The loans under the Term Loan Facility accrue interest at LIBOR plus 1.85%. The Term Loan Facility also requires customary mandatory

prepayments with excess cash flow, asset sale and casualty event proceeds and proceeds of prohibited indebtedness, all subject to customary exceptions. The Term Loan may be prepaid, in full or in part, at any time at the Company’s election without penalty or premium. The Term Loan Facility allows for additional term loans to be issued in an amount not to exceed $300 million (or its equivalent in other currencies) plus an unlimited amount if, after giving effect to such incurrence on a pro forma basis, the senior secured net leverage ratio does not exceed 3.00 to 1.00. The lenders under the Term Loan Facility have not committed to provide any such additional term loans.

~~ABL Revolver~~

In September 2017, we amended and extended the ABL Revolver. The facility is a senior secured revolver bearing an interest rate of LIBOR plus a spread of 1.25% to 1.75% or a prime rate plus a prime spread of 0.25% to 0.75% based on excess availability. The ABL Revolver has a provision that allows the facility to be increased by an additional $500 million. The ABL Revolver has various customary covenants including maintaining a minimum fixed charge coverage ratio of 1.25 to 1 if excess availability is less than the greater of (1) $90 million and (2) 10% of the lesser of (a) the maximum size of the ABL Revolver and (b) the borrowing base. The fixed charge coverage ratio will be equal to the ratio of (1) (a) ABL Revolver defined Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") less (b) maintenance capital expenditures less (c) cash taxes; to (2) (a) interest expense plus (b) scheduled principal payments plus (c) dividends to the Company's direct holding company to pay certain taxes, operating expenses and management fees and repurchases of equity interests from employees, officers and directors. The ABL Revolver matures on September 14, 2022; provided that, in the event that the Term Loan Facility, or certain other indebtedness matures on or prior to March 14, 2023 and is outstanding 90 days prior to its maturity (and not refinanced with a maturity date later than March 14, 2023), then the ABL Revolver will mature 90 days prior to the maturity date for such other indebtedness, as applicable; unless excess availability under the ABL Revolver is at least (i) 20% of the lesser of (x) the total ABL Revolver commitment and (y) the then applicable borrowing base and (ii) 15% of the lesser of (x) the total ABL Revolver commitment and (y) the then applicable borrowing base, and a minimum fixed charge ratio test of at least 1.25 to 1 is met.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

ABL Revolver

~~Short-Term Borrowings~~In October 2021, Novelis amended the ABL Revolver facility. Prior to the USD LIBOR transition date, loans denominated in USD under the ABL Revolver will continue to bear interest at a rate of LIBOR plus a spread of 1.25% to 1.75% based on excess availability. The amendment provides for replacement reference rates, as applicable, based on the currency of the loan, as well as applicable spreads on and after the USD LIBOR transition date. The USD LIBOR transition date is defined as the earlier of (a) when the ICE Benchmark Administration ceases to provide the USD LIBOR and there is no available tenor of USD LIBOR or the Financial Conduct Authority announces all available tenors of USD LIBOR are no longer representative or (b) an early opt-in effective date.

In April 2022, Novelis amended the ABL Revolver facility to increase the limit on committed letters of credit under the facility to $275 million. There were no material costs incurred or accounting impacts as a result of this amendment.

In August 2022, Novelis amended the ABL Revolver facility to, among other things, increase the commitment under the ABL Revolver by $500 million to $2.0 billion and extend the maturity of the ABL Revolver until August 18, 2027. The amendment provides that new borrowings under the ABL Revolver facility made subsequent to the date of the amendment will incur interest at Term SOFR, EURIBOR, SONIA or SARON, as applicable based on the currency of the loan, plus a spread of 1.10% to 1.60% based on excess availability. The ABL Revolver facility also permits us to elect to borrow USD loans that accrue interest at a base rate (determined based on the greatest of one month Term SOFR plus 1.00%, a prime rate or an adjusted federal funds rate) plus a prime spread of 0.10% to 0.60% based on excess availability. As a result of this debt modification, the Company incurred $6 million of financing fees, which will be amortized over the term of the loan.

As of December 31, ~~2017, our short-term~~2022, we had $739 million in borrowings under the ABL Revolver and were ~~$116 million, consisting of $73~~in compliance with debt covenants. We utilized $40 million of ~~short-term loans under our~~the ABL Revolver ~~$39~~for letters of credit. We had availability of $884 million on the ABL Revolver, including $235 million of remaining availability that can be utilized for letters of credit.

Senior Notes

The Senior Notes are guaranteed, jointly and severally, on a senior unsecured basis, by Novelis Inc. and certain of its subsidiaries. The Senior Notes contain customary covenants and events of default that will limit our ability and, in certain instances, the ability of certain of our subsidiaries to incur additional debt and provide additional guarantees; pay dividends or return capital beyond certain amounts and make other restricted payments; 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 certain of Novelis' subsidiaries to pay dividends or make other distributions to Novelis ~~China loans (CNY 253 million),~~or certain of Novelis' subsidiaries, as applicable; engage in certain transactions with affiliates; enter into sale and ~~$4 million~~leaseback transactions; designate subsidiaries as unrestricted subsidiaries; and consolidate, merge, or transfer all or substantially all of our assets and the assets of certain of our subsidiaries. During any future period in ~~other loans.~~which either Standard & Poor's Ratings Group, Inc. or Moody's Investors Service, Inc. have assigned an investment grade credit rating to the Senior Notes and no default or event of default under the indenture has occurred and is continuing, certain of the covenants will be suspended. The Senior Notes include customary events of default, including a cross-acceleration event of default. The Senior Notes also contain customary call protection provisions for our bondholders that extend through November 2023 for the 3.25% Senior Notes due November 2026, through April 2024 for the 3.375% Senior Notes due April 2029, through January 2025 for the 4.75% Senior Notes due January 2030, and through August 2026 for the 3.875% Senior Notes due August 2031.

As of December 31, ~~2017, $19 million of the ABL Revolver was utilized for letters of credit, and we had $739 million in remaining availability under the ABL Revolver.~~

As of December 31, 2017, we had availability under our Novelis Korea, Novelis Middle East and Africa, and Novelis China revolving credit facilities and credit lines of $202 million (KRW 216 billion), $20 million, and $6 million (CNY 45 million), respectively.

~~Senior Notes~~

~~Refer to our Annual Report on Form 10-K for the year-ended March 31, 2017 for details on the issuances of the senior notes and their respective covenants. As of December 31, 2017,~~2022, we were in compliance with the covenants ~~for~~of our Senior Notes.

~~Interest Rate Swaps~~

We use interest rate swaps to manage our exposure to changes in benchmark interest rates which impact our variable-rate debt. See Note 10 — Financial Instruments and Commodity Contracts for further information about these interest rate swaps.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

7. SHARE-BASED COMPENSATION

The Company's board of directors has authorized long term incentive plans (LTIPs), under which Hindalco stock appreciation rights (Hindalco SARs), Novelis stock appreciation rights (Novelis SARs), phantom restricted stock units (RSUs), and Novelis Performance Units (Novelis PUs) are granted to certain executive officers and key employees.

The Hindalco SARs vest at the rate of 25% or 33% per year, subject to the achievement of an annual performance target, and expire seven years from their original grant date. The performance criterion for vesting of the Hindalco SARs is based on the actual overall Novelis operating EBITDA compared to the target established and approved each fiscal year. The RSUs are based on Hindalco's stock price. The RSUs vest either in full three years from the grant date or 33% per year over three years, subject to continued employment with the Company, but are not subject to performance criteria.

In May 2016, the Company's board of directors approved the issuance of Novelis PUs which have a fixed $100 value per unit and will vest in full three years from the grant date, subject to specific performance criteria compared to the established target. The Company made a voluntary offer to the participants with outstanding Novelis SARs granted for fiscal years 2012 through 2016 to exchange their Novelis SARs for an equivalently valued number of Novelis PUs. The voluntary exchange resulted in 1,054,662 Novelis SARs being modified into PUs which are not based on Novelis' or Hindalco's fair values and are accounted for outside the scope of ASC 718, ~~Compensation - Stock Compensation. This exchange was accounted for as a modification.~~

During the nine months ended December 31, ~~2017,~~2022, we granted ~~2,586,824~~4,413,832 Hindalco phantom RSUs ~~2,317,529~~and 2,380,074 Hindalco ~~SARs, and no Novelis~~ SARs. Total share-based compensation expense ~~related to these plans for the respective periods~~ was $9 million and $3$13 million for the three and nine months ended December 31, ~~2017 and 2016,~~2022, respectively. These amounts are included in “Selling, general and administrative expenses” in our condensed consolidated statements of operations. As the performance criteria for fiscal years 2019, 2020 and 2021 have not yet been established, measurement periods for Hindalco SARs relating to those periods have not yet commenced. As a result, onlyTotal share-based compensation expense was $6 million and $30 million for ~~vested~~the three and ~~current year Hindalco SARs and Novelis SARs has been recorded.~~nine months ended December 31, 2021, respectively. As of December 31, ~~2017,~~2022, the outstanding liability related to share-based compensation was ~~$27~~$24 million.

The cash payments made to settle all Hindalco SAR liabilities were $9$8 million and $3$22 million in the nine months ended December 31, ~~2017~~2022, and ~~2016.~~2021, respectively. Total cash payments made to settle ~~Hindalco~~ RSUs were $8$15 million and $2$17 million in the nine months ended December 31, ~~2017~~2022, and ~~2016,~~2021, respectively. ~~Unrecognized~~As of December 31, 2022, unrecognized compensation expense related to the non-vested Hindalco SARs (assuming all future performance criteria are met) and the RSUs was $9$8 million ~~which~~and $23 million, respectively. The unrecognized expense related to the non-vested Hindalco SARs and the RSUs is expected to be recognized over a weighted average period of 1.2 years. Unrecognized compensation expense related to the non-vested Novelis SARs (assuming all future performance criteria are met) was less than $1 million, which is expected to be recognized over a weighted average period of 0.9 years. Unrecognized compensation expense related to the RSUs was $11 million, which will be recognized over the remaining weighted average vesting periodperiods of 1.3 ~~years.~~years and 2.0 years, respectively.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

8. POSTRETIREMENT BENEFIT PLANS

~~Our pension obligations relate to: (1) funded~~The Company recognizes actuarial gains and losses and prior service costs in the condensed consolidated balance sheet and recognizes changes in these amounts during the year in which changes occur through other comprehensive income (loss). The Company uses various assumptions when computing amounts relating to its defined benefit pension ~~plans in~~plan obligations and their associated expenses (including the ~~U.S., Canada, Switzerland~~discount rate and the U.K.; (2) unfunded defined benefit pension plans in Germany; (3) unfunded lump sum indemnities payable upon retirement to employees in France and Italy; and (4) partially funded lump sum indemnities in South Korea. Our other postretirement obligations (Other Benefit Plans, as shown in certain tables below) include unfunded health care and life insurance benefits provided to retired employees in the U.S., Canada and Brazil.expected rate of return on plan assets).

Components of net periodic benefit cost for all of our postretirement benefit plans are shown in the table ~~below (in millions).~~below.


													Pension Benefit Plans								Other Benefit Plans
													Three Months Ended December 31,								Three Months Ended December 31,
in millions											in millions		2022				2021				2022				2021
Service cost											Service cost		$	7			$	8			$	1			$	2
Interest cost											Interest cost		16				14				2				2
Expected return on assets											Expected return on assets		(18)				(19)				—				—
Amortization — losses, net											Amortization — losses, net		2				5				(1)				—
Amortization — prior service credit, net											Amortization — prior service credit, net		(1)				(1)				—				(1)

Net periodic benefit cost(1)											$	6			$	7			$	2			$	3

	Pension Benefit Plans						Other Benefit Plans						Pension Benefit Plans								Other Benefit Plans
	Three Months Ended December 31,						Three Months Ended December 31,						Nine Months Ended December 31,								Nine Months Ended December 31,
	2017			2016			2017		2016				2022				2021				2022				2021
Service cost	$	11		$	11		$	1	$	2	Service cost		$	20			$	24			$	3			$	8
Interest cost	15			15			2		2		Interest cost		47				42				4				5
Expected return on assets	(16		)	(16		)	—		—		Expected return on assets		(54)				(58)				—				—
Amortization — losses, net	9			10			—		1		Amortization — losses, net		6				14				(1)				—
Amortization — prior service credit, net	—			(1		)	—		—		Amortization — prior service credit, net		(1)				(1)				(2)				(1)
Settlement/curtailments gain											Settlement/curtailments gain		—				(7)				—				—
Net periodic benefit cost(1)	$	19		$	19		$	3	$	5	Net periodic benefit cost(1)		$	18			$	14			$	4			$	12

Pension Benefit Plans Other Benefit Plans
Nine Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016
Service cost $ 33
$ 34
$ 5
$ 5
Interest cost 44
46
5
5
Expected return on assets (46 ) (47 ) —
—
Amortization — losses 26
30
1
3
Amortization — prior service credit, net —
(2 ) —
1
Termination benefits / (curtailments) 2
—
—
—
Net periodic benefit cost $ 59
$ 61
$ 11
$ 14
____________________

(1)Service cost is included within cost of goods sold (exclusive of depreciation and amortization) and selling, general and administrative expenses, while all other cost components are recorded within other expenses (income), net.

The average expected long-term rate of return on all plan assets is ~~5.2%~~4.8% in fiscal ~~2018.~~2023.

Employer Contributions to Plans

For pension plans, our policy is to fund an amount required to provide for contractual benefits attributed to service to date and amortize unfunded actuarial liabilities typically over periods of 15 years or less. We also participate in savings plans in Canada and the U.S., as well as defined contribution pension plans in the U.S., the U.K., Canada, Germany, Italy, Switzerland, and Brazil. We contributed the following amounts to all ~~plans (in millions).~~plans.


										Three Months Ended December 31,				Nine Months Ended December 31,
	Three Months Ended December 31,				Nine Months Ended December 31,
	2017		2016		2017		2016
in millions									in millions	2022		2021		2022		2021
Funded pension plans	$	8	$	13	$	42	$	20	Funded pension plans	$	2	$	5	$	10	$	22
Unfunded pension plans	3		3		10		9		Unfunded pension plans	4		4		12		10
Savings and defined contribution pension plans	7		6		21		19		Savings and defined contribution pension plans	13		11		40		38
Total contributions	$	18	$	22	$	73	$	48	Total contributions	$	19	$	20	$	62	$	70

During the remainder of fiscal ~~2018,~~2023, we expect to contribute an additional $5$10 million to our funded pension plans, $4 million to our unfunded pension plans, and $7$13 million to our savings and defined contribution pension plans.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

9. CURRENCY LOSSES (GAINS) ~~LOSSES~~

The following currency losses (gains) ~~losses~~ are included in ~~“Other~~other expenses (income) ~~expense, net”~~, net in the accompanying condensed consolidated statements of ~~operations (in millions).~~operations.

Three Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016
(Gain) loss on remeasurement of monetary assets and liabilities, net $ (4 ) $ (1 ) $ (43 ) $ 14
Loss (gain) recognized on balance sheet remeasurement currency exchange contracts, net 4
(1 ) 43
(15 )
Currency gains, net $ —
$ (2 ) $ —
$ (1 )


	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2022		2021		2022		2021
Losses (gains) on remeasurement of monetary assets and liabilities, net	$	39	$	6	$	(28)	$	(2)
(Gains) losses recognized on balance sheet remeasurement currency exchange contracts, net	(32)		(7)		46		1
Currency losses (gains), net	$	7	$	(1)	$	18	$	(1)

The following currency ~~gains (losses)~~losses are included in ~~“Accumulated~~accumulated other comprehensive loss, net of ~~tax”~~tax and ~~“Noncontrolling interests”~~noncontrolling interests in the accompanying condensed consolidated balance ~~sheets (in millions).~~sheets.


	Nine Months Ended December 31, 2022		Fiscal Year Ended March 31, 2022
in millions
Cumulative currency translation adjustment — beginning of period	$	(166)	$	(95)
Effect of changes in exchange rates	(146)		(71)

Cumulative currency translation adjustment — end of period	$	(312)	$	(166)

Nine Months Ended December 31, 2017 Year Ended March 31, 2017

Cumulative currency translation adjustment — beginning of period $ (256 ) $ (197 )
Effect of changes in exchange rates 149
(75 )
Sale of investment in foreign entities (A) —
16
Cumulative currency translation adjustment — end of period $ (107 ) $ (256 )

~~_________________________~~


~~(A)~~	We reclassified $16 million of cumulative currency losses from AOCI to "(Gain) loss on sale of a business, net" in the twelve months ended March 31, 2017 due to the sale of our equity interest in Aluminium Company of Malaysia Berhad (ALCOM) in fiscal 2017.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

10. FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS

The following tables summarize the gross fair values of our financial instruments and commodity contracts as of ~~December 31, 2017 and March 31, 2017 (in millions).~~the periods presented.


															December 31, 2022
	December 31, 2017														Assets				Liabilities				Net Fair Value
	Assets				Liabilities						Net Fair Value
	Current		Noncurrent (A)		Current			Noncurrent (A)			Assets / (Liabilities)
in millions														in millions	Current		Noncurrent(1)		Current		Noncurrent(1)		Assets / (Liabilities)
Derivatives designated as hedging instruments:														Derivatives designated as hedging instruments:
Cash flow hedges														Cash flow hedges
Aluminum contracts	$	—	$	—	$	(62	)	$	—		$	(62	)
Metal contracts														Metal contracts	$	100	$	4	$	(26)	$	(1)	$	77
Currency exchange contracts	12		1		(6		)	(4		)	3			Currency exchange contracts	32		7		(23)		(4)		12
Energy contracts	—		1		(2		)	(7		)	(8		)	Energy contracts	8		2		(1)		—		9
Total derivatives designated as hedging instruments	12		2		(70		)	(11		)	(67		)	Total derivatives designated as hedging instruments	$	140	$	13	$	(50)	$	(5)	$	98
Derivatives not designated as hedging instruments
Aluminum contracts	76		—		(91		)	(1		)	(16		)
Derivatives not designated as hedging instruments:														Derivatives not designated as hedging instruments:
Metal contracts														Metal contracts	$	56	$	1	$	(62)	$	(2)	$	(7)
Currency exchange contracts	26		—		(31		)	(1		)	(6		)	Currency exchange contracts	39		1		(52)		(2)		(14)
Energy contracts	1		—		—			—			1			Energy contracts	1		—		—		—		1
Total derivatives not designated as hedging instruments	103		—		(122		)	(2		)	(21		)	Total derivatives not designated as hedging instruments	$	96	$	2	$	(114)	$	(4)	$	(20)
Total derivative fair value	$	115	$	2	$	(192	)	$	(13	)	$	(88	)	Total derivative fair value	$	236	$	15	$	(164)	$	(9)	$	78


	March 31, 2022
	Assets				Liabilities				Net Fair Value
	Current		Noncurrent(1)		Current		Noncurrent(1)		Assets / (Liabilities)
Derivatives designated as hedging instruments:
Cash flow hedges
Metal contracts	$	10	$	—	$	(535)	$	(7)	$	(532)
Currency exchange contracts	30		8		(28)		(1)		9
Energy contracts	22		6		—		—		28
Total derivatives designated as hedging instruments	$	62	$	14	$	(563)	$	(8)	$	(495)
Derivatives not designated as hedging instruments:
Metal contracts	$	290	$	3	$	(372)	$	(2)	$	(81)
Currency exchange contracts	22		—		(24)		—		(2)
Energy contracts	3		—		—		—		3
Total derivatives not designated as hedging instruments	$	315	$	3	$	(396)	$	(2)	$	(80)
Total derivative fair value	$	377	$	17	$	(959)	$	(10)	$	(575)

____________________

(1)The noncurrent portions of derivative assets and liabilities are included in other long-term assets and other long-term liabilities, respectively, in the accompanying condensed consolidated balance sheets.

March 31, 2017
Assets Liabilities
Net Fair Value

Current Noncurrent (A) Current Noncurrent(A) Assets / (Liabilities)
Derivatives designated as hedging instruments:
Cash flow hedges
Aluminum contracts $ —
$ —
$ (69 ) $ —
$ (69 )
Currency exchange contracts 26
1
(1 ) (3 ) 23
Energy contracts 1
—
—
(9 ) (8 )
Total derivatives designated as hedging instruments 27
1
(70 ) (12 ) (54 )
Derivatives not designated as hedging instruments:
Aluminum contracts 57
1
(68 ) (1 ) (11 )
Currency exchange contracts 29
—
(13 ) —
16
Total derivatives not designated as hedging instruments 86
1
(81 ) (1 ) 5
Total derivative fair value $ 113
$ 2
$ (151 ) $ (13 ) $ (49 )

~~_________________________~~


~~(A)~~	The noncurrent portions of derivative assets and liabilities are included in “Other long-term assets-third parties” and in “Other long-term liabilities”, respectively, in the accompanying condensed consolidated balance sheets.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

~~Aluminum~~Metal

We use derivative instruments to preserve our conversion margins and manage the timing differences associated with metal price lag. We use over-the-counter derivatives indexed to ~~the London Metals Exchange (LME)~~LME (referred to as our "aluminum derivative 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, which is known as "metal price lag." We also purchase forward LME aluminum contracts simultaneously 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 better match the selling price of the metal with the purchase price of the metal. The volatility in ~~local market premiums~~LMPs also results in metal price lag.

Price risk exposure arises from commitments to sell aluminum in future periods at fixed prices. We identify and designate certain LME aluminum forward contracts as fair value hedges of the metal price risk associated with fixed price sales commitments that qualify as firm commitments. We did not have any outstanding aluminum forward purchase contracts designated as fair value hedges as of December 31, 2017 and March 31, 2017.

Price risk arises due to fluctuating aluminum prices between the time the sales order is committed and the time the order is shipped. We identify and designate certain LME aluminum forward purchase contracts as cash flow hedges of the metal price risk associated with our future metal purchases that vary based on changes in the price of aluminum. ~~We did~~Generally, such exposures do not ~~have any outstanding aluminum forward purchase~~extendbeyond three years in length for all contracts, ~~designated as cash flow hedges as~~and the average duration of ~~December 31, 2017 and March 31, 2017.~~those contracts is less than one year.

Price risk exposure arises due to the timing lag between the LME based pricing of raw material aluminum purchases and the LME based pricing of finished product sales. We identify and designate certain LME aluminum forward sales contracts as cash flow hedges of the metal price risk associated with our future metal sales that vary based on changes in the price of aluminum. Generally, such exposures do not extend beyond ~~two~~four years in ~~length. The~~length for all contracts, and the average duration of ~~undesignated~~those contracts is less than one year.

In addition to aluminum, we entered into LME copper and zinc forward contracts, as well as LMP forward contracts. As of December 31, 2022, and March 31, 2022, the fair value of these contracts represented an asset of less than $1 million and $4 million, respectively. These contracts are undesignated with an average duration of one year.

The following table summarizes our metal notional ~~amount (in kt).~~amount.


	December 31, 2017		March 31, 2017
in kt					in kt	December 31, 2022	March 31, 2022
Hedge type					Hedge type
Purchase (Sale)
Purchase (sale)					Purchase (sale)
Cash flow purchases					Cash flow purchases	—	6
Cash flow sales	(341	)	(391	)	Cash flow sales	(866)	(910)
Not designated	(197	)	(89	)	Not designated	(55)	(16)
Total, net	(538	)	(480	)	Total, net	(921)	(920)

Foreign Currency

We use foreign exchange forward contracts ~~cross-currency swaps and options~~ 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.

We use foreign currency contracts to hedge expected future foreign currency transactions, which include capital expenditures. These contracts cover the same periods as known or expected exposures. We had total notional amounts of ~~$432 million~~$1.4 billion and ~~$465 million~~$1.3 billion in outstanding foreign currency forwards designated as cash flow hedges as of December 31, ~~2017~~2022, and March 31, ~~2017,~~2022, respectively.

We use foreign currency contracts to hedge our foreign currency exposure to our net investment in foreign subsidiaries. We did not have any outstanding foreign currency forwards designated as net investment hedges as of December 31, 2017 and March 31, 2017.

As of December 31, ~~2017~~2022, and March 31, ~~2017,~~2022, we had outstanding foreign currency exchange contracts with a total notional amount of ~~$1,478 million~~$1.5 billion and ~~$683 million,~~$1.7 billion, respectively, to primarily hedge balance sheet remeasurement risk, which were not designated as hedges. Contracts representing the majority of this notional amount will mature ~~during~~by the fourth quarter of fiscal 2023 and first quarter of fiscal ~~2018~~year 2024 and offset the remeasurement impact.

~~Novelis Inc.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - (Continued)~~

Energy

We own an interest in an electricity swap contract to hedge our exposure to fluctuating electricity prices. As of December 31, 2017 and March 31, 2017, there were 1 million of notional megawatt hours outstanding, and the fair value of the swap was a liability of $7 million and $9 million, respectively. The electricity swap, which matures on January 5, 2022, is designated as a cash flow hedge.

We use natural gas forward purchase contracts ~~("forward contracts")~~ to manage our exposure to fluctuating ~~natural gas~~energy prices in North America. We had a notional of 217 million ~~MMBTUs~~MMBtu designated as cash flow hedges as of December 31, ~~2017,~~2022, and the fair value was ~~a liability~~an asset of $1$8 million. There was a notional of 610 million ~~MMBTU~~MMBtu of natural gas forward contracts designated as cash flow hedges as of March 31, ~~2017~~2022, and the fair value was an asset of $25 million. As of December 31, 2022, we had a notional of less than 1 million MMBtu forward contracts that were not designated as hedges, and the fair value was an asset of $1 million. As of ~~December 31, 2017 and~~ March 31, ~~2017,~~2022, we had ~~notionals~~a notional of ~~less than~~ 1 million ~~MMBTU forward contracts that were not designated as hedges. The~~MMBtu and the fair value ~~for the forward contracts not designated as hedges as~~was an asset of ~~December 31, 2017 was a liability of $1 million and as of March 31, 2017 was a liability of less than $1~~$2 million. The average duration ~~of undesignated~~for all natural gas contracts is ~~approximately 2~~three years in length. ~~One MMBTU is the equivalent of one decatherm, or one million British Thermal Units.~~

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

We use diesel fuel forward purchase contracts to manage our exposure to fluctuating fuel prices in North America ~~which were not~~and Europe. We had a notional of 2 million gallons designated as cash flow hedges as of December 31, ~~2017. As of December 31, 2017~~2022, and ~~March 31, 2017, we had 5 million and 8 million gallons of diesel fuel forward purchase contracts outstanding. The~~the fair value ~~as of December 31, 2017~~ was an asset of $1 million. There was a notional of 4 million ~~and~~gallons designated as cash flow hedges as of March 31, ~~2017~~2022, and the fair value was an asset of $3 million. As of December 31, 2022, we had a notional of less than 1 million metric tonnes not designated as hedges, and the fair value was a liability of less than $1 million. As of March 31, 2022, we had a notional of less than 1 million metric tonnes of forward contracts that were not designated as hedges, and the fair value was an asset of $1 million. The average duration ~~of undesignated~~for all diesel fuel contracts is ~~less than 2 years~~one year in length.

~~Interest Rate~~

As of December 31, 2017, we swapped $56 million (KRW 60 billion) floating rate loans to a weighted average fixed rate of 3.10%. All swaps expire concurrent with the maturity of the related loans. As of December 31, 2017 and March 31, 2017, $56 million (KRW 60 billion) and $119 million (KRW 133 billion), respectively, were designated as cash flow hedges.

~~Novelis Inc.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - (Continued)~~

~~Gain (Loss)~~(Gain) Loss Recognition

The following table summarizes the ~~gains (losses)~~(gains) losses associated with the change in fair value of derivative instruments not designated as hedges and the ~~ineffectiveness~~excluded portion of designated derivatives recognized in ~~“Other~~other expenses (income) ~~expense, net” (in millions). Gains (losses)~~, net. (Gains) losses recognized in other line items in the condensed consolidated statement of operations are separately disclosed within this footnote.


	Three Months Ended December 31				Nine Months Ended December 31
in millions	2022		2021		2022		2021
Derivative instruments not designated as hedges
Metal contracts	$	5	$	23	$	54	$	8
Currency exchange contracts	(32)		(14)		52		(8)
Energy contracts(1)	—		(1)		(4)		(7)
(Gain) loss recognized in other expenses (income), net	(27)		8		102		(7)
Derivative instruments designated as hedges
Gain recognized in other expenses (income), net(2)	—		—		(5)		—
Total (gain) loss recognized in other expenses (income), net	$	(27)	$	8	$	97	$	(7)

(Gains) losses recognized on balance sheet remeasurement currency exchange contracts, net	$	(32)	$	(7)	$	46	$	1
Realized losses (gains) on change in fair value of derivative instruments, net	4		41		71		(2)
Unrealized losses (gains) on change in fair value of derivative instruments, net	1		(26)		(20)		(6)
Total (gain) loss recognized in other expenses (income), net	$	(27)	$	8	$	97	$	(7)

Three Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016
Derivative instruments not designated as hedges
Aluminum contracts $ 6
$ (10 ) $ 8
$ (27 )
Currency exchange contracts (2 ) 4
(51 ) 17
Energy contracts (A) 3
4
6
9
Gain (loss) recognized in "Other (income) expense, net" 7
(2 ) (37 ) (1 )
Derivative instruments designated as hedges
(Loss) gain recognized in "Other (income) expense, net" (B) (1 ) 5
(8 ) (8 )
Total gain (loss) recognized in "Other (income) expense, net" $ 6
$ 3
$ (45 ) $ (9 )
Balance sheet remeasurement currency exchange contract (losses) gains $ (4 ) $ 1
$ (43 ) $ 15
Realized losses, net (5 ) (19 ) (15 ) (42 )
Unrealized gains on other derivative instruments, net 15
21
13
18
Total gain (loss) recognized in "Other (income) expense, net" $ 6
$ 3
$ (45 ) $ (9 )
_________________________

~~_________________________~~(1)Includes amounts related to natural gas and diesel swaps not designated as hedges and electricity swap settlements.


~~(A)~~	~~Includes amounts related to de-designated electricity swap and natural gas swaps not designated as hedges.~~


~~(B)~~	Amount includes: forward market premium/discount excluded from hedging relationship and ineffectiveness on designated aluminum and foreign currency capital expenditure contracts; releases to income from AOCI on balance sheet remeasurement contracts; and ineffectiveness of fair value hedges involving aluminum derivatives.

(2)Amount includes forward market premium/discount excluded from hedging relationship and releases to income from accumulated other comprehensive loss on balance sheet remeasurement contracts.

The following table summarizes the impact on ~~AOCI~~accumulated other comprehensive loss and earnings of derivative instruments designated as cash flow ~~and net investment hedges (in millions).~~hedges. Within the next twelve months, we expect to reclassify ~~$76~~$88 million of ~~losses~~gains from ~~AOCI~~accumulated other comprehensive loss to earnings, before taxes.


	Amount of Gain (Loss) Recognized in Other comprehensive income (loss) (Effective Portion)
	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2022		2021		2022		2021
Cash flow hedging derivatives
Metal contracts	$	(135)	$	35	$	968	$	(488)
Currency exchange contracts	121		—		(56)		(19)
Energy contracts	(8)		(7)		8		23
Total cash flow hedging derivatives	$	(22)	$	28	$	920	$	(484)


Total	$	(22)	$	28	$	920	$	(484)

Amount of Gain (Loss)
Recognized in OCI
(Effective Portion)

Amount of Gain (Loss)
Recognized in OCI
(Effective Portion)

Amount of Gain (Loss)
Recognized in “Other Expense, net”
(Ineffective and
Excluded Portion)

Amount of Gain (Loss)
Recognized in “Other Expense, net”
(Ineffective and
Excluded Portion)
Three Months Ended December 31, Nine Months Ended December 31, Three Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016 2017 2016 2017 2016
Cash flow hedging derivatives
Aluminum contracts $ (66 ) $ (22 ) $ (89 ) $ (52 ) $ —
$ 4
$ (9 ) $ (9 )
Currency exchange contracts —
(14 ) (7 ) 18
—
—
1
1
Energy contracts (2 ) 1
(4 ) (3 ) —
—
1
(1 )
Total cash flow hedging derivatives $ (68 ) $ (35 ) $ (100 ) $ (37 ) $ —
$ 4
$ (7 ) $ (9 )
Net investment derivatives
Currency exchange contracts (17 ) —
(17 ) —
—
—
—
—
Total $ (85 ) $ (35 ) $ (117 ) $ (37 ) $ —
$ 4
$ (7 ) $ (9 )

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

Gain (Loss) Reclassification


															Amount of Gain (Loss) Reclassified from Accumulated other comprehensive loss into Income/(Expense) (Effective Portion)
	Amount of Gain (Loss) Reclassified from AOCI into Income/(Expense) (Effective Portion) Three Months Ended December 31,						Amount of Gain (Loss) Reclassified from AOCI into Income/(Expense) (Effective Portion) Nine Months Ended September 30,						Location of Gain (Loss) Reclassified from AOCI into Earnings		Three Months Ended December 31,				Nine Months Ended December 31,				Location of Gain (Loss) Reclassified from Accumulated other comprehensive loss into Earnings
in millions														in millions	2022		2021		2022		2021
Cash flow hedging derivatives	2017			2016			2017			2016				Cash flow hedging derivatives
Energy contracts (A)	$	—		$	(1	)	$	—		$	(4	)	Other (income) expense, net
Energy contracts (C)	(1		)	(1		)	(2		)	(4		)	Cost of goods sold (B)
Aluminum contracts	(36		)	(13		)	(79		)	(19		)	Cost of goods sold (B)
Aluminum contracts	—			(1		)	—			(3		)	Net sales
Currency exchange contracts	4			5			11			10			Cost of goods sold (B)

Energy contracts(1)														Energy contracts(1)	$	9	$	6	$	27	$	6	Cost of goods sold (exclusive of depreciation and amortization)
Metal contracts														Metal contracts	(3)		4		—		9		Cost of goods sold (exclusive of depreciation and amortization)
Metal contracts														Metal contracts	139		(136)		286		(449)		Net sales
Currency exchange contracts	—			—			1			1			Selling, general and administrative expenses	Currency exchange contracts	5		1		16		4		Cost of goods sold (exclusive of depreciation and amortization)
Currency exchange contracts	1			1			3			4			Net sales	Currency exchange contracts	—		—		1		—		Selling, general and administrative expenses
Currency exchange contracts	—			—			—			1			Other (income) expense, net	Currency exchange contracts	(18)		(5)		(46)		(6)		Net sales
Currency exchange contracts	—			—			(1		)	(1		)	Depreciation and amortization	Currency exchange contracts	(1)		(1)		(4)		(2)		Depreciation and amortization
Total	$	(32	)	$	(10	)	$	(67	)	$	(15	)	Loss before taxes	Total	$	131	$	(131)	$	280	$	(438)	Income from continuing operations before income tax provision
	11			2			23			3			Income tax benefit		(32)		33		(64)		112		Income tax (benefit) provision
	$	(21	)	$	(8	)	$	(44	)	$	(12	)	Net loss		$	99	$	(98)	$	216	$	(326)	Net income from continuing operations

_________________________


~~(A)~~	~~Includes amounts related to de-designated electricity swap. AOCI related to this swap was amortized to income over the remaining term of the hedged item.~~


~~(B)~~	~~"Cost of goods sold" is exclusive of depreciation and amortization.~~


~~(C)~~	~~Includes amounts related to electricity and natural gas swaps.~~

(1)Includes amounts related to electricity, natural gas, and diesel swaps.

The entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is included in other comprehensive (loss) income and reclassified to earnings in the period in which earnings are impacted by the hedged items or in the period that the transaction becomes probable of not occurring.The was no amount excluded from the assessment of effectiveness recognized in earnings for the periods ended December 31, 2022, and 2021.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

11. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following tables summarize the change in the components ofof accumulated other comprehensive loss, ~~net of tax and~~ excluding ~~"Noncontrolling interests",~~noncontrolling interests, for the periods ~~presented (in millions).~~presented.


in millions	Currency Translation		Cash Flow Hedges(1)		Postretirement Benefit Plans(2)		Total
Balance as of September 30, 2022	$	(527)	$	166	$	(7)	$	(368)
Other comprehensive income (loss) before reclassifications	215		(22)		(3)		190
Amounts reclassified from accumulated other comprehensive loss, net	—		(99)		(2)		(101)
Net current-period other comprehensive income (loss)	215		(121)		(5)		89
Balance as of December 31, 2022	$	(312)	$	45	$	(12)	$	(279)

	Currency Translation		Cash Flow Hedges(1)		Postretirement Benefit Plans(2)		Total
Balance as of September 30, 2021	$	(129)	$	(285)	$	(133)	$	(547)
Other comprehensive income before reclassifications	6		22		4		32
Amounts reclassified from accumulated other comprehensive loss, net	—		98		1		99
Net current-period other comprehensive income	6		120		5		131
Balance as of December 31, 2021	$	(123)	$	(165)	$	(128)	$	(416)

	Currency Translation		Cash Flow Hedges(1)		Postretirement Benefit Plans(2)		Total
Balance as of March 31, 2022	$	(166)	$	(435)	$	(19)	$	(620)
Other comprehensive (loss) income before reclassifications	(146)		696		8		558
Amounts reclassified from accumulated other comprehensive loss, net	—		(216)		(1)		(217)
Net current-period other comprehensive (loss) income	(146)		480		7		341
Balance as of December 31, 2022	$	(312)	$	45	$	(12)	$	(279)

	Currency Translation		Cash Flow Hedges(1)		Postretirement Benefit Plans(2)		Total
Balance as of March 31, 2021	$	(95)	$	(133)	$	(138)	$	(366)
Other comprehensive (loss) income before reclassifications	(28)		(358)		9		(377)
Amounts reclassified from accumulated other comprehensive loss, net	—		326		1		327
Net current-period other comprehensive (loss) income	(28)		(32)		10		(50)
Balance as of December 31, 2021	$	(123)	$	(165)	$	(128)	$	(416)

Currency Translation (A) Cash Flow Hedges (B)
Postretirement Benefit Plans Total
Balance as of September 30, 2017 $ (165 ) $ (44 ) $ (241 ) $ (450 )
Other comprehensive income (loss) before reclassifications 58
(46 ) (10 ) 2
Amounts reclassified from AOCI, net —
20
13
33
Net current-period other comprehensive income (loss)
58
(26 ) 3
35
Balance as of December 31, 2017 $ (107 ) $ (70 ) $ (238 ) $ (415 )
_________________________

(1)For additional information on our cash flow hedges, see Note 10 – Financial Instruments and Commodity Contracts.

Currency Translation (A) Cash Flow Hedges (B)
Postretirement Benefit Plans Total
Balance as of September 30, 2016 $ (185 ) $ (8 ) $ (274 ) $ (467 )
Other comprehensive loss before reclassifications (140 ) (25 ) —
(165 )
Amounts reclassified from AOCI, net —
8
18
26
Net current-period other comprehensive income (loss) (140 ) (17 ) 18
(139 )
Balance as of December 31, 2016 $ (325 ) $ (25 ) $ (256 ) $ (606 )
(2)For additional information on our postretirement benefit plans, see Note 8 – Postretirement Benefit Plans.

Currency Translation (A) Cash Flow Hedges (B)
Postretirement Benefit Plans Total
Balance as of March 31, 2017 $ (256 ) $ (46 ) $ (243 ) $ (545 )
Other comprehensive income (loss) before reclassifications 149
(67 ) (14 ) 68
Amounts reclassified from AOCI, net —
43
19
62
Net current-period other comprehensive income (loss) 149
(24 ) 5
130
Balance as of December 31, 2017 $ (107 ) $ (70 ) $ (238 ) $ (415 )

Currency Translation (A) Cash Flow Hedges (B)
Postretirement Benefit Plans Total
Balance as of March 31, 2016 $ (196 ) $ (11 ) $ (293 ) $ (500 )
Other comprehensive (loss) income before reclassifications (145 ) (26 ) 17
(154 )
Amounts reclassified from AOCI, net (C) 16
12
20
48
Net current-period other comprehensive (loss) income (129 ) (14 ) 37
(106 )
Balance as of December 31, 2016 $ (325 ) $ (25 ) $ (256 ) $ (606 )

~~_________________________~~


~~(A)~~	~~For additional information on our cash flow hedges, see Note 10 — Financial Instruments and Commodity Contracts.~~


~~(B)~~	~~For additional information on our postretirement benefit plans, see Note 8 — Postretirement Benefit Plans.~~


~~(C)~~	The $16 million in currency translation reclassified from AOCI relates to CTA that was written off as part of our sale of the Aluminium Company of Malaysia Berhad (ALCOM) business in fiscal 2017. This amount is classified in (Gain) loss on sale of a business, net.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

12. FAIR VALUE MEASUREMENTS

We record certain assets and liabilities, primarily derivative instruments, on our condensed consolidated balance sheets at fair value. We also disclose the fair ~~value~~values of certain financial instruments, including debt and loans receivable, which are not recorded at fair value. Our objective in measuring fair value is to estimate an exit price in an orderly transaction between market participants on the measurement date. We consider factors such as liquidity, bid/offer spreads, and nonperformance risk, including our own nonperformance risk, in measuring fair value. We use observable market inputs wherever possible. To the extent observable market inputs are not available, our fair value measurements will reflect the assumptions we used. We grade the level of the inputs and assumptions used according to a three-tier hierarchy:

Level 1 — Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities we have the ability to access at the measurement date.

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 — Unobservable inputs for which there is little or no market data, which require us to develop our own assumptions based on the best information available as to what market participants would use in pricing the asset or liability.

The following section describes the valuation methodologies we used to measure our various financial instruments at fair value, including an indication of the level in the fair value hierarchy in which each instrument is generally classified.

Derivative Contracts

For certain derivative contracts with fair values based upon trades in liquid markets, such as aluminum, zinc, copper, foreign exchange, natural gas, and diesel fuel forward contracts and options, valuation model inputs can generally be verified and valuation techniques do not involve significant judgment. The fair values of such financial instruments are generally classified within Level 2 of the fair value hierarchy.

The majority of our derivative contracts are valued using industry-standard models with observable market inputs as their basis, such as time value, forward interest rates, volatility factors, and current (spot) and forward market prices. We generally classify these instruments within Level 2 of the valuation hierarchy. Such derivatives include interest rate swaps, ~~cross-currency swaps,~~ foreign currency contracts, aluminum, ~~derivative~~copper, and zinc forward contracts, and natural gas and diesel fuel forward contracts.

We classify derivative contracts that are valued based on models with significant unobservable market inputs as Level 3 of the valuation hierarchy. Our electricity swap, which is our only Level 3 derivative contract, represents an agreement to buy electricity at a fixed price at our Oswego, New York facility. Forward prices are not observable for this market, so we must make certain assumptions based on available information we believe to be relevant to market participants. We use observable forward prices for a geographically nearby market and adjust for 1) historical spreads between the cash prices of the two markets, and 2) historical spreads between retail and wholesale prices.

For the electricity swap, the average forward price at December 31, 2017, estimated using the method described above, was $40 per megawatt hour, which represented a $3 premium over forward prices in the nearby observable market. The actual rate from the most recent swap settlement was approximately $47 per megawatt hour. Each $1 per megawatt hour decline in price decreases the valuation of the electricity swap by $1 million.

For Level 2 and 3 of the fair value hierarchy, where appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads, and credit considerations (nonperformance risk). We regularly monitor these factors along with significant market inputs and assumptions used in our fair value measurements and evaluate the level of the valuation input according to the fair value hierarchy. This may result in a transfer between levels in the hierarchy from period to period. As of December 31, ~~2017~~2022, and March 31, ~~2017,~~2022, we did not have any Level 1 or Level 3 derivative contracts. No amounts were transferred between levels in the fair value hierarchy.

All of the Company's derivative instruments are carried at fair value in the statements of financial position prior to considering master netting agreements.

~~Novelis Inc.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - (Continued)~~

The fair values of all derivative instruments are recognized as assets or liabilities at the balance sheet date and are reported gross.

The following table presents our derivative assets and liabilities which were measured and recognized at fair value on a recurring basis ~~and~~ classified under the appropriate level of the fair value hierarchy as of December 31, ~~2017~~2022, and March 31, ~~2017 (in millions).~~2022. The table below also discloses the net fair value of the derivative instruments after considering the impact of master netting agreements.


	December 31, 2022				March 31, 2022
in millions	Assets		Liabilities		Assets		Liabilities
Level 2 instruments:
Metal contracts	$	161	$	(91)	$	303	$	(916)
Currency exchange contracts	79		(81)		60		(53)
Energy contracts	11		(1)		31		—
Total level 2 instruments	$	251	$	(173)	$	394	$	(969)




Netting adjustment(1)	(91)		91		(236)		236
Total net	$	160	$	(82)	$	158	$	(733)

December 31, 2017 March 31, 2017
Assets Liabilities Assets Liabilities
Level 2 instruments
Aluminum contracts $ 76
$ (154 ) $ 58
$ (138 )
Currency exchange contracts 39
(42 ) 56
(17 )
Energy contracts 2
(2 ) 1
—
Total level 2 instruments 117
(198 ) 115
(155 )
Level 3 instruments
Energy contracts —
(7 ) —
(9 )
Total level 3 instruments —
(7 ) —
(9 )
Total gross $ 117
$ (205 ) $ 115
$ (164 )
Netting adjustment (A) $ (64 ) $ 64
$ (46 ) $ 46
Total net $ 53
$ (141 ) $ 69
$ (118 )
_________________________

~~_________________________~~


~~(A)~~	(1)Amounts represent the impact ~~of legally enforceable master netting agreements that allow the Company to settle positive and negative positions with the same counterparties.~~

~~We recognized unrealized gains~~ of ~~$2 million for~~legally enforceable master netting agreements that allow the ~~nine months ended December 31, 2017 related~~Company to ~~Level 3 financial instruments that were still held as of December 31, 2017. These unrealized gains were included in “Other (income) expense, net.”~~

~~The following table presents a reconciliation of fair value activity for Level 3 derivative contracts (in millions).~~settle positive and negative positions with the same counterparties.

Level 3 –
Derivative Instruments (A)
Balance as of March 31, 2017 $ (9 )
Unrealized/realized gain included in earnings (B) 4
Unrealized loss included in AOCI (C) —
Settlements (B) (2 )
Balance as of December 31, 2017 $ (7 )

~~_________________________~~


~~(A)~~	~~Represents net derivative liabilities.~~


~~(B)~~	~~Included in “Other (income) expense, net.”~~


~~(C)~~	~~Included in "Change in fair value of effective portion of cash flow hedges, net"~~

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

In addition to our derivative assets and liabilities held at fair value, our consolidated balance sheet as of March 31, 2022 includes a Level 3 receivable related to the contingent consideration for the sale of Duffel to ALVANCE. Upon closing on September 30, 2020, we recorded a receivable at a fair value of €93 million ($109 million) measured based on the anticipated outcome, timeline of arbitration of greater than one year, and a discount rate of 5%. During the first quarter of fiscal 2022, Novelis marked all outstanding receivables related to the sale of Duffel to an estimated fair value of €45 million ($53 million), which resulted in a loss of €51 million ($61 million) recorded in loss from discontinued operations, net of tax. As further discussed in Note 2 – Discontinued Operations, in December 2022, the Company reached an agreement with the current owner of Duffel, where the outstanding contingent consideration receivable was settled in exchange for €5 million ($5 million) in cash and a note receivable in the amount of €40 million ($41 million). The note receivable is not carried at fair value, but we will continue to assess its collectibility on a quarterly basis. The fair value of the note receivable is determined using Level 2 inputs and is materially consistent with the carrying value.

Financial Instruments Not Recorded at Fair Value

The table below presents the estimated fair value of certain financial instruments not recorded at fair value on a recurring ~~basis (in millions).~~basis. The table excludes finance leases and short-term financial assets and liabilities for which we believe carrying value approximates fair value. We value long-term receivables and long-term debt using Level 2 inputs. Valuations are based on either market and/or broker ask prices when available or on a standard credit adjusted discounted cash flow model using market observable inputs.


	December 31, 2022				March 31, 2022
in millions	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term receivables from related parties	$	2	$	2	$	1	$	1
Total debt — third parties (excluding finance leases and short-term borrowings)	4,931		4,570		4,963		4,912

December 31, 2017 March 31, 2017

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value
Assets
Long-term receivables from related parties $ 10
$ 10
$ 15
$ 14
Liabilities
Total debt — third parties (excluding short-term borrowings) $ 4,488
$ 4,689
$ 4,558
$ 4,797

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

13. OTHER EXPENSES (INCOME) ~~EXPENSE,~~, NET

“Other expenses (income) ~~expense, net” is comprised~~, net consists of the ~~following (in millions)~~following.


	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2022		2021		2022		2021
Currency losses (gains), net(1)	$	7	$	(1)	$	18	$	(1)
Unrealized losses (gains) on change in fair value of derivative instruments, net(2)	1		(26)		(20)		(6)
Realized losses (gains) on change in fair value of derivative instruments, net(2)	4		41		71		(2)
Gain on sale of business(3)	—		(15)		—		(15)
Loss on sale of assets, net	—		3		1		5
Loss (gain) on Brazilian tax litigation, net(4)	1		(9)		1		(85)
Interest income	(6)		(2)		(14)		(6)
Non-operating net periodic benefit cost(5)	—		—		(1)		(6)

Other, net(6)	—		7		11		30
Other expenses (income), net	$	7	$	(2)	$	67	$	(86)

_________________________

(1)Includes losses (gains) recognized on balance sheet remeasurement currency exchange contracts, net. See Note 9 – Currency Losses (Gains ) for further details.

(2)See Note 10 – Financial Instruments and Commodity Contracts for further details.

(3)During the third quarter of fiscal 2022, Novelis sold 90% of its equity ownership in Saras Micro Devices, Inc., an early stage business founded by Novelis related to the development, design, manufacturing, and sale of aluminum-integrated passive devices for use in semiconductor and electronic systems. The sale resulted in a $15 million gain on sale of business.

(4)See Note 15 – Commitments and Contingencies for further details.

(5)Represents net periodic benefit cost, exclusive of service cost for the Company's pension and other post-retirement plans. For further details, refer to Note 8 – Postretirement Benefit Plans.

(6)Other, net for the three and nine months ended December 31, 2022, includes $10 million from the release of certain accrued expenses. Other, net for the nine months ended December 31, 2021, includes $18 million from the release of certain outstanding receivables.

Three Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016
Currency gains, net (A) $ —
$ (2 ) $ —
$ (1 )
Unrealized gains on change in fair value of derivative instruments, net (B) (15 ) (21 ) (13 ) (18 )
Realized losses on change in fair value of derivative
instruments, net (B) 5
19
15
42
Loss (gain) on sale of assets, net 2
(2 ) 4
4
Loss on Brazilian tax litigation, net (C) —
1
2
4
Interest income (2 ) (2 ) (6 ) (7 )
Other, net 4
4
5
12
Other (income) expense, net (D) $ (6 ) $ (3 ) $ 7
$ 36

~~_________________________~~


~~(A)~~	~~See Note 9 — Currency (Gains) Losses for further details.~~


~~(B)~~	~~See Note 10 — Financial Instruments and Commodity Contracts for further details.~~


~~(C)~~	~~See Note 15 — Commitments and Contingencies – Brazil Tax and Legal Matters for further details.~~

~~(D)~~

We have reclassified the "Loss on sale of a business" for the nine months ended December 31, 2016 of $27 million from "Other (income) expense, net" to "(Gain) loss on sale of a business, net" in the condensed consolidated statement of operations for presentation purposes. In September 2016, we sold our equity interest in Aluminium Company of Malaysia Berhad (ALCOM), a previously consolidated subsidiary. The sale resulted in a loss of $27 million during the three months ended September 30, 2016.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

14. INCOME TAXES

~~A reconciliation of~~For the ~~Canadian statutory tax rate to our effective tax rate was as follows (in millions, except percentages).~~

Three Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016
Pre-tax income before equity in net (income) loss of non-consolidated affiliates and noncontrolling interests $ 125
$ 119
$ 692
$ 117
Canadian statutory tax rate 25 % 25 % 25 % 25 %
Provision at the Canadian statutory rate $ 31
$ 30
$ 173
$ 29
Increase (decrease) for taxes on income (loss) resulting from:
Exchange translation items 2
3
8
7
Exchange remeasurement of deferred income taxes (3 ) —
(3 ) 6
Change in valuation allowances 7
6
10
49
Tax credits (8 ) —
(14 ) —
Income items not subject to tax (4 ) (2 ) (4 ) —
Tax gain, net —
—
—
9
Dividends not subject to tax —
—
—
(23 )
Legislative changes including enacted tax rates (18 ) —
(18 ) 3
Tax rate differences on foreign earnings 9
10
22
25
Uncertain tax positions 2
3
5
4
Other — net 2
(3 ) —
1
Income tax provision $ 20
$ 47
$ 179
$ 110
Effective tax rate 16 % 39 % 26 % 94 %

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. Among its numerous changes, the Act reduces the Company’s U.S. corporate rate from 35% to 21% effective January 1, 2018. The result is a blended U.S. corporate rate of 31.55% for fiscal year 2018. The impact of the lower statutory rate applied to year-to-date earnings has been recorded in the periodthree months ended December 31, 2017. Also recorded in the same period is an estimated non-cash income tax benefit of $18 million for the remeasurement of deferred tax assets and liabilities to reflect the anticipated rate at which the deferred items will be realized. The following information is needed to complete the accounting for the remeasurement of deferred tax assets and liabilities.

~~Determination of state conformity~~

~~Changes in temporary differences for the impact of obligations for which companies measure on an annual basis based on actuarial reports.~~

~~Actual reversals of temporary differences through March 31, 2018~~

Based on an initial assessment of the Act, the Company believes that most significant impact on the Company’s consolidated financial statements is the remeasurement of deferred tax assets and liabilities. Other provisions of the Act are not expected to have a material impact on the fiscal year 2018 consolidated financial statements.

~~Our~~2022, our effective tax rate differs from the Canadian statutory rate primarily due to the ~~following factors: (1) pre-tax~~full-year forecasted effective tax rate taking into account income taxed at rates that differ from the 25% Canadian rate, including withholding taxes and changes to the Brazilian real foreign ~~currency gains or losses with no~~exchange rate, offset by income not subject to tax, ~~effect~~tax credits, and tax benefits related to Korea tax reform. For the nine months ended December 31, 2022, our effective tax rate differs from the Canadian statutory rate primarily due to the full-year forecasted effective tax rate taking into account income taxed at rates that differ from the 25% Canadian rate, including withholding taxes, the availability of tax credits, income not subject to tax, and the change in valuation allowance. The change in valuation allowance is mainly attributable to the release of the full valuation allowance on temporary items and tax ~~effect~~attributes of ~~U.S. dollar denominated currency gains~~legacy Aleris entities in certain separate filer states and unitary filer states that require combined or ~~losses with no pre-tax effect, which are shown above as exchange translation items; (2)~~separate reporting, resulting in a benefit of $11 million. For the ~~remeasurement of deferred income taxes~~three months ended December 31, 2021, our effective tax rate differs from the Canadian statutory rate primarily due to foreign currency changes, which is shown above as exchange remeasurement of deferred income taxes; (3) changes in valuation allowances; (4) remeasurement of deferred taxes for recently enacted tax reform; (5) differences between Canadian and foreign statutory tax rates applied to earnings in foreign jurisdictions and foreign withholding tax expense shown above asthe full-year forecasted effective tax rate ~~differences on~~taking into account income taxed at rates that differ from the 25% Canadian rate, including withholding taxes and changes to the Brazilian real foreign ~~earnings.~~exchange rate, offset by income not subject to tax, and tax credits. For the nine months ended December 31, 2021, our effective tax rate differs from the Canadian statutory rate primarily due to the full-year forecasted effective tax rate taking into account income taxed at rates that differ from the 25% Canadian rate, including withholding taxes and changes to the Brazilian real foreign exchange rate, offset by tax credits, income not subject to tax, and the enacted rate change in the United Kingdom. The enacted rate change in the United Kingdom provided a benefit of approximately $8 million.

As of December 31, ~~2017,~~2022, we had a net deferred tax liability of ~~$47~~$155 million. This amount included gross deferred tax assets of approximately ~~$1.1~~$1.4 billion and a valuation allowance of ~~$696~~$724 million. It is reasonably possible that our estimates of future taxable income may change within the next 12twelve months resulting in a change to the valuation allowance in one or more jurisdictions.

~~Novelis Inc.~~Tax Uncertainties

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - (Continued)~~

~~Tax authorities continue to examine certain of our~~Certain tax filings for fiscal years ~~2005~~2007 through ~~2017.~~2020 are subject to tax examinations and judicial and administrative proceedings. As a result of ~~audit settlements,~~further settlement of audits, judicial decisions, the filing of amended tax returns, or the expiration of statutes of limitations, our reserves for unrecognized tax benefits, as well as reserves for interest and penalties, may ~~decrease~~change in the next 12 months. With few exceptions, tax returns for all jurisdictions for all tax years before 2007 are no longer subject to examination by taxing authorities or subject to any judicial or administrative proceedings. During the three months ~~by an amount up to approximately $17 million.~~ended December 31, 2022, certain estimates and assumptions associated with uncertain tax positions changed, none of which had a material impact on our financial statements for any periods presented.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

15. COMMITMENTS AND CONTINGENCIES

We are party to, and may in the future be involved in or subject to, disputes, claims, and proceedings arising in the ordinary course of our business, including some we assert against others, such as environmental, health and safety, product liability, employee, tax, personal injury, and other matters. We have established a liability with respect to contingencies for which a loss is probable and estimable. While the ultimate resolution of, liability and costs related to these matters cannot be determined with certainty, we do not believe any of these pending actions, individually or in the aggregate, will materially impair our operations or materially affect our financial condition or liquidity.

For certain matters in which the Company is involved for which a loss is reasonably possible, we are unable to estimate a loss. For certain other matters for which a loss is reasonably possible and the loss is estimable, we have estimated the aggregated range of loss as $0 to ~~$110~~$66 million. This estimated aggregate range of reasonably possible losses is based upon currently available information. The ~~Company’s~~Company's estimates involve significant ~~judgment, and therefore,~~judgment. Therefore, the estimate will change from time to time and actual losses may differ from the current estimate. We review the status of, and estimated liability related to, pending claims and civil actions on a quarterly basis. The evaluation model includes all asserted and unasserted claims that can be reasonably identified, including claims relating to our responsibility for compliance with environmental, health and safety laws and regulations in the jurisdictions in which we operate or formerly operated. The estimated costs in respect of such reported liabilities are not offset by amounts related to insurance or indemnification arrangements unless otherwise noted.

~~The following describes certain contingencies relating to our business, including those for which we assumed liability as a result of our spin-off from Alcan Inc.~~

Environmental Matters

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 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 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 are also involved in claims and litigation filed on behalf of persons alleging exposure to substances and other hazards at our current and former facilities.

We have established liabilities based on our estimates for ~~the~~ currently anticipated costs associated with ~~these~~ environmental matters. We ~~estimated~~estimate that the ~~remaining undiscounted clean-up~~ costs related to our environmental liabilities as of December 31, ~~2017~~2022, and March 31, 2022, were ~~approximately~~$32 million and $35 million, respectively. Of the total $32 million as of December 31, 2022, $15 million is associated with an environmental reserve, $14 million is associated with undiscounted environmental clean-up costs, and $3 million is associated with restructuring actions. As of ~~which $7~~December 31, 2022, $19 million ~~was~~is included in ~~“Other long-term liabilities” and the remaining $8 million in “Accrued~~accrued expenses and other current ~~liabilities”. Of the total $15 million, $11 million was associated with restructuring actions~~liabilities and the ~~remaining undiscounted clean-up costswere approximately $4 million. As of March 31, 2017, $10 million of the environmental liability was included~~remainder is within other long-term liabilities in ~~“Other long-term liabilities,” with the remaining $5 million included in “Accrued expenses and other current liabilities” in~~ our accompanying condensed consolidated balance sheet. Management has reviewed the environmental matters, including those for which we assumed liability as a result of our spin-off from Alcan Inc. As a result of management's review of these items, management has determined that the currently anticipated costs associated with these environmental matters will not, individually or in the aggregate, materially impact our operations or materially adversely affect our financial condition, results of operations or liquidity.sheets.

~~Novelis Inc.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - (Continued)~~

~~Brazil~~Brazilian Tax ~~and Legal Matters~~Litigation

Under a federal tax dispute settlement program established by the Brazilian government, we have settled several disputes with ~~Brazil’s~~Brazil's tax authorities regarding various forms of manufacturing taxes and social security contributions. In most cases, we are paying the settlement amounts over a period of 180 months, ~~although~~however, in some cases we ~~are paying~~pay the settlement amounts over a shorter period. ~~The assets and liabilities related to these settlements, as well as proceedings with labor courts and designated civil courts, are presented in the table below (in millions).~~

December 31,
2017 March 31,
2017
Cash deposits (A) $ 7
$ 7

Short-term settlement liability (B) $ 9
$ 9
Long-term settlement liability (B) 51
59
Total settlement liability $ 60
$ 68

Liability for other disputes and claims (C) $ 28
$ 22

~~_________________________~~

~~(A)~~

Effective in the third quarter of fiscal 2018, management defines “Cash deposits” to include cash deposits related to tax, labor, and civil disputes. To conform with current year presentation, we have updated prior period amounts to also include cash deposits related to labor and civil disputes. We have maintained these cash deposits as a result of legal proceedings with Brazil's tax authorities, labor courts, or designated civil courts. These deposits, which are included in “Other long-term assets - third parties” in our accompanying condensed consolidated balance sheets, will be expended toward these legal proceedings.


~~(B)~~	The short-term and long-term settlement liabilities are included in "Accrued expenses and other current liabilities" and "Other long-term liabilities", respectively, in our accompanying condensed consolidated balance sheets.


~~(C)~~	In addition to the disputes we have settled under the federal tax dispute settlement program, we are involved in several other unresolved tax and other legal claims in Brazil. The related liabilities are included in "Other long-term liabilities" in our accompanying condensed consolidated balance sheets.

~~The interest cost recorded on these~~Total settlement liabilities ~~partially offset by interest earned on the cash deposits~~as of December 31, 2022, and March 31, 2022, were $12 million and $18 million, respectively. As of December 31, 2022, $7 million is included in accrued expenses and other current liabilities and the ~~table below (in millions).~~remainder is within other long-term liabilities in our accompanying condensed consolidated balance sheets.

Three Months Ended December 31, Nine Months Ended December 31,

2017 2016 2017 2016
Loss on Brazilian tax litigation, net $ —
$ 1
$ 2
$ 4

In addition to the disputes we have settled under the federal tax dispute settlement program, we are involved in several other unresolved tax and other legal claims in Brazil. Total liabilities for other disputes and claims were $36 million as of December 31, 2022, and $38 million as of March 31, 2022. As of December 31, 2022, $2 million is included in accrued expenses and other current liabilities and the remainder is within other long-term liabilities in our accompanying condensed consolidated balance sheets. Additionally, we have included in the range of reasonably possible losses disclosed above any unresolved tax disputes or other contingencies for which a loss is reasonably possible and estimable. The interest cost recorded on these settlement liabilities offset by interest earned on the cash deposits is reported in other expenses (income), net on the condensed consolidated statement of operations.

~~Other Commitments~~

We sell and repurchase inventory with third parties in an attempt to better manage inventory levels and to better match the purchasing of inventory with the demand for our products. We sell certain inventories to third parties and agree to repurchase the same or similar inventory backDuring prior fiscal years, we received multiple favorable rulings from the ~~third parties at market prices subsequent~~Brazilian court that recognized the right to ~~balance sheet dates. Our estimated outstanding repurchase obligations~~exclude certain taxes from the tax base used to calculate contributions to the social integration program and social security contributions on gross revenues, also known as PIS and COFINS. As a result of these cases, we had the right to apply for tax credits for the amounts overpaid during specified tax years. These credits and corresponding interest could be used to offset various Brazilian federal taxes in future years.

The Brazilian Office of the Attorney General of the National Treasury sought clarification from the Brazilian Supreme Court on certain matters, including the calculation methodology (i.e. gross or net credit amount) and timing of these credits. Since the Brazilian Supreme Court had not yet confirmed the appropriate methodology when these favorable rulings were received, Novelis recorded this ~~inventory as of December 31, 2017 and March 31, 2017 was approximately $10 million and $12 million, respectively,~~benefit in the corresponding periods based on ~~market prices as~~the net credit amount.

However, during the first quarter of fiscal 2022, the ~~balance sheet dates.~~Brazilian Supreme Court ruled that the credit should be calculated using the gross methodology for lawsuits filed prior to March 2017. As such, Novelis recorded additional income of ~~December 31, 2017~~$76 million in other expenses (income), net, $48 million of which is principal and ~~March 31, 2017, there were no liabilities~~$29 million is interest, related to PIS and COFINS for the years 2009 to 2017, net of $1 million in litigation expense.

During the third quarter of fiscal 2022, Novelis recorded $5 million of additional income in other (income) expenses, net, $2 million of which is principal and $3 million of which is interest, related to PIS and COFINS for certain periods.

The credit amounts, interest calculation, and supporting documentation are subject to further validation and scrutiny by tax authorities for five years after the credits are utilized. Thus, credits recognized may differ from these ~~repurchase obligations recorded in our accompanying condensed consolidated balance sheets.~~amounts.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

In order to qualify for these credits, the Company is required to compile and present verifiable support validating the credits. During fiscal 2022, Novelis applied for and received official authorization from The Special Department of Federal Revenue of Brazil ("Receita Federal") to use the PIS and COFINS credits related to certain periods. Novelis was able to utilize a majority of these credits to offset taxes paid in fiscal 2022 and utilized the remaining credits in the first quarter of fiscal 2023.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

16. SEGMENT, GEOGRAPHICAL AREA, MAJOR CUSTOMER AND MAJOR SUPPLIER INFORMATION

Segment Information

Due in part to the regional nature of the supply and demand of aluminum rolled products and to best serve our customers, we manage our activities based on geographical areas and are organized under four operating segments: North America, Europe, Asia, and South America. All of our segments manufacture aluminum sheet and light gauge products. We also manufacture aluminum plate products in Europe and Asia.

The following is a description of our operating ~~segments:~~segments.

North America. Headquartered in Atlanta, Georgia, this segment operates ~~eight~~17 plants, including ~~two fully dedicated recycling facilities and one facility~~seven with recycling operations, in two countries.

Europe. Headquartered in Küsnacht, Switzerland, this segment operates ~~ten~~10 plants, including ~~two fully dedicated recycling facilities and two facilities~~five with recycling operations, in four countries.

Asia. Headquartered in Seoul, South Korea, this segment operates four plants, including ~~three facilities~~two with recycling operations, in ~~three~~two countries.

South America. Headquartered in ~~Sao~~São Paulo, Brazil, this segment ~~comprises power generation operations, and~~ operates two plants in Brazil, including ~~a facility~~one with recycling ~~operations, in Brazil. The majority of our power generation operations were sold during the fourth quarter of fiscal 2015.~~operations.

Net sales and expenses are measured in accordance with the policies and procedures described in Note 1 —– Business and Summary of Significant Accounting Policies ~~see in~~within our ~~Annual Report on~~2022 Form ~~10-K for the year ended March 31, 2017.~~10-K.

We measure the profitability and financial performance of our operating segments based on ~~“Segment income.” “Segment income”~~Adjusted EBITDA. Adjusted EBITDA provides a measure of our underlying segment results that is in line with our approach to risk management. We define ~~“Segment income”~~Adjusted EBITDA as earnings before (a) ~~“depreciation~~depreciation and ~~amortization”;~~amortization; (b) ~~“interest~~interest expense and amortization of debt issuance ~~costs”;~~costs; (c) ~~“interest income”;~~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;~~Adjusted EBITDA; (e) impairment of goodwill; (f) ~~gain or~~(gain) loss on extinguishment of ~~debt;~~debt, net; (g) noncontrolling interests' share; (h) adjustments to reconcile our proportional share of ~~“Segment income”~~Adjusted EBITDA from non-consolidated affiliates to income as determined on the equity method of accounting; (i) ~~“restructuring~~restructuring and impairment ~~net”;~~expenses (reversals), net; (j) gains or losses on disposals of property, plant and equipment and businesses, net; (k) other costs, net; (l) litigation settlement, net of insurance recoveries; (m) sale transaction fees; (n) income tax provision ~~or benefit for taxes on income (loss)~~(benefit); (o) cumulative effect of accounting change, net of tax; ~~and~~ (p) metal price ~~lag.~~lag; (q) business acquisition and other related costs; (r) purchase price accounting adjustments; (s) income (loss) from discontinued operations, net of tax; and (t) loss on sale of discontinued operations, net of tax.

Prior to the three months ended June 30, 2022, we also utilized the term Segment Income to refer to Adjusted EBITDA. Both terms have the same definition and there is no difference in the composition or calculation of Adjusted EBITDA for the periods presented and Segment Income previously reported. Under ASC 280, Segment Reporting ("ASC 280"), our measure of segment profitability and financial performance of our operating segments is Adjusted EBITDA, and when used in this context, Adjusted EBITDA is a financial measure prepared in accordance with U.S. GAAP.

The tables ~~below~~that follow show selected segment financial ~~information (in millions). The “Eliminations~~information. "Eliminations and ~~Other” column in the table below~~Other" includes eliminations and functions that are managed directly from our corporate office that have not been allocated to our operating segments as well as the adjustments for proportional consolidation and eliminations of intersegment ~~“Net~~net 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~~GAAP based measures, we must adjust proportional consolidation of each line item. The ~~“Eliminations~~"Eliminations and ~~Other”~~Other" in ~~“Net~~net sales – third ~~party”~~party includes the net sales attributable to our joint venture party, Tri-Arrows, for our Logan affiliate because we consolidate 100% of the Logan joint venture for U.S. GAAP, but we manage our Logan affiliate on a proportionately consolidated basis. See Note 4 —– Consolidation and Note 5 – Investment in and Advances to Non-Consolidated Affiliates and Related Party Transactions for further information about ~~this affiliate.~~these affiliates. Additionally, we eliminate intersegment sales and intersegment income for reporting on a consolidated basis.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

Selected Segment Financial Information


in millions
December 31, 2022	North America		Europe		Asia		South America		Eliminations and Other(1)		Total
Investment in and advances to non-consolidated affiliates	$	—	$	506	$	340	$	—	$	—	$	846
Total assets	4,971		3,943		2,412		2,159		765		14,250

December 31, 2017
North
America
Europe Asia
South
America
Eliminations and Other Total
Investment in and advances to non–consolidated affiliates $ —
$ 508
$ 323
$ —
$ —
$ 831
Total assets $ 2,575
$ 2,957
$ 1,812
$ 1,726
$ 205
$ 9,275


in millions
March 31, 2022	North America		Europe		Asia		South America		Eliminations and Other(1)		Total
Investment in and advances to non-consolidated affiliates	$	—	$	508	$	324	$	—	$	—	$	832
Total assets	5,084		4,535		2,627		2,115		735		15,096


in millions
Selected Operating Results Three Months Ended December 31, 2022	North America		Europe		Asia		South America		Eliminations and Other		Total
Net sales – third party	$	1,762	$	1,083	$	574	$	662	$	120	$	4,201
Net sales – intersegment	—		44		8		15		(67)		—
Net sales	$	1,762	$	1,127	$	582	$	677	$	53	$	4,201

Depreciation and amortization	$	55	$	41	$	21	$	20	$	(4)	$	133
Income tax (benefit) provision	(15)		(18)		(5)		25		7		(6)
Capital expenditures	107		29		28		20		(6)		178

in millions
Selected Operating Results Three Months Ended December 31, 2021	North America		Europe		Asia		South America		Eliminations and Other		Total
Net sales – third party	$	1,716	$	1,116	$	697	$	698	$	99	$	4,326
Net sales – intersegment	—		40		13		29		(82)		—
Net sales	$	1,716	$	1,156	$	710	$	727	$	17	$	4,326

Depreciation and amortization	$	58	$	41	$	23	$	21	$	(6)	$	137
Income tax (benefit) provision	(9)		1		13		48		36		89
Capital expenditures	33		29		23		14		(6)		93

in millions
Selected Operating Results Nine Months Ended December 31, 2022	North America		Europe		Asia		South America		Eliminations and Other		Total
Net sales – third party	$	5,816	$	3,707	$	2,105	$	2,106	$	355	$	14,089
Net sales – intersegment	—		129		184		148		(461)		—
Net sales	$	5,816	$	3,836	$	2,289	$	2,254	$	(106)	$	14,089

Depreciation and amortization	$	170	$	119	$	64	$	60	$	(8)	$	405
Income tax (benefit) provision	(38)		(13)		25		98		74		146
Capital expenditures	259		72		70		57		4		462

in millions
Selected Operating Results Nine Months Ended December 31, 2021	North America		Europe		Asia		South America		Eliminations and Other		Total
Net sales – third party	$	4,843	$	3,228	$	2,085	$	1,864	$	280	$	12,300
Net sales – intersegment	—		137		25		34		(196)		—
Net sales	$	4,843	$	3,365	$	2,110	$	1,898	$	84	$	12,300

Depreciation and amortization	$	171	$	128	$	67	$	58	$	(19)	$	405
Income tax provision	36		24		49		134		33		276
Capital expenditures	112		62		59		63		(9)		287

_________________________

(1)Total assets includes assets of discontinued operations.

March 31, 2017
North
America
Europe Asia
South
America
Eliminations and Other Total
Investment in and advances to non–consolidated affiliates $ —
$ 451
$ —
$ —
$ —
$ 451
Total assets $ 2,359
$ 2,683
$ 1,602
$ 1,637
$ 93
$ 8,374

Selected Operating Results Three Months Ended December 31, 2017
North
America
Europe Asia
South
America
Eliminations and Other Total
Net sales-third party $ 985
$ 820
$ 533
$ 542
$ 205
$ 3,085
Net sales-intersegment 1
17
14
25
(57 ) —
Net sales $ 986
$ 837
$ 547
$ 567
$ 148
$ 3,085

Depreciation and amortization $ 37
$ 29
$ 18
$ 16
$ (14 ) $ 86
Income tax (benefit) provision $ (11 ) $ (6 ) $ 9
$ 18
$ 10
$ 20
Capital expenditures $ 19
$ 19
$ 7
$ 10
$ (1 ) $ 54

Selected Operating Results Three Months Ended December 31, 2016
North
America
Europe Asia
South
America
Eliminations and Other Total
Net sales-third party $ 789
$ 684
$ 409
$ 386
$ 45
$ 2,313
Net sales-intersegment —
9
3
13
(25 ) —
Net sales $ 789
$ 693
$ 412
$ 399
$ 20
$ 2,313

Depreciation and amortization $ 38
$ 25
$ 14
$ 15
$ (4 ) $ 88
Income tax provision $ 8
$ 8
$ 3
$ 19
$ 9
$ 47
Capital expenditures $ 20
$ 16
$ 10
$ 9
$ (7 ) $ 48

Selected Operating Results Nine Months Ended December 31, 2017
North
America
Europe Asia
South
America
Eliminations and Other Total
Net sales - third party $ 2,878
$ 2,480
$ 1,533
$ 1,348
$ 309
$ 8,548
Net sales - intersegment 17
39
32
62
(150 ) —
Net sales $ 2,895
$ 2,519
$ 1,565
$ 1,410
$ 159
$ 8,548

Depreciation and amortization $ 112
$ 83
$ 47
$ 48
$ (23 ) $ 267
Income tax provision $ 10
$ 5
$ 98
$ 54
$ 12
$ 179
Capital expenditures $ 52
$ 40
$ 19
$ 22
$ 3
$ 136

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ~~- (Continued)~~

Selected Operating Results Nine Months Ended December 31, 2016
North
America
Europe Asia
South
America
Eliminations and Other Total
Net sales - third party $ 2,305
$ 2,158
$ 1,305
$ 1,044
$ 158
$ 6,970
Net sales - intersegment 2
31
9
46
(88 ) —
Net sales $ 2,307
$ 2,189
$ 1,314
$ 1,090
$ 70
$ 6,970

Depreciation and amortization $ 112
$ 79
$ 44
$ 46
$ (14 ) $ 267
Income tax provision $ 2
$ 11
$ 16
$ 58
$ 23
$ 110
Capital expenditures $ 47
$ 49
$ 24
$ 28
$ (10 ) $ 138

The table below ~~reconciles “Net~~displays the reconciliation from net income ~~(loss)~~ attributable to our common shareholder” to ~~segment income from reportable segments for the three and nine months ended December 31, 2017 and 2016 (in millions).~~Adjusted EBITDA.

Three Months Ended December 31, 2017 Nine Months Ended December 31, 2017
2017 2016 2017 2016
Net income (loss) attributable to our common shareholder $ 121
$ 63
$ 529
$ (2 )
Noncontrolling interests (16 ) 1
(16 ) 1
Income tax provision 20
47
179
110
Depreciation and amortization 86
88
267
267
Interest expense and amortization of debt issuance costs 64
67
192
231
Adjustment to reconcile proportional consolidation 17
4
33
20
Unrealized gains on change in fair value of derivative instruments, net (15 ) (21 ) (13 ) (18 )
Realized losses (gains) on derivative instruments not included in segment income 1
(1 ) —
(2 )
Gain on assets held for sale —
—
—
(2 )
Loss on extinguishment of debt —
—
—
112
Restructuring and impairment, net 25
1
33
4
Losses (gains) on sale of fixed assets 2
(2 ) 4
4
(Gain) loss on sale of a business (A) —
—
(318 ) 27
Metal price lag (B) (1 ) 4
5
32
Other, net 1
4
1
10
Total of reportable segments $ 305
$ 255
$ 896
$ 794


	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2022		2021		2022		2021
Net income attributable to our common shareholder	$	12	$	262	$	502	$	739
Net loss attributable to noncontrolling interests	—		—		(1)		—
Income tax (benefit) provision	(6)		89		146		276
(Income) loss from discontinued operations, net of tax	—		(3)		2		62

Income from continuing operations before income tax provision	6		348		649		1,077
Depreciation and amortization	133		137		405		405
Interest expense and amortization of debt issuance costs	75		54		198		173
Adjustment to reconcile proportional consolidation(1)	13		17		40		46
Unrealized losses (gains) on change in fair value of derivative instruments, net	1		(26)		(20)		(6)
Realized gains on derivative instruments not included in Adjusted EBITDA(2)	(1)		—		(3)		(1)

Gain on sale of business(3)	—		(15)		—		(15)
Loss on extinguishment of debt, net	—		1		—		63
Restructuring and impairment expenses, net	5		3		7		1
Loss on sale of assets, net	—		3		1		5

Metal price lag	109		(14)		130		(127)

Other, net(4)	—		(2)		1		(7)
Adjusted EBITDA	$	341	$	506	$	1,408	$	1,614

_________________________


~~(A)~~	In September 2017, Novelis Korea Ltd., a subsidiary of Novelis Inc., sold a portion of its shares in Ulsan Aluminum, Ltd. (UAL) for $314 million, which resulted in a gain on sale of investments. For additional information related to the transaction, see Note 5 — Investment in and Advances to Non-Consolidated Affiliates and Related Party Transactions.

~~(B)~~

Effective in the first quarter of fiscal 2018, management removed the impact of metal price lag from Segment Income in order to enhance the visibility of the underlying operating performance of the Company. The impact of metal price lag is now reported as a separate line item in this reconciliation. This change does not impact our condensed consolidated financial statements. Segment Income for prior periods presented has been updated to reflect this change. For additional information related to metal price lag, see Note 10 — Financial Instruments and Commodity Contracts.

~~Novelis Inc.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - (Continued)~~

“(1)Adjustment to reconcile proportional ~~consolidation”~~consolidation relates to depreciation, amortization, and income taxes atof our ~~Aluminium Norf GmbH (Alunorf) and Ulsan Aluminum, Ltd. (UAL) joint ventures.~~equity method investments. Income taxes related to our equity method investments are reflected in the carrying value of the investment and not in our consolidated ~~“Income~~income tax (benefit) provision.”

“(2)Realized ~~losses (gains)~~gains on derivative instruments not included in ~~segment income”~~Adjusted EBITDA represents ~~realized gains (losses) on~~ foreign currency derivatives ~~related~~unrelated to ~~capital expenditures.~~operations.

"(3)Gain on sale of business relates to Novelis' sale of 90% of its equity ownership in Saras Micro Devices, Inc. See Note 13 – Other ~~net" is related primarily to losses on certain indirect tax expenses in Brazil and interest income.~~(Income) Expenses, net for further details.

~~The table below displays income from reportable segments for~~(4)For the ~~three months and~~ nine months ended December 31, ~~2017~~2021, other, net includes $36 million of interest income recognized as a result of Brazilian tax litigation settlements and ~~2016, respectively.~~interest income, partially offset by $18 million from the release of certain outstanding receivables.

The following table displays Adjusted EBITDA by reportable segment.


	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2022		2021		2022		2021
North America	$	124	$	181	$	542	$	580
Europe	38		71		195		251
Asia	60		76		267		256
South America	124		178		407		525
Eliminations and Other	(5)		—		(3)		2
Adjusted EBITDA	$	341	$	506	$	1,408	$	1,614

Three Months Ended December 31, 2017 Nine Months Ended December 31, 2017

2017
2016 2017 2016
North America $ 111

$ 90
$ 351
$ 276
Europe 50

44
158
150
Asia 43

40
124
132
South America 107

81
269
236
Intersegment eliminations (6 )
—
(6 ) —
Total of reportable segments $ 305

$ 255
$ 896
$ 794

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Information about Product Sales, Major Customers, and Primary Supplier

Product Sales

The following table displays net sales by product end market.


	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2022		2021		2022		2021
Can	$	1,998	$	2,154	$	6,800	$	6,206
Automotive	934		885		2,876		2,395
Aerospace and industrial plate	180		125		543		361
Specialty	1,089		1,162		3,870		3,338
Net sales	$	4,201	$	4,326	$	14,089	$	12,300

Major Customers

The following table ~~below shows~~displays customers representing 10% or more of our net sales tofor any of the ~~Affiliates of Ball Corporation (Ball), Ford Motor Company (Ford), Crown Holdings Incorporated, formerly Crown Cork & Seal Company (Crown), our three largest customers, as a~~periods presented and their respective percentage of ~~total “Net~~net sales.”

Three Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016
Ball (A) 21 % 26 % 21 % 27 %
Ford 10 % 11 % 10 % 10 %
Crown 8 % 10 % 9 % 10 %

~~_________________________~~


~~(A)~~	In fiscal 2017, Ball completed the acquisition of Rexam and the divestiture of certain assets to the Ardagh Group (Ardagh). We combined the sales of Ball and Rexam for presentation purposes. For the three and nine months ended December 31, 2017, combined sales to Ball, Rexam, and Ardagh totaled 29% of "Net Sales".


	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Ball	16	%	17	%	16	%	16	%

Primary Supplier

Rio Tinto ~~(RT)~~ is our primary supplier of metal inputs, including prime and sheet ingot. The table below shows our purchases from RTRio Tinto as a percentage of our total combined metal purchases.


	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Purchases from Rio Tinto as a percentage of total combined metal purchases	9	%	8	%	8	%	8	%

Three Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016
Purchases from RT as a percentage of total combined metal purchases 9 % 11 % 10 % 11 %

Item 2. ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations.

FORWARD-LOOKING STATEMENTS

The following information should be read together with our unaudited condensed consolidated financial statements and accompanying notes included elsewhere in this ~~Quarterly Report~~Form 10-Q for a more complete understanding of our financial condition and results of operations. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below, particularly in ~~“SPECIAL~~SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND MARKET ~~DATA.”~~DATA.

OVERVIEW AND REFERENCES

Novelis is the world's leading aluminum rolled products producer based on shipment volume in fiscal 2017. 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 automotive, 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 December 31, 2017, we had manufacturing operations in ten countries on four continents, which include 24 operating plants, and recycling operations in eleven of these plants.

In this ~~Quarterly Report on~~ Form 10-Q, unless otherwise specified, the terms ~~“we,” “our,” “us,” “Company,”~~"we," "our," "us," the "Company," and ~~“Novelis”~~"Novelis" refer to Novelis Inc., a company incorporated in Canada under the Canadian Business Corporations Act, ~~(CBCA)~~ and its subsidiaries. References herein to ~~“Hindalco”~~"Hindalco" refer to Hindalco Industries Limited, ~~our indirect parent company,~~ which acquired Novelis in May ~~2007,~~2007.

Novelis is driven by its purpose of shaping a sustainable world together. We are a global leader in the production of innovative aluminum products and solutions and the world's largest recycler of aluminum. Our ambition is to be the leading provider of low-carbon, sustainable aluminum solutions and to achieve a fully circular economy by partnering with our suppliers and customers in beverage packaging, automotive, aerospace, and specialties (a diverse market including building and construction; signage; foil and packaging; commercial transportation; and commercial and consumer products, among others) markets throughout North America, Europe, Asia, and South America. Novelis is a subsidiary of Hindalco, an industry leader in aluminum and copper and the metals flagship company of the Aditya Birla Group, a multinational conglomerate based in Mumbai. As of December 31, 2022, we had manufacturing operations in nine countries on four continents: North America, South America, Asia, and Europe, through ~~its indirect wholly-owned subsidiary, AV Metals Inc.,~~33 operating facilities, which may include any combination of hot or cold rolling, finishing, casting, or recycling capabilities. We have recycling operations in 15 of our ~~direct parent company.~~operating facilities to recycle post-consumer aluminum, such as UBCs, and post-industrial aluminum, such as class scrap.

As used in this ~~Quarterly Report,~~Form 10-Q, consolidated ~~“aluminum~~"aluminum rolled product ~~shipments”~~shipments," "flat-rolled product shipments," or ~~“flat rolled product shipments”~~"shipments" refers to aluminum rolled ~~products~~product shipments to third parties. Regional ~~“aluminum~~"aluminum rolled product ~~shipments”~~shipments," "flat-rolled product shipments," or ~~“flat rolled product shipments”~~"shipments" refers to aluminum rolled ~~products~~product shipments to third parties and intersegment shipments to other Novelis regions. Shipment amounts also include tolling shipments. References to ~~“total shipments”~~"total shipments" include aluminum rolled ~~products~~product shipments as well as certain other non-rolled product shipments, primarily scrap, ~~used beverage cans (UBC), ingot,~~UBCs, ingots, billets, and primary remelt. The term ~~“aluminum~~"aluminum rolled ~~products”~~products" is synonymous with the terms ~~“flat rolled products”~~"flat-rolled products" and ~~“FRP”~~"FRP," which are commonly used by manufacturers and ~~third party~~third-party analysts in our industry. All tonnages are stated in metric tonnes. One metric tonne ~~(mt)~~ is equivalent to 2,204.6 pounds. One ~~kilotonne (kt)~~kt is 1,000 metric tonnes.

References to our Form 10-K made throughout this document refer to our Annual Report on Form 10-K for the year ended March 31, 2017, filed with the United States Securities and Exchange Commission (SEC) on May 10, 2017.

~~HIGHLIGHTS~~

We reported "Net income attributable to our common shareholder" of $121 million in the three months ended December 31, 2017, compared with "Net income attributable to our common shareholder" of $63 million in the three months ended December 31, 2016. The increase is primarily due to strong can and automotive demand combined with a focus on driving asset efficiency, strong global operational performance and diligent operating cost management. As a result of this, net sales and shipments were up 33% and 6%, respectively, in the three months ended December 31, 2017 and the three months ended December 31, 2016. Additionally, our focus on optimizing our product portfolio continues to contribute to higher net income.

We achieved record "Segment income" of $305 million (an increase of 20%) for the third quarter of fiscal 2018 compared with "Segment income" of $255 million for the third quarter of fiscal 2017. The increase is primarily due to the factors noted above. Also, as a result of these factors, net cash provided by operating activities was $237 million for the nine months ended December 31, 2017, an improvement of $86 million from the prior comparable period.

BUSINESS AND INDUSTRY CLIMATE

A little over a decade ago, we launched a strategy to transform and improve the profitability of our business through disciplined phases of significant capital investment in new capacity and capabilities. These investments enabled us to increase the amount of recycled content in our products, capitalize on favorable long-term market trends driving increased consumer demand for lightweight, sustainable aluminum products, and diversify and optimize our product portfolio. As a global leader in the aluminum flat-rolled products industry, we leveraged our new capacity, global footprint, scale, and solid customer relationships to drive volumes and capture favorable supply and demand market dynamics across all our end-use markets. With volume growth combined with improved pricing, a significant increase in scrap inputs, operational efficiencies, acquisition cost synergies, and high-capacity utilization rates, we significantly improved the profitability of our beverage packaging and specialties products and maintained high margins for automotive and aerospace products to deliver a 72% increase in total company Adjusted EBITDA per tonne to $530 and turn a net loss of $38 million into $955 million in net income between fiscal 2016 and fiscal 2022.

~~Economic growth~~

This improvement in profitability is despite increased inflationary cost pressures that began in early fiscal 2022 resulting from, among other factors, global supply chain disruptions and ~~material substitution~~geopolitical instability impacting the availability and price of materials and services including freight, energy, coatings, and alloys, such as magnesium. However, these cost headwinds have intensified in fiscal 2023 and are expected to continue for the foreseeable future. Beginning in the fourth quarter of fiscal 2022, we have been impacted by higher energy prices globally, and especially in Europe, where the Russia-Ukraine conflict's negative impact on energy prices and raw materials has also caused reduced manufacturing and industrial demand. We expect such elevated costs and reduced demand until energy prices and economic conditions stabilize. Our operations otherwise have not been materially impacted by labor shortages, and we remain able to procure the necessary raw materials, parts, and equipment due to our diverse global supplier network. While we believe we are positioned to maintain production levels necessary to service our customers, we cannot predict supply chain disruptions or their potential future financial impacts. While our results are being negatively impacted by these higher costs, we have been able to partially mitigate a portion of the higher inflationary cost impact through a combination of hedging, passing through a portion of higher costs to customers, favorable pricing environments, and utilizing recycled materials. We have also begun implementing cost control measures across our global operations, including a focus on employment, professional services, and travel costs. There is no assurance that we will continue to ~~drive increasing~~be able to mitigate these higher costs in the future.

Our management administers an Enterprise Risk Management ("ERM") program, which is a comprehensive risk assessment and mitigation process that identifies and addresses all known current and potential material risks to Novelis' global operations, including legal and regulatory risks. The ERM team is led by an executive officer who delivers an ERM report to the Audit Committee of our board at least quarterly. The ERM team meets with or interviews approximately 80 employees each quarter to stay abreast of the latest risks we face. Throughout the escalation of the Russia-Ukraine conflict, our ERM team has monitored developments and gathered information about Novelis contacts with Russian businesses. Novelis' direct exposure to the conflict has been limited, as we have no operations, assets, or employees in either Russia or Ukraine, and we have only immaterial customer relationships in these countries historically. Sanctions, tariffs, a ban or similar actions impacting the supply of Russian aluminum could disrupt global aluminum supply. While one of our suppliers of metal is UC Rusal PLC ("Rusal"), a Russian aluminum company, we purchase metal from a diverse global portfolio of metal suppliers and are not dependent on Rusal for a significant portion of our metal supply. The ERM team also monitors other potential impacts of Russia's invasion of Ukraine, including impacts on the reliability of energy supplies to our European manufacturing sites and supply chain disruptions. This information is presented to, and discussed with, the Audit Committee of our board at least quarterly, with interim updates from our executive leadership as our board may require. In addition, we manage sanctions compliance through a global sanctions screening program, and our Information Security team monitors cybersecurity matters and makes periodic reports at meetings of our board.

We believe that global long-term demand for aluminum rolled products remains strong, driven by anticipated economic growth, material substitution, and ~~rolled~~

~~products. Global can sheet overcapacity,~~sustainability considerations, including increased ~~competition from Chinese suppliers of flat rolled aluminum products, and customer consolidation are also adding downward pricing pressures~~environmental awareness around polyethylene terephthalate ("PET") plastics. Disruption in ~~the can sheet market.~~

~~Meanwhile, the~~ demand for aluminum inrolled products as a result of the COVID-19 pandemic and semiconductor shortages impacting the automotive industry ~~continues~~appears to be moderating. However, we believe the challenging inflationary and geopolitical environment has increased economic uncertainty and is negatively impacting near-term demand in some end markets. The building and construction end market is where we see the most uncertainty, as it is more sensitive to inflation and interest rates. In addition, we are seeing reduced can sheet demand in the near term attributed to canmakers reducing their excess inventory as they adjust to a more moderated level of can demand.

Despite current market uncertainty, we believe that long-term demand for aluminum rolled products remains intact. Increasing customer preference for sustainable packaging options, and package mix shift toward infinitely recyclable aluminum are driving higher demand for aluminum beverage packaging worldwide. In the first half of fiscal 2022, we completed an investment to expand the rolling and recycling capacity, each by 100 kt, in our Pindamonhangaba, Brazil, plant to support this demand. Additionally, more than half of the 600 kt capacity of the greenfield rolling and recycling plant being built in Bay Minette, Alabama, announced in May 2022, will be used to serve the growing demand for aluminum beverage can sheet in North America. We continue to evaluate opportunities for additional capacity expansion across regions where local can sheet supply is insufficient to meet the rapid rise in demand.

We believe that long-term demand for aluminum automotive sheet will continue to grow, which drove ~~the~~our recently completed investments ~~we made~~ in ~~our~~ automotive sheet finishing capacity in ~~North America, Europe~~Guthrie, Kentucky, and ~~Asia.~~Changzhou, China. This demand has been primarily driven by the benefits that result from using ~~lighter weight materials~~lightweight aluminum in ~~the vehicles,~~vehicle structures and components, as ~~companies~~automakers respond to stricter government regulations ~~which are driving improved~~regarding emissions and ~~better~~ fuel ~~economy;~~economy, while ~~also~~ maintaining or improving vehicle safety and ~~performance.~~performance, resulting in increased competition with high-strength steel. We are also seeing increased demand for aluminum for electric vehicles, as aluminum's lighter weight can result in extended battery range.

~~Key Sales~~We expect long-term demand for building and ~~Shipment~~construction and other specialty products to grow due to increased customer preference for lightweight, sustainable materials and demand for aluminum plate in Asia to grow driven by the development and expansion of industries serving aerospace, rail, and other technically demanding applications.

While aerospace was muted in fiscal 2022 as air travel was impacted by the COVID-19 pandemic, shipments of aerospace aluminum plate and sheet have improved in fiscal year 2023 to date as demand has recovered toward pre-COVID levels. In the longer-term, we believe significant aircraft industry order backlogs for key OEMs, including Airbus and Boeing, will translate into growth in the future and that our multi-year supply agreements have positioned us to benefit from future expected demand.

We believe the long-term demand trends for flat-rolled aluminum products remain strong, and we have identified more than $4.5 billion of potential organic capital investment opportunities to grow Novelis' business through debottlenecking, recycling, and new capacity investments through fiscal 2027, focused on increasing capacity and capabilities that meet growing customer demand and align with our sustainability commitments. Of the more than $4.5 billion of potential investment opportunities we have identified, we have already allocated over $3.4 billion to the specific investments outlined below. We expect to fund these organic growth investments from internally generated cash flows.

In October 2021, we announced plans to invest approximately $130 million at our Oswego, New York, plant to meet growing customer demand for sustainable, aluminum flat-rolled products. We expect the project to increase hot mill capacity by 124 kt, with a total expected increase of finished goods capacity estimated in the range of 65 kt. The investment also includes enhancements to the plant's batch annealing capabilities for automotive sheet.

In October 2021, we announced plans to invest approximately $375 million to expand cold rolling and recycling capacity in Zhenjiang, China, to integrate our automotive business in Asia. This investment will also release rolling capacity at UAL, the Company's joint venture in South Korea, to serve the can and specialty products market. We are delaying the start of the project to an appropriate time given the current constraints arising from COVID lockdowns and the economic uncertainties which calls for prudence in deploying capital until we see a more stable environment.

In January 2022, we announced plans to invest approximately $365 million to build a highly advanced recycling center for automotive in the U.S., which will be adjacent to our existing automotive finishing plant in Guthrie, Kentucky. With an expected annual casting capacity of 240 kt of sheet ingot, we expect the facility will reduce the Company's carbon emissions by more than one million tonnes each year. We broke ground for this new recycling center in May 2022.

In February 2022, we announced plans to invest approximately $50 million to build a recycling and casting center at the site of our UAL joint venture in South Korea. Fully funded by Novelis, the Ulsan Recycling Center will have an annual casting capacity of 100 kt of low-carbon sheet ingot. Once online, we expect the recycling center to reduce the Company's carbon emissions by more than 420,000 tonnes each year. We broke ground on this new recycling and casting center in November 2022.

In March 2022, we announced a $50 million debottlenecking investment at our plant located in Pindamonhangaba, Brazil, to unlock approximately 70 kt of rolling capacity.

In May 2022, we announced plans to build an approximately $2.5 billion greenfield, fully integrated rolling and recycling plant in Bay Minette, Alabama. This new U.S. plant will support strong demand for sustainable beverage can and automotive aluminum sheet and advance a more circular economy. We broke ground for this new facility in October 2022.

Environmental, Social & Governance

In April 2021, we announced that we will further our longstanding sustainability commitment by aiming to become a carbon-neutral company by 2050 or sooner and reducing our carbon footprint by 30% by 2026, from our baseline of fiscal 2016. Carbon goals are inclusive of Scope 1 and 2, as well as Scope 3 emissions in categories 1, 3, and 9, of the Greenhouse Gas Protocol. In addition, we have targets to reduce waste to landfills by 20%, energy intensity by 10%, and water intensity by 10%, each by 2026, from our baseline of fiscal 2016.

We plan to increase the use of recycled content in our products, as appropriate, and engage with customers, suppliers, and industry peers across the value chain as we aim to drive innovation that improves aluminum's overall sustainability. In addition, we intend to evaluate each future expansion project's carbon impact and plan to include an appropriate carbon cost impact as part of our financial evaluation of future strategic growth investments. We intend to evaluate each future expansion project's carbon impact so that we may appropriately mitigate any negative carbon impacts to meet our goals.

In support of our commitments, we are voluntarily pursuing the certification of all of our plant operations to the Aluminum Stewardship Initiatives' ("ASI") certification program. ASI works together with producers, users, and stakeholders in the aluminum value chain to collaboratively foster responsible production, sourcing, and stewardship of aluminum. Currently, we have 19 plants with the Performance Standard Certification and 14 with the Chain of Custody Certification. In addition, to support our initiatives, in April 2021 we issued €500 million in aggregate principal amount of senior notes. We intend to allocate an amount equal to the net proceeds of these notes to eligible "green" projects, such as investments in recycling, renewable energy, and pollution prevention and control. Through March 31, 2022, we have allocated $140 million of the net proceeds toward pollution prevention and control.

Our path to a more sustainable and circular future goes beyond our environmental commitments. We have set targets to build a more diverse and inclusive workforce that reflects our local communities. Globally, we are dedicated to increasing the representation of women in senior leadership, as well as in technical roles at Novelis in order to create and foster the next generation of female leaders, scientists, and engineers. To achieve these goals, the Company has established a global Diversity & Inclusion board, as well as supporting councils in each of our four regions. We will also continue assisting our Employee Resource Groups to help create a more inclusive environment where we seek to provide our employees with a sense of belonging and where different backgrounds and perspectives are embraced and valued.

We are also committed to supporting the communities in which our employees live and work. With firmly established community engagement programs, the Company is committed to advancing its corporate social responsibility efforts by further investing in the Novelis Neighbor program, which gives back to communities through financial contributions and employee volunteer service. The program will continue emphasizing Science, Technology, Engineering, and Math ("STEM") education, raising recycling awareness, and fostering better overall community health and well-being.

COVID-19 Response

With our primary focus being the health and well-being of our employees, we continue to monitor the changing landscape with respect to COVID-19 and take actions to manage our business and support our customers. We have bolstered our own Environmental, Health, and Safety protocols and aligned them with guidance from global health authorities and government agencies across our operations to help ensure the safety of our employees, customers, suppliers, communities, and other stakeholders.

Liquidity Position

We believe we have adequate liquidity to manage the business with dynamic metal prices. Our cash and cash equivalents and availability under committed credit facilities aggregated to $2.1 billion of liquidity as of December 31, 2022.

We maintain a disciplined approach to capital spending, prioritizing maintenance capital for our operations, as well as organic strategic capacity expansion projects. We are rephasing the pace of spending of some strategic capital, and expect capital expenditures for fiscal 2023 to be approximately $900 million. This current guidance includes approximately $300 million for expected maintenance spend.

Market Trends

Beverage Packaging. According to CRU, the global mining, metals, and fertilizer business intelligence company, global demand for can stock, which represents the largest percentage of our total rolled product shipments, is forecasted to increase at a compound annual growth rate of approximately 4% from calendar year 2022 to 2031 mainly driven by sustainability trends, growth in beverage markets that are increasingly released in aluminum packaging, and substitution against plastic, glass, and steel. However, we are seeing reduced can sheet demand in the near term attributed to canmakers reducing their excess inventory as they adjust to a more moderated level of can demand as compared to unprecedented high demand during the COVID-19 pandemic due to high at-home consumption.

Automotive. We believe aluminum utilization is positioned for long-term growth through increased adoption of electric vehicles, which require higher amounts of aluminum. We estimate global automotive aluminum sheet demand is expected to grow at an 11% compound annual growth rate between calendar year 2022 and 2028. While chip supply has been improving, global supply chain disruption, for example from semiconductor shortages or outbreaks of new COVID-19 variants, and increasing economic uncertainty may continue to impact automotive build rates and near-term demand for automotive aluminum sheet.

Aerospace.Passenger air travel is increasing, as loosening COVID-19 restrictions have facilitated a faster than anticipated recovery for the industry. We expect demand for aerospace aluminum to continue to recover toward pre-COVID-19 levels by the end of fiscal 2023.

Specialties. Specialties includes diverse markets, including building and construction, commercial transportation, foil and packaging, and commercial and consumer products. These industries continue to increase aluminum material adoption due to its many desirable characteristics. We believe these trends will keep demand high in the long-term, despite the near-term economic headwinds.

(in millions, except shipments which are in kt) Three Months Ended Year Ended Three Months Ended
June 30, 2016 Sept 30, 2016 Dec 31, 2016 March 31, 2017 March 31, 2017 June 30, 2017 Sept 30, 2017 Dec 31, 2017
Net sales $ 2,296
$ 2,361
$ 2,313
$ 2,621
$ 9,591
$ 2,669
$ 2,794
$ 3,085
Percentage (decrease) increase in net sales versus comparable previous year period (13 )% (5 )% (2 )% 9 % (3 )% 16 % 18 % 33 %
Rolled product shipments:
North America 242
252
247
269
1,010
273
274
269
Europe 246
236
226
235
943
235
237
222
Asia 178
176
162
174
690
180
180
177
South America 103
121
125
125
474
110
131
146
Eliminations (14 ) (12 ) (10 ) (14 ) (50 ) (13 ) (20 ) (18 )
Total 755
773
750
789
3,067
785
802
796

The following summarizes the percentage (decrease) increase in rolled product shipments versus the comparable previous year period:
North America (7 )% (6 )% (2 )% 8 % (2 )% 13 % 9 % 9 %
Europe (2 )% (6 )% (3 )% (4 )% (4 )% (4 )% — % (2 )%
Asia (8 )% (6 )% (16 )% (7 )% (9 )% 1 % 2 % 9 %
South America (4 )% 3 % (5 )% (7 )% (3 )% 7 % 8 % 17 %
Total (2 )% (2 )% (4 )% — % (2 )% 4 % 4 % 6 %

~~Business Model and Key Concepts~~BUSINESS MODEL AND KEY CONCEPTS

Conversion Business Model

A significant amount 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 flat-rolled products have a price structure with three components: ~~(i)~~(1) a base aluminum price quoted off the LME; ~~(ii)~~(2) an LMP; and (3) a ~~local market premium; and (iii) a “conversion premium”~~"conversion premium" to produce the rolled product, which reflects, among other factors, the competitive market conditions for that product. Base aluminum prices are typically driven by macroeconomic factors and global supply and demand offor aluminum. ~~The local market premiums~~LMPs tend to vary based on the supply and demand for metal in a particular region and associated transportation costs.

In North America, Europe, and South America, we pass through ~~local market premiums~~LMPs to our customers, which are recorded through ~~"Net~~net sales." In Asia, we purchase our metal inputs based on the LME and incur ~~a local market premium; however, many~~an LMP. Many of our competitors in this region price their metal off the Shanghai Futures Exchange, which does not include an LMP. However, in a ~~local market premium, making it difficult for us~~majority of new contracts over the last several quarters, we are able to fully pass through ~~this component of our metal input cost to some of our customers.~~the LMPs.

LME Base Aluminum Prices and Local Market Premiums

The average (based on the simple average of the monthly averages) and closing prices for aluminum set on the LME ~~for the three and nine months ended December 31, 2017 and 2016~~ are as ~~follows:~~follows.


														Three Months Ended December 31,				Percent Change			Nine Months Ended December 31,						Percent Change
	Three Months Ended December 31,				Percent		Nine Months Ended December 31,				Percent			2022		2021			2022			2021
	2017		2016		Change		2017		2016		Change
London Metal Exchange Prices
Aluminum (per metric tonne, and presented in U.S. dollars):													Aluminum (per metric tonne, and presented in U.S. dollars):
Closing cash price as of beginning of period	$	2,111	$	1,659	27	%	$	1,947	$	1,492	30	%	Closing cash price as of beginning of period	$	2,180	$	2,851		(24)	%		$	3,503		$	2,213		58	%
Average cash price during the period	$	2,101	$	1,710	23	%	$	2,008	$	1,634	23	%	Average cash price during the period	2,324		2,764		(16)			2,520			2,603			(3)
Closing cash price as of end of period	$	2,242	$	1,714	31	%	$	2,242	$	1,714	31	%	Closing cash price as of end of period	2,361		2,806		(16)			2,361			2,806			(16)

The weighted average ~~local market premium was as follows for the three and nine months ended December 31, 2017 and 2016~~LMPs are as ~~follows:~~follows.

Three Months Ended December 31, Percent Nine Months Ended December 31, Percent
2017 2016 Change 2017 2016 Change
Weighted average Local Market Premium (per metric tonne, and presented in U.S. dollars) $ 180
$ 144
25 % $ 168
$ 142
18 %


	Three Months Ended December 31,				Percent Change		Nine Months Ended December 31,				Percent Change
	2022		2021				2022		2021
Weighted average LMP (per metric tonne and presented in U.S. dollars)	$	329	$	456	(28)	%	$	404	$	455	(11)	%

Metal Price Lag and Related Hedging Activities

Increases or decreases in the price of aluminum based on the average LME base aluminum prices and ~~local market premiums~~LMPs directly impact ~~“Net~~net sales,~~” “Cost~~ 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: (i) 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 and (ii) 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.

We use LME aluminum forward contracts to preserve our conversion margins and manage the timing differences associated with the LME base metal component of ~~“Net~~net sales” and ~~“Cost~~cost of goods sold (exclusive of depreciation and amortization)." These derivatives directly hedge the economic risk of future LME base metal price fluctuations to better match the purchase price of metal with the sales price of metal. ~~The~~We have exposure to multiple regional LMPs, however the derivative ~~market~~markets for ~~local market premiums is~~those LMPs are generally not robust or efficient enough for us to ~~offset the impacts~~hedge all of ~~LMP~~our exposure to price movements beyond a ~~very~~ small volume. From time to time, we take advantage of short-term market conditions to hedge a small percentage of our exposure. As a consequence, volatility in ~~local market premiums~~LMPs can have a significant impact on our results of operations and cash flows. ~~Reduced volatility of local market premiums reduced the amount of metal price lag for the nine months ended December 31, 2017.~~

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, and revenue recognition. The timing difference between the recognition of unrealized gains and losses on undesignated metal derivatives and cost or revenue recognition impacts ~~“Income~~income from continuing operations before income ~~taxes”~~tax provision and ~~“Net income (loss).”~~net income. Gains and losses on metal derivative contracts are not recognized in ~~“Segment income”~~Adjusted EBITDA until realized.

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 aswhen we translate the operating results from various functional currencies into our 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. Global economic uncertainty is contributing to higher levels of volatility among the currency pairs in which we conduct business. 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 three and nine months ended December 31, 2017 and 2016:~~rates.


								Exchange Rate as of		Average Exchange Rate Three Months Ended December 31,		Average Exchange Rate Nine Months Ended December 31,
								December 31, 2022	March 31, 2022	2022	2021	2022	2021
	Exchange Rate as of		Average Exchange Rate		Average Exchange Rate
	December 31, 2017	March 31, 2017	Three Months Ended December 31,		Nine Months Ended December 31,
			2017	2016	2017	2016
U.S. dollar per Euro	1.201	1.068	1.185	1.070	1.163	1.104
Euro per U.S. dollar							Euro per U.S. dollar	0.937	0.889	0.972	0.877	0.972	0.852
Brazilian real per U.S. dollar	3.308	3.168	3.282	3.279	3.227	3.313	Brazilian real per U.S. dollar	5.218	4.738	5.256	5.614	5.159	5.354
South Korean won per U.S. dollar	1,071	1,116	1,093	1,174	1,118	1,151	South Korean won per U.S. dollar	1,268	1,211	1,340	1,184	1,324	1,156
Canadian dollar per U.S. dollar	1.254	1.329	1.278	1.343	1.288	1.313	Canadian dollar per U.S. dollar	1.356	1.249	1.359	1.262	1.319	1.249
Swiss franc per Euro	1.171	1.069	1.168	1.079	1.133	1.088
Swiss franc per euro							Swiss franc per euro	0.987	1.023	0.987	1.045	0.992	1.074

Exchange rate movements have an impact on our operating results. In Europe, where we predominantly have ~~predominantly~~ local currency selling prices and operating costs, we benefit as the ~~Euro~~euro strengthens but are adversely affected as the ~~Euro~~euro weakens. For our Swiss operations, where operating costs are incurred primarily in the Swiss franc and a large portion of revenues are denominated in the euro, we benefit as the Swiss franc weakens but are adversely affected as the franc strengthens. In South Korea, where we have local currency operating costs and U.S. dollar denominated selling prices for exports, we benefit as the South Korean won weakens but are adversely affected as the won strengthens. In Brazil, where we have predominately U.S. dollar selling prices and local currency manufacturing costs, we benefit as the Brazilian real weakens but are adversely affected as the real strengthens.

We use foreign exchange forward contracts ~~and cross-currency swaps~~ to manage our exposure arising from recorded assets and liabilities, firm commitments, and forecasted cash flows denominated in currencies other than the functional currency of certain operations, which include capital expenditures and net investment in foreign subsidiaries. There was no earnings impact of foreign exchange remeasurement, net of related hedges, in the third quarter of fiscal 2018, and a net currency gain of $2 million during the third quarter of fiscal 2017. The movement of currency exchange rates during the third quarter of fiscal 2018 and fiscal 2017 resulted in $4 million of net unrealized gains and less than $4 million of net unrealized losses, respectively, on undesignated foreign currency derivatives.

See Segment Review below for the impact of foreign currency on each of our segments.

~~Recent Developments~~

On January 31, 2018, our subsidiary, Novelis Switzerland SA, entered into a framework agreement with a subsidiary of Constellium N.V. (Constellium). Under the agreement, the parties agreed that (i) Novelis will purchase from Constellium all of the real and personal property we lease at our Sierre, Switzerland rolling facility for an aggregate purchase price of €195 million, (ii) Constellium will create a service company that will be jointly owned and operated by the parties to provide certain services to the parties at the Sierre facility, and Novelis will acquire from Constellium a 50% interest in the service company for an aggregate purchase price of €5 million, and (iii) under two commercial arrangements, Constellium will provide ingots to Novelis on a tolling basis and Novelis will provide rolled products to Constellium on a tolling basis, respectively. The parties also agreed to suspend, until the closing of the transactions described in the agreement, the arbitration proceedings currently before the International Chamber of Commerce (ICC) regarding the existing arrangements between them. At the closing of the transactions, the parties will release all of the claims between them, including the claims subject to the ICC arbitration.

RESULTS OF CONSOLIDATED OPERATIONS

For the three months ended December 31, 2022, we reported net income attributable to our common shareholder of $12 million, a decrease of 95% compared to $262 million in the comparable prior year period, and total Adjusted EBITDA of $341 million, a decrease of 33% compared to $506 million in the comparable prior year period. The decrease in operational performance compared to the comparable prior year period is primarily driven by significantly higher inflationary operating and energy costs as a result of geopolitical instability and supply chain disruptions, as well as unfavorable foreign exchange rates, less favorable metal benefit from recycling, and higher factoring costs in SG&A due to rising interest rates, partially offset by favorable product mix, and higher pricing including some cost pass-through to customers.

For the nine months ended December 31, 2022, we reported net income attributable to our common shareholder of $502 million, a decrease of 32% compared to $739 million in the comparable prior year period, and total Adjusted EBITDA of $1.4 billion, a decrease of 13% compared to $1.6 billion in the comparable prior year period. The decrease in operational performance was primarily driven by significantly higher inflationary operating, energy and metal costs as a result of geopolitical instability, supply chain disruptions, rising interest rates, higher SG&A, unfavorable foreign exchange rates, less favorable metal benefit from recycling, and a gain, net of litigation expenses, from favorable outcomes in a Brazilian tax litigation in the comparable prior year period. These unfavorable factors were mostly offset by higher pricing, including some higher cost pass-through to customers, and favorable product mix.

Key Sales and Shipment Trends


	Three Months Ended												Fiscal Year Ended			Three Months Ended
in millions, except percentages and shipments, which are in kt	June 30, 2021			September 30, 2021			December 31, 2021			March 31, 2022			March 31, 2022			June 30, 2022			September 30, 2022			December 31, 2022
Net sales	$	3,855		$	4,119		$	4,326		$	4,849		$	17,149		$	5,089		$	4,799		4,201
Percentage (decrease) increase in net sales versus comparable prior year period	59		%	38		%	33		%	34		%	40		%	32		%	17		%	(3)	%
Rolled product shipments:
North America	358			375			358			376			1,467			386			386			380
Europe	279			260			254			274			1,067			272			268			242
Asia	192			197			171			203			763			185			208			141
South America	157			147			157			156			617			148			162			162
Eliminations	(13)			(11)			(10)			(22)			(56)			(29)			(40)			(17)
Total	973			968			930			987			3,858			962			984			908

The following summarizes the percentage (decrease) increase in rolled product shipments versus the comparable prior year period:
North America	32		%	2		%	3		%	4		%	9		%	8		%	3		%	6	%
Europe	32			8			—			1			9			(3)			3		%	(5)	%
Asia	4			11			(7)			2			2			(4)			6		%	(18)	%
South America	39			(1)			(1)			(3)			7			(6)			10		%	3	%
Total	26		%	5		%	—		%	—		%	7		%	(1)		%	2		%	(2)	%

Three Months Ended December 31, ~~2017 compared~~2022, Compared to the Three Months Ended December 31, ~~2016~~2021

“Net ~~sales” increased $772 million, or 33%, driven by a 23% increase in average base aluminum prices and a 25% increase in average local market premiums. The increase~~sales was ~~also due to a 6% increase in flat rolled product shipments, including a favorable impact from our strategic shift to higher conversion premium products.~~

“Cost of goods sold (exclusive of depreciation and amortization)” increased $722 million, or 38%, due to higher average aluminum prices and a 6% increase in flat rolled product shipments. Total metal input costs included in "Cost of goods sold (exclusive of depreciation and amortization)” increased $542 million.

~~“Income before income taxes”~~$4.2 billion for the three months ended December 31, ~~2017 was $125 million, compared to~~2022, a ~~$111 million "Income~~decrease of 3% from $4.3 billion in the comparable prior year period, primarily driven by lower average aluminum prices, and a 2% decrease in shipments, partially offset by higher pricing across end markets and a favorable product mix from higher automotive shipments.

Income from continuing operations before income ~~taxes" in~~tax provision was $6 million for the three months ended December 31, ~~2016.~~2022, compared to $348 million in the comparable prior year period. In addition to the factors noted above, the following ~~additional~~ items affected ~~“Income~~income from continuing operations before income ~~taxes”:~~tax provision.

~~"Restructuring~~Cost of Goods Sold (Exclusive of Depreciation and ~~impairment, net"~~Amortization)

Cost of ~~$25~~goods sold (exclusive of depreciation and amortization) was $3.8 billion for the three months ended December 31, 2022, an increase of 5% from $3.6 billion in the comparable prior year period, primarily due to cost inflation and less favorable metal benefits from recycling, partially offset by lower average aluminum prices. Total metal input costs included in cost of goods sold (exclusive of depreciation and amortization) increased $54 million over the comparable prior year period.

Selling, General and Administrative Expenses

SG&A was $164 million for the three months ended December 31, ~~2017 primarily related to restructuring actions in Europe. We incurred $1 million of restructuring for the three months ended December 31, 2016 primarily related to severance charges.~~

~~Net gains related to changes in the fair value of other unrealized derivative instruments was $15 million~~2022, compared to ~~$21 million of gains in the same period in the prior year, which is reported as "Other (income) expense, net"; and~~

~~An increase in "Selling, general and administrative expenses" primarily related to an increase in fair value of LTIP awards and an increase in factoring expense.~~

We recognized $20 million of tax expense for the three months ended December 31, 2017, which resulted in an effective tax rate of 16%, primarily due to a non-cash income tax benefit of $18 million for the remeasurement of deferred tax assets and liabilities in accordance with the Tax Cuts and Jobs Act offset by the results of operations and tax rate differences in foreign earnings. We recognized $47 million of tax expense for the three months ended December 31, 2016, primarily due to tax rate differences in foreign earnings and tax losses in jurisdictions where we believe it to be more likely than not that we will not be able to utilize those losses and therefore have a valuation allowance recorded.

~~We reported “Net income attributable to our common shareholder” of $121 million and $63~~$156 million for the three months ended December 31, ~~2017~~2021. The increase is mainly due to higher factoring expense resulting from higher interest rates.

Depreciation and ~~2016, respectively,~~Amortization

Depreciation and amortization was $133 million and $137 million in the three months ended December 31, 2022, and 2021, respectively.

Interest Expense and Amortization of Debt Issuance Costs

Interest expense and amortization of debt issuance costs was $75 million and $54 million for the three months ended December 31, 2022, and 2021, respectively. The increase is primarily asdue to higher average interest rates on variable interest rate borrowings.

Restructuring and Impairment Expenses (Reversals), Net

Restructuring and impairment expenses, net was a ~~result~~net expense of $5 million and $3 million for the ~~factors discussed above.~~three months ended December 31, 2022 and 2021, respectively.

Other Expenses (Income), Net

Other expenses (income), net was an expense of $7 million and income of $2 million for the three months ended December 31, 2022, and 2021, respectively. The change primarily relates to higher losses on the change in fair value of derivative instruments, net in the current period.

Taxes

We recognized $6 million of income tax benefit for the three months ended December 31, 2022. Our effective tax rate was primarily driven by the full-year forecasted effective tax rate that takes into account income taxed at rates that differ from the 25% Canadian rate, including withholding taxes and changes to the Brazilian real foreign exchange rate, offset by the availability of tax credits, income not subject to tax, and tax benefits related to Korea tax reform. We recognized $89 million of income tax provision in the comparable prior year period.

Segment Review

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 regions and are organized under four operating segments: North America, Europe, Asia, and South America.

~~See Note 16 - Segment, Major Customer and Major Supplier information for our definition of segment income, a reconciliation of “Net income (loss) attributable to our common shareholder” to segment income and segment income by region for the three and nine months ended December 31, 2017 and 2016, respectively.~~

The tables below ~~show~~illustrate selected segment financial information (in millions, except shipments, which are in kt). For additional financial information related to our operating segments including the reconciliation of net income attributable to our common shareholder to Adjusted EBITDA, see Note 16 —– Segment, Geographical Area, Major Customer and Major Supplier ~~Information.~~Information. In order to reconcile the financial information for the segments shown in the tables below to the relevant U.S. GAAP-based measures, "Eliminations and Other" ~~adjusts~~must adjust for proportional consolidation of each line item for our Logan affiliate because we consolidate 100% of the Logan joint venture for U.S. GAAP purposes. However, we manage our Logan affiliate on a proportionately consolidated basis and ~~eliminates~~eliminate intersegment shipments (in kt) ~~and intersegment "Net sales."~~.


Selected Operating Results Three Months Ended December 31, 2017	North America		Europe		Asia		South America		Eliminations and Other			Total
Selected Operating Results Three Months Ended December 31, 2022														Selected Operating Results Three Months Ended December 31, 2022	North America		Europe		Asia		South America		Eliminations and Other		Total
Net sales	$	986	$	837	$	547	$	567	$	148		$	3,085	Net sales	$	1,762	$	1,127	$	582	$	677	$	53	$	4,201
Shipments
Rolled products - third party	268		217		173		138		—			796
Rolled products - intersegment	1		5		4		8		(18		)	—
Shipments (in kt):														Shipments (in kt):
Rolled products – third party														Rolled products – third party	380		232		139		157		—		908
Rolled products – intersegment														Rolled products – intersegment	—		10		2		5		(17)		—
Total rolled products	269		222		177		146		(18		)	796		Total rolled products	380		242		141		162		(17)		908
Non-rolled products	—		1		2		38		—			41		Non-rolled products	4		27		11		31		—		73
Total shipments	269		223		179		184		(18		)	837		Total shipments	384		269		152		193		(17)		981


Selected Operating Results Three Months Ended December 31, 2016	North America		Europe		Asia		South America		Eliminations and Other			Total
Selected Operating Results Three Months Ended December 31, 2021														Selected Operating Results Three Months Ended December 31, 2021	North America		Europe		Asia		South America		Eliminations and Other		Total
Net sales	$	789	$	693	$	412	$	399	$	20		$	2,313	Net sales	$	1,716	$	1,156	$	710	$	727	$	17	$	4,326
Shipments
Rolled products - third party	247		222		161		120		—			750
Rolled products - intersegment	—		4		1		5		(10		)	—
Shipments (in kt):														Shipments (in kt):
Rolled products – third party														Rolled products – third party	358		248		167		157		—		930
Rolled products – intersegment														Rolled products – intersegment	—		6		4		—		(10)		—
Total rolled products	247		226		162		125		(10		)	750		Total rolled products	358		254		171		157		(10)		930
Non-rolled products	—		1		2		28		—			31		Non-rolled products	2		23		4		28		(11)		46
Total shipments	247		227		164		153		(10		)	781		Total shipments	360		277		175		185		(21)		976

The following table reconciles changes in ~~“Segment income”~~Adjusted EBITDA for the three months ended December 31, ~~2016~~2021, to the three months ended December 31, ~~2017 (in millions).~~2022.


in millions	North America		Europe		Asia		South America		Eliminations and Other(1)		Total
Adjusted EBITDA - Three Months Ended December 31, 2021	$	181	$	71	$	76	$	178	$	—	$	506
Volume	23		(14)		(28)		3		(9)		(25)
Conversion premium and product mix	48		46		28		17		(2)		137
Conversion costs	(109)		(69)		3		(76)		13		(238)
Foreign exchange	(1)		(5)		(11)		(1)		—		(18)
Selling, general & administrative and research & development costs(2)	(9)		(4)		(4)		4		1		(12)
Other changes	(9)		13		(4)		(1)		(8)		(9)
Adjusted EBITDA - Three Months Ended December 31, 2022	$	124	$	38	$	60	$	124	$	(5)	$	341

Changes in Segment income
North
America
Europe Asia
South
America
Eliminations (A) Total
Segment income - Three Months Ended December 31, 2016 (B) $ 90
$ 44
$ 40
$ 81
$ —
$ 255
Volume 23
(3 ) 11
23
(8 ) 46
Conversion premium and product mix 7
2
(9 ) (2 ) 3
1
Conversion costs (C) (2 ) 3
1
9
4
15
Foreign exchange —
6
—
(3 ) —
3
Selling, general & administrative and research & development costs (D) (11 ) (2 ) —
(8 ) (4 ) (25 )
Other changes (E) 4
—
—
7
(1 ) 10
Segment income - Three Months Ended December 31, 2017 $ 111
$ 50
$ 43
$ 107
$ (6 ) $ 305
_________________________

~~_________________________~~


~~(A)~~	The recognition of "Segment income" by a region on an intersegment shipment could occur in a period prior to the recognition of "Segment income" on a consolidated basis, depending on the timing of when the inventory is sold to the

~~third party~~(1)The recognition of Adjusted EBITDA by a region on an intersegment shipment could occur in a period prior to the recognition of Adjusted EBITDA on a consolidated basis, depending on the timing of when the inventory is sold to the third-party customer. The ~~"Eliminations"~~"Eliminations and Other" column adjusts regional ~~"Segment income"~~Adjusted EBITDA for intersegment shipments that occur in a period prior to recognition of ~~"Segment income"~~Adjusted EBITDA on a consolidated basis. The ~~"Eliminations"~~"Eliminations and Other" column also reflects adjustments for changes in regional volume, conversion premium and product mix, and conversion costs related to intersegment shipments for consolidation. "Eliminations and Other" must adjust for proportional consolidation of each line item for our Logan affiliate because we consolidate 100% of the Logan joint venture for U.S. GAAP, but we manage our Logan affiliate on a proportionately consolidated basis.


~~(B)~~	Effective in the first quarter of fiscal 2018, management removed the impact of metal price lag from Segment Income in order to enhance the visibility of the underlying operating performance of the Company. This change does not impact our condensed consolidated financial statements. Segment information for prior periods presented has been updated to reflect this change.


~~(C)~~	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 utilizing scrap and other metal costs. Fluctuations in this component reflect cost efficiencies (inefficiencies) during the period as well as cost (inflation) deflation.


~~(D)~~	~~Selling, general & administrative costs and research & development costs include costs incurred directly by each segment and all corporate related costs.~~


~~(E)~~	The State of Espirito Santo grants an indirect tax incentive (ICMS) for companies who fulfill certain requirements. According to this incentive, the Company can recognize a presumed ICMS credit, thus reducing the amounts due to the State. The mentioned incentive is recorded in our consolidated results of operations.

(2)Selling, general & administrative and research & development costs include costs incurred directly by each segment and all corporate related costs.

North America

“Net ~~sales”~~sales increased ~~$197~~$46 million, or ~~25%~~3%, primarily driven by higher automotive shipments as the semiconductor shortages impacting the automotive industry for more than the past year begin to ease, and slightly higher can shipments despite customers reducing their excess inventory, partially offset by lower specialty shipments, mainly in building and construction and light gauge products due to ~~higher~~softer market demand, and lower average aluminum ~~prices,~~prices. Adjusted EBITDA was $124 million, a decrease of 31%, primarily driven by higher ~~can and automotive shipments~~operating costs due to ~~customer demand.~~

~~“Segment income” was $111 million,~~inflation, geopolitical instability, global supply chain disruptions, and less favorable metal benefit. In addition, SG&A and other changes increased versus the comparable prior year period mainly due to an increase ~~of 23%, primarily~~in factoring expense resulting from higher interest rates, as well as higher employment cost. These unfavorable factors were partially offset by higher volume, favorable product mix due to higher automotive shipments and higher product prices.

Europe

Net sales decreased $29 million, or 3%, primarily driven by lower can ~~volumes~~shipments impacted by customers reducing their excess inventory, lower specialty shipments, mainly thick gauge sheet, due to softer market demand, and lower average aluminum prices. Adjusted EBITDA was $38 million, a decrease of 46%, primarily driven by higher energy and other operating costs due to inflation, geopolitical instability, and global supply chain disruptions, as well as less favorable ~~product mix as a result of our portfolio optimization efforts,~~metal benefit, lower volume, and unfavorable foreign exchange translation. These factors were partially offset by higher ~~selling, general and administrative expenses.~~

~~Europe~~

~~“Net sales” increased $144 million, or 21%,~~product prices, favorable product mix due to higher automotive shipments.

Asia

Net sales decreased $128 million, or 18%, primarily driven by lower can shipments impacted by suddenly lower export demand due to customers reducing excess inventory, as well as lower planned specialty shipments due to portfolio optimization, and lower average aluminum ~~prices~~prices. Automotive shipments were flat to prior year, impacted by COVID-related disruptions during the current year period. Adjusted EBITDA was $60 million, a decrease of 21%, primarily driven by lower volume, less favorable metal benefit, unfavorable foreign exchange, and higher ~~automotive shipments~~energy and other operating costs due to inflation, geopolitical instability, and global supply chain disruptions, partially offset by ~~lower can and specialties shipments.~~

~~“Segment income” was $50 million, an increase of 14%, primarily reflecting foreign currency benefits and favorable~~higher product ~~mix as a result of automotive shipment growth and other portfolio optimization efforts. These benefits were partially offset by lower can and specialty volumes.~~

~~Asia~~

~~“Net sales” increased $135 million, or 33%, due to higher average aluminum prices and higher can and automotive shipments, partially offset by lower can pricing.~~

~~“Segment income” was $43 million, a increase of 8%, primarily due to higher can and auto shipments. This was partially offset by lower can~~ pricing.

South America

“Net ~~sales” increased $168~~sales decreased $50 million, or ~~42%, due to higher can and specialties shipments offset by unfavorable pricing due to higher exports.~~

~~“Segment income” was $107 million, an increase of 32%~~7%, primarily ~~due to higher can and specialties volumes as well as~~driven by lower ~~metal input costs and favorable indirect tax incentives~~average aluminum prices, partially offset by higher ~~selling, general~~can shipments. Adjusted EBITDA was $124 million, a decrease of 30%, primarily driven by less favorable metal benefit, higher operating costs due to inflation, geopolitical instability, and ~~administrative costs.~~global supply chain disruptions and unfavorable foreign exchange, partially offset by higher products prices and higher volume.

~~RESULTS OF OPERATIONS~~

Nine Months Ended December 31, ~~2017 compared~~2022, Compared to the Nine Months Ended December 31, ~~2016~~2021

“Net sales” increased $1,578 million or 23%, driven by a 23% increase in average base aluminum prices and an 18% increase in average local market premiums. The increase was also due to a 5% increase in flat rolled product shipments, including a favorable impact from our strategic shift to higher conversion premium products.

“Cost of goods sold (exclusive of depreciation and amortization)” increased $1,434 million, or 25%, due to an increase in flat rolled product shipments and higher average aluminum prices. Total metal input costs included in "Cost of goods sold (exclusive of depreciation and amortization)” increased $1,263 million.

~~“Income before income taxes”~~sales were $14.1 billion for the nine months ended December 31, ~~2017 was $692 million,~~2022, an increase of 15% from $12.3 billion in the comparable prior year period, primarily driven by higher average aluminum prices, partially offset by a 1% decline in total shipments compared to ~~a $109 million "Income~~the prior year period.

Income from continuing operations before income ~~taxes" in~~tax provision was $649 million for the nine months ended December 31, ~~2016.~~2022, compared to $1.1 billion in the comparable prior year period. In addition to the factors noted above, the following ~~additional~~ items affected ~~“Income~~income from continuing operations before income ~~taxes:”~~tax provision.

Cost of Goods Sold (Exclusive of Depreciation and Amortization)

~~A pre-tax gain on sale~~Cost of ~~a business~~goods sold (exclusive of ~~$318 million related to the purchase of shares of UAL by Kobe~~depreciation and the deconsolidation of the remaining assets to form the equity method investment in September 2017 compared to a loss of $27 million recognized on the sale of our interest in Aluminium Company of Malaysia Berhad in the prior year, whichamortization) was ~~report within (Gain) loss on sale of a business, net~~

~~"Loss on extinguishment of debt" in the prior year of $112 million relates to the extinguishment of our 2017 and 2020 Senior Notes in fiscal 2017;~~

~~A decline in interest expense of $39 million primarily due to lower interest rates resulting from the refinancing of the 2017 Notes, 2020 Notes and Term Loan in fiscal 2017;~~

~~"Restructuring and impairment, net"~~$12.2 billion for the nine months ended December 31, ~~2017 was $33 million compared to $4 million~~2022, an increase of ~~expenses~~20% from $10.2 billion in the ~~same~~comparable prior year period, driven primarily by higher average aluminum prices, cost inflation and less favorable metal benefits from recycling. Total metal input costs included in cost of goods sold (exclusive of depreciation and amortization) increased $1.7 billion over the comparable prior ~~year;~~year period.

~~An increase in "Selling, general~~Selling, General and ~~administrative expenses " primarily related to an increase in fair value of LTIP awards and an increase in factoring expense; and~~Administrative Expenses

Increased stability in local market premiums which we are unable to hedge economically resulted in a $5 million metal price lag loss in the first nine months of this fiscal year compared to a $32 million loss in the prior year.

We recognized $179 million of tax expense for the nine months ended December 31, 2017, primarily due to a non-cash tax benefit of $18 million for the remeasurement of deferred tax assets and liabilities in accordance with the Tax Cuts and Jobs Act offset by the results of operations and tax rate differences in foreign earnings. We recognized $110 million of tax expense for the nine months ended December 31, 2016, primarily due to tax losses in jurisdictions where we believe it more likely than not that we will not be able to utilize those losses and therefore have a valuation allowance recorded and unfavorable foreign exchange translation and remeasurement of deferred income taxes, offset by dividends not subject to tax.

~~We reported “Net income attributable to our common shareholder” of $529~~SG&A was $509 million for the nine months ended December 31, ~~2017 as~~2022, compared to ~~"Net loss attributable to our common shareholder" of $2~~$457 million for the nine months ended December 31, ~~2016,~~2021. The increase is mainly due to higher factoring expense resulting from higher interest rates, as well as higher travel expense due to loosened travel restrictions.

Depreciation and Amortization

Depreciation and amortization was $405 million for the nine months ended December 31, 2022, and December 31, 2021.

Interest Expense and Amortization of Debt Issuance Costs

Interest expense and amortization of debt issuance costs was $198 million and $173 million for the nine months ended December 31, 2022, and 2021, respectively. This increase is primarily due to higher average interest rates on variable interest rate borrowings.

Loss on Extinguishment of Debt, Net

There were no losses on extinguishments of debt for the nine months ended December 31, 2022. We recorded $63 million in loss on extinguishment of debt, net for the nine months ended December 31, 2021. This primarily related to the write-off of unamortized debt issuance costs and a $51 million cash payment of a redemption premium for the redemption of our 5.875% Senior Notes, due September 2026.

Restructuring and Impairment Expenses, Net

Restructuring and impairment expenses, net was a net expense of $7 million and a net reversal of expense of $1 million for the nine months ended December 31, 2022, and 2021, respectively.

Other (Income) Expenses, Net

Other expenses (income), net was an expense of $67 million and income of $86 million for the nine months ended December 31, 2022, and 2021, respectively. This change primarily relates to a gain in the comparable prior year period of $85 million on a Brazilian tax litigation related to favorable decisions that did not recur in the current period, as ~~a result~~well as higher losses on the change in fair value of derivative instruments, net, in the ~~factors discussed above.~~current period.

Taxes

We recognized $146 million of income tax provision for the nine months ended December 31, 2022. Our effective tax rate was primarily driven by the full year forecasted effective tax rate that takes into account income taxed at rates that differ from the 25% Canadian rate, including withholding taxes, the change in valuation allowance, the availability of tax credits, and income not subject to tax, offset by the US base erosion and anti-abuse tax. We recognized $276 million of income tax provision in the prior comparable period.

Segment Review


Selected Operating Results Nine Months Ended December 31, 2022	North America		Europe		Asia		South America		Eliminations and Other		Total
Net sales	$	5,816	$	3,836	$	2,289	$	2,254	$	(106)	$	14,089
Shipments
Rolled products – third party	1,152		754		493		455		—		2,854
Rolled products – intersegment	—		28		41		17		(86)		—
Total rolled products	1,152		782		534		472		(86)		2,854
Non-rolled products	10		86		24		103		(21)		202
Total shipments	1,162		868		558		575		(107)		3,056


Selected Operating Results Nine Months Ended December 31, 2021	North America		Europe		Asia		South America		Eliminations and Other		Total
Net sales	$	4,843	$	3,365	$	2,110	$	1,898	$	84	$	12,300
Shipments
Rolled products – third party	1,091		767		553		460		—		2,871
Rolled products – intersegment	—		26		7		1		(34)		—
Total rolled products	1,091		793		560		461		(34)		2,871
Non-rolled products	8		81		10		70		(20)		149
Total shipments	1,099		874		570		531		(54)		3,020

The ~~tables below show selected segment financial information (in millions, except shipments which are~~following table reconciles changes in ~~kt). For additional financial information related to our operating segments, see Note 16 — Segment, Major Customer and Major Supplier Information. In order to reconcile the financial information~~Adjusted EBITDA for the ~~segments shown in the tables below~~nine months ended December 31, 2021, to the ~~relevant U.S. GAAP-based measures,~~nine months ended December 31, 2022.


in millions	North America		Europe		Asia		South America		Eliminations and Other(1)		Total
Adjusted EBITDA - Nine Months Ended December 31, 2021	$	580	$	251	$	256	$	525	$	2	$	1,614
Volume	64		(14)		(24)		10		(54)		(18)
Conversion premium and product mix(2)	184		160		112		49		(31)		474
Conversion costs	(213)		(165)		(32)		(123)		87		(446)
Foreign exchange	(1)		(32)		(18)		4		—		(47)
Selling, general & administrative and research & development costs(3)	(30)		(13)		(17)		(11)		3		(68)
Other changes	(42)		8		(10)		(47)		(10)		(101)
Adjusted EBITDA - Nine Months Ended December 31, 2022	$	542	$	195	$	267	$	407	$	(3)	$	1,408

_________________________

(1)The recognition of Adjusted EBITDA by a region on an intersegment shipment could occur in a period prior to the recognition of Adjusted EBITDA on a consolidated basis, depending on the timing of when the inventory is sold to the third-party customer. The "Eliminations and Other" column adjusts regional Adjusted EBITDA for intersegment shipments that occur in a period prior to recognition of Adjusted EBITDA on a consolidated basis. The "Eliminations and Other" column also reflects adjustments for changes in regional volume, conversion premium and product mix, and conversion costs related to intersegment shipments for consolidation. "Eliminations and Other" must adjust for proportional consolidation of each line item for our Logan affiliate because we consolidate 100% of the Logan joint venture for U.S. GAAP, but we manage our Logan affiliate on a proportionately consolidated basis.

(2)Conversion premium and ~~eliminates intersegment shipments (in kt) and intersegment "Net sales."~~

Selected Operating Results Nine Months Ended December 31, 2017 North
America Europe Asia South
America Eliminations and Other Total
Net sales $ 2,895
$ 2,519
$ 1,565
$ 1,410
$ 159
$ 8,548
Shipments
Rolled products - third party 809
682
527
365
—
2,383
Rolled products - intersegment 7
12
10
22
(51 ) —
Total rolled products 816
694
537
387
(51 ) 2,383
Non-rolled products —
5
6
97
—
108
Total shipments 816
699
543
484
(51 ) 2,491

Selected Operating Results Nine Months Ended December 31, 2016 North
America Europe Asia South
America Eliminations and Other Total
Net sales $ 2,307
$ 2,189
$ 1,314
$ 1,090
$ 70
$ 6,970
Shipments
Rolled products - third party 740
695
512
331
—
2,278
Rolled products - intersegment 1
13
4
18
(36 ) —
Total rolled products 741
708
516
349
(36 ) 2,278
Non-rolled products 3
6
6
61
—
76
Total shipments 744
714
522
410
(36 ) 2,354

~~The following table reconciles changes~~product mix in ~~“Segment income” for~~Europe includes a $30 million customer contractual obligation benefit recognized during the nine months ended December 31, ~~2016 to the nine months ended December 31, 2017 (in millions).~~2022.

Changes in Segment income
North
America
Europe Asia
South
America
Eliminations (A) Total
Segment income - Nine Months Ended December 31, 2016 (B) $ 276
$ 150
$ 132
$ 236
$ —
$ 794
Volume 80
(14 ) 25
44
(14 ) 121
Conversion premium and product mix 8
12
(27 ) (25 ) 10
(22 )
Conversion costs (C) (7 ) 10
2
17
3
25
Foreign exchange 2
14
(2 ) (4 ) —
10
Selling, general & administrative and research & development costs (D) (21 ) (13 ) (4 ) (17 ) (5 ) (60 )
Other changes (E) 13
(1 ) (2 ) 18
—
28
Segment income - Nine Months Ended December 31, 2017 $ 351
$ 158
$ 124
$ 269
$ (6 ) $ 896

~~_________________________~~

~~(A)~~

The recognition of "Segment income" by a region on an intersegment shipment could occur in a period prior to the recognition of "Segment income" on a consolidated basis, depending on the timing of when the inventory is sold to the third party customer. The "Eliminations" column adjusts regional "Segment income" for intersegment shipments that occur in a period prior to recognition of "Segment income" on a consolidated basis. The "Eliminations" column also reflects adjustments for changes in regional volume, conversion premium and product mix, and conversion costs related to intersegment shipments for consolidation.


~~(B)~~	Effective in the first quarter of fiscal 2018, management removed the impact of metal price lag from Segment Income in order to enhance the visibility of the underlying operating performance of the Company. This change does not impact our condensed consolidated financial statements. Segment information for prior periods presented has been updated to reflect this change.


~~(C)~~	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 utilizing scrap and other metal costs. Fluctuations in this component reflect cost efficiencies (inefficiencies) during the period as well as cost (inflation) deflation.


~~(D)~~	~~Selling, general & administrative costs and research & development costs include costs incurred directly by each segment and all corporate related costs.~~


~~(E)~~	The State of Espirito Santo grants an indirect tax incentive (ICMS) for companies who fulfill certain requirements. According to this incentive, the Company can recognize a presumed ICMS credit, thus reducing the amounts due to the State. The mentioned incentive is recorded in our consolidated results of operations.

(3)Selling, general & administrative and research & development costs include costs incurred directly by each segment and all corporate related costs.

North America

“Net ~~sales”~~sales increased ~~$588~~$973 million, or ~~25%~~20%, driven by higher average aluminum prices, as well as higher automotive shipments as semiconductor shortages that impacted the automotive industry in the prior year ease, higher can shipments, and slightly higher specialty shipments. Adjusted EBITDA was $542 million, a decrease of 7%, primarily driven by higher operating costs due to inflation, geopolitical instability, global supply chain disruptions, and less favorable metal benefit. In addition, SG&A and other changes increased versus the comparable prior year period mainly due to an increase in factoring expense resulting from higher interest rates, higher employment cost, partially offset by higher volume, favorable product mix, and higher product prices.

Europe

Net sales increased $471 million, or 14%, driven by higher average aluminum prices and higher automotive and aerospace shipments as semiconductor challenges ease and air travel demand recovers, partially offset by lower specialty shipments due to softer demand in a weaker economic environment and lower can shipments due to customers reducing their excess inventory. Adjusted EBITDA was $195 million, a decrease of 22%, primarily driven by unfavorable foreign exchange rates, higher energy and other operating costs due to inflation, geopolitical instability, and global supply chain disruptions, lower metal benefits and higher factoring expense resulting from higher interest rates. These factors are partially offset by favorable product mix on improving automotive and aerospace shipments, and higher product prices, as well as a $30 million customer contractual obligation benefit and a $10 million Duffel settlement benefit in the current year.

Asia

Net sales increased $179 million, or 8%, driven primarily by higher average aluminum prices, higher aerospace shipments as some recovery in air travel improves demand for aerospace plate and sheet, and higher can shipments on strong demand earlier in the current fiscal year, partially offset by lower specialty shipments due to planned portfolio optimization and lower automotive shipments impacted by COVID-19 pandemic-related lockdowns in China in the current fiscal year. Adjusted EBITDA was $267 million, an increase of 4%, primarily due to higher volume, higher product prices and favorable metal benefit, partially offset by higher energy and other operating costs due to inflation, geopolitical instability, and global supply chain disruptions.

South America

Net sales increased $356 million, or 19%, driven by higher average aluminum prices and higher can ~~and automotive shipments.~~

~~“Segment income”~~shipments across the Americas due to strong demand in the first half of the current fiscal year. Adjusted EBITDA was ~~$351~~$407 million, ~~an increase~~a decrease of ~~27%~~22%, primarily due to $49 million in prior year gains from the principal amount net of litigation expenses from favorable outcomes of Brazil tax litigation that did not recur in the current period, as well as less favorable metal benefit, higher ~~automotive~~energy and ~~can volumes~~other operating costs due to inflation, geopolitical instability, and ~~favorable product mix~~global supply chain disruptions as ~~a result of automotive growth.~~well as higher SG&A due to an increase in factoring expense resulting from higher interest rates. These ~~positive~~ factors were partially offset by ~~cost inflation and unfavorable selling, general, and administrative costs resulting from increased factoring costs.~~

~~Europe~~

~~“Net sales” increased $330 million or 15%, primarily due to~~ higher ~~average aluminum~~volume, higher product prices, and ~~higher automotive shipments; partially offset by lower can and specialty shipments.~~

~~“Segment income” was $158 million, an increase of 5%, primarily due to~~ favorable foreign ~~currency impact~~exchange rates.

LIQUIDITY AND CAPITAL RESOURCES

We believe we maintain adequate liquidity levels through a combination of cash and ~~favorable product mix~~availability under committed credit facilities. Our cash and cash equivalents and availability under committed credit facilities aggregated to $2.1 billion of liquidity as ~~a result~~ of December 31, 2022. Our primary liquidity sources are cash flows from operations, working capital management, cash, and liquidity under our portfolio optimization efforts, higher automotive volumes and favorable cost absorption. These positive factors were partially offset by lower can and specialties volumes, and higher selling, general and administrative costs.

~~Asia~~

~~“Net sales” increased $251 million, or 19%, due to higher average aluminum prices and higher can and automotive shipments; partially offset by lower can pricing and lower specialties shipments.~~

“Segment income” was $124 million, a decrease of 6%, primarily due to lower can pricing and lower specialties volumes. These negative factors were partially offset by increased can and automotive volumes, and favorable automotive mix.

~~South America~~

“Net sales” increased $320 million, or 29%, due to higher average aluminum prices and higher specialties and can shipments; partially offset by unfavorable mix within specialties products and lower can pricing.

“Segment income” was $269 million, an increase of 14%, primarily due to higher can and specialties volumes and lower metal input costs. These positive factors were partially offset by unfavorable price and product mix and higher selling, general and administrative costs.

~~Liquidity and Capital Resources~~

debt agreements. Our ~~significant~~recent business investments ~~in the business were~~are being funded through cash flows generated by our operations and a

combination of local financing and our senior secured credit facilities. ~~Our expansion projects are currently generating additional operating cash flows.~~ We ~~have the ability~~expect to be able to fund both our ~~potential~~short- and long-term liquidity needs, such as our continued expansions, ~~service~~servicing our debt obligations, and ~~provide~~providing sufficient liquidity to operate our business, through one or more of the following: the generation of operating cash ~~flows;~~flows, working capital management, our existing debt facilities ~~including refinancing;~~(including refinancing), and new debt issuances, as necessary.

~~Debt Refinancing~~

~~For more information on our most recent debt refinancing activities, please refer to Note 6 - Debt.~~

As of December 31, 2017, the Company’s subsidiaries that are not guarantors represented the following approximate percentages of (a) net sales, (b) Adjusted EBITDA, and (c) total assets of the Company, on a consolidated basis (including intercompany balances):



~~Item Description~~	~~Ratio~~
~~Consolidated net sales represented by net sales to third parties by non-guarantor subsidiaries (for the nine months ended December 31, 2017)~~	22	%
~~Consolidated Adjusted EBITDA represented by non-guarantor subsidiaries (for the nine months ended December 31, 2017)~~	16	%
~~Consolidated assets owned by non-guarantor subsidiaries (as of December 31, 2017)~~	19	%

In addition, for the nine months ended December 31, 2017 and 2016, the Company’s subsidiaries that are not guarantors had net sales of $2.1 billion and $1.7 billion, respectively, and, as of December 31, 2017, those subsidiaries had assets of $2.3 billion and debt and other liabilities of $1.6 billion (including inter-company balances).

Available Liquidity

Our available liquidity as of December 31, ~~2017~~2022, and March 31, ~~2017~~2022, is as ~~follows (in millions):~~follows.


in millions	December 31, 2022		March 31, 2022
Cash and cash equivalents	$	1,126	$	1,070
Availability under committed credit facilities	1,018		1,499
Total available liquidity	$	2,144	$	2,569

December 31, 2017 March 31, 2017
Cash and cash equivalents $ 757
$ 594
Availability under committed credit facilities 967
701
Total liquidity $ 1,724
$ 1,295

~~We reported~~The decrease in total available liquidity ~~of $1.7 billion as of December 31, 2017, which represents an increase compared~~primarily relates to ~~$1.3 billion reported as of March 31, 2017. The increase is primarily attributable~~the decrease in availability under our ABL Revolver facility due to ~~$314 million in proceeds~~additional borrowings this fiscal year from the ~~sale of shares in UAL and other assets,~~same facility, partially offset by an increase in the cash and cash equivalents balance. In August 2022, we amended the ABL ~~borrowing base of $178~~Revolver facility to, among other things, increase availability by $500 million and positive free cash flow of $103 million. These increases were partially offset by net payments on short-term and long-term borrowings of $162 million, a reduction in availability of credit facilities of $34 million, and other changes of $40 million. As of December 31, 2017,to $2 billion. See Note 6 – Debt for more details about our availability under committed credit ~~facilities of $967 million was comprised of $739 million under our ABL Revolver and $228 million under our Korea, China, and Middle East loan~~ facilities.

~~The “Cash~~Cash and cash ~~equivalents” balance above~~equivalents includes cash held in foreign countries in which we operate. As of December 31, ~~2017,~~2022, we held $2$3 million of ~~"Cash~~cash and cash ~~equivalents"~~equivalents in Canada, ~~where~~in which we are incorporated, with the rest held in other countries in which we operate. As of December 31, ~~2017,~~2022, we held ~~$356~~$655 million of cash in jurisdictions for which we have asserted that earnings are ~~indefinitely~~permanently reinvested, and we plan to continue to fund operations and local expansions with cash held in those jurisdictions. Our significant future uses of cash include funding our expansion projects globally, which we plan to fund with cash flows from operating activities and local financing, and servicing our debt obligations domestically, which we plan to fund with cash flows from operating activities and, if necessary, by repatriating cash from jurisdictions for which we have not asserted that earnings are indefinitely reinvested. Cash held outside of Canada is free from significant restrictions that would prevent the cash from being accessed to meet the Company's liquidity needs, including, if necessary, to fund operations and service debt obligations in Canada. Upon the repatriation of any earnings to Canada, in the form of dividends or otherwise, we could be subject to Canadian income taxes (subject to adjustment for foreign taxes paid and the utilization of the large cumulative net operating losses we have in Canada) and withholding taxes payable to the various foreign jurisdictions. As of December 31, ~~2017,~~2022, we do not believe adverse tax consequences exist that restrict our use of ~~“Cash or~~ cash ~~equivalents”~~and cash equivalents in a material manner.

Obligations

~~Free Cash Flow~~

~~We define “Free~~Our material cash flow” (which is a non-GAAP measure) as: (a) “net cash provided by (used in) operating activities,” (b) plus "net cash provided by (used in) investing activities” and (c) less “proceeds from sales of assets, net of transaction fees, cash income taxes and hedging.” Management believes “Free cash flow” is relevant to investors as it provides a measure of the cash generated internally that is available for debt servicerequirements include future contractual and other ~~value creation opportunities. However, “Free cash flow” does not necessarily represent cash available for discretionary activities, as certain debt service~~ obligations ~~must be funded out of “Free cash flow.” Our method of calculating “Free cash flow” may not be consistent with that of other companies.~~

~~Effective~~arising in the ~~second quarter~~normal course of fiscal 2018, management clarified the definition of “Free cash flow” (a non-GAAP measure) to reduce "Proceeds on the sale of assets, net of transaction fees and hedging" by cash income taxes to further enable users of the financial statements to understand cash generated internally by the Company. This change does not impact the condensed consolidated financial statements or significantly impact prior periods.

~~The following table shows “Free cash flow” for the nine months ended December 31, 2017 and 2016, the change between periods, and the ending balances of cash and cash equivalents (in millions).~~

Nine Months Ended December 31,
2017 2016 Change
Net cash provided by operating activities $ 237
$ 151
$ 86
Net cash provided by (used in) investing activities 170
(122 ) 292
Less: Proceeds from the sale of a business, net of transaction fees, cash income taxes and hedging (A) (304 ) —
(304 )
Free cash flow $ 103
$ 29
$ 74
Ending cash and cash equivalents $ 757
$ 505
$ 252

~~_________________________~~

~~(A)~~

This line item includes the proceeds from the sale of shares in Ulsan Aluminum Ltd., to Kobe Steel Ltd. during the three months ended December 31, 2017 in the amount of $314 million. This line item also includes "Outflows from the sale of a business, net of transaction fees," which is comprised of cash of $13 million held by ALCOM, which was a consolidated entity sold during the nine months ended September 30, 2016. We expect additional cash taxes and transaction fees related to Ulsan Aluminum Ltd. of approximately $41 million and $2 million, respectively, to be paid during the remainder of fiscal 2018.

~~Operating Activities~~

~~Net cash provided by operating activities~~ was $237 million for the nine months ended December 31, 2017, which was favorable compared to net cash provided by operating activities of $151 million for the nine months ended December 31, 2016. The favorable variancebusiness. These obligations primarily ~~relates to higher "Segment income". The following summarizes changes in working capital accounts (in millions).~~

Nine Months Ended December 31,
2017 2016 Change
Net cash used in operating activities due to changes in working capital:
Accounts receivable $ (403 ) $ (108 ) $ (295 )
Inventories (175 ) (200 ) 25
Accounts payable 221
59
162
Other current assets and liabilities 36
(58 ) 94
Net change in working capital $ (321 ) $ (307 ) $ (14 )

~~Nine Months Ended December 31, 2017~~

~~"Accounts receivable, net" increased due to the timing of cash collections on certain customer~~include debt and related party receivables balances coupled with an 33% increase in sales. To manage the timing of cash collections, we determine the need to factor our receivables based on local cash needs including the need to fund our strategic investments, as well as attempting to

balance the timing of cash flows of trade payables and receivables. "Inventories" were higher due to higher quantities on hand and higher average metal costs. The higher quantities of inventory on hand at December 31, 2017 is the result of recent capacity expansions, as well as longer supply chains to support the automotive sector and expand our scrap procurement network. "Accounts payable" increased $221 million in the nine months ended December 31, 2017 due primarily to higher metal input costs.

~~Included in cash flows from operating activities for the nine months ended December 31, 2017 were $197 million of~~ interest payments, $107 million of cash paid for income taxes, $5 million of payments on restructuring programs, and $73 million of contributions to our pension plans. As of December 31, 2017, we had $36 million of outstanding restructuring liabilities, of which $31 million we estimate will result in cash outflows within the next twelve months.

~~Nine Months Ended December 31, 2016~~

"Accounts receivable, net" increased due to the timing of cash collections on certain customer receivables balances offset by 2% lower sales and higher factoring balances. As of December 31, 2016 and March 31, 2016, we had factored, without recourse, certain trade receivables aggregating $846 million and $626 million, respectively, which had a favorable impact to net cash provided by operating activities of $220 million for the nine months ended December 31, 2016. We determine the need to factor our receivables based on local cash needs including the need to fund our strategic investments, as well as attempting to balance the timing of cash flows of trade payables and receivables. "Inventories" were higher due to higher quantities on hand partially offset by lower average metal costs. The higher quantities of inventory on hand at December 31, 2016 is the result of recent capacity expansions, as well as longer supply chains to support the automotive sector and expand our scrap procurement network. As of December 31, 2016, we had sold certain inventories to third parties and have agreed to repurchase the same or similar inventory back from the third parties at market prices subsequent to December 31, 2016. Our estimated repurchase obligation for this inventory as of December 31, 2016 is $16 million, based on market prices as of this date. We sell and repurchase inventory with third parties in an attempt to better manage inventory levels and to better match the purchasing of inventory with the demand for our products. "Accounts payable" increased $59 million in the nine months ended December 31, 2016 due primarily to the timing of payments to vendors.

Included in cash flows from operating activities for the nine months ended December 31, 2016 were $236 million of interest payments, $70 million of cash paid for income taxes, $10 million of payments on restructuring programs, and $48 million of contributions to our pension plans. As of December 31, 2016, we had $23 million of outstanding restructuring liabilities, of which $15 million we estimate will result in cash outflows within the next twelve months. We also expect to incur restructuring charges in future periods as we dismantle the smelter site in South America.

~~Hedging Activities~~

We use derivative contracts to manage risk as well as liquidity. Under our terms of credit with counterparties to our derivative contracts, we do not have any material margin call exposure. No material amounts have been posted by Novelis nor do we hold any material amounts of margin posted by our counterparties. We settle derivative contracts in advance of billing on the underlying physical inventory and collecting payment from our customers, which temporarily impacts our liquidity position. The lag between derivative settlement and customer collection typically ranges from 30 to 90 days.

~~More details on our operating activities can be found above in “Results of operations for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016."~~

~~Investing Activities~~

~~The following table presents information regarding our “Net cash provided by (used in) investing activities” (in millions).~~

Nine Months Ended December 31,
2017 2016 Change
Capital expenditures $ (136 ) $ (138 ) $ 2
(Outflows) proceeds from the settlement of derivative instruments, net (18 ) 7
(25 )
Proceeds from sales of assets, third party, net of transaction fees and hedging 1
2
(1 )
Proceeds (outflows) from the sale of a business 314
(2 ) 316
Proceeds from investment in and advances to non-consolidated affiliates, net 9
12
(3 )
Net cash provided by (used in) investing activities $ 170
$ (122 ) $ 292

~~For the nine months ended December 31, 2017 and December 31, 2016, our "Capital expenditures" were primarily attributable to maintenance of existing property, plant, and equipment.~~

~~"Proceeds from the sale of a business, net of certain transaction fees" for the nine months ended December 31, 2017 was primarily due to the sale of shares in Ulsan Aluminum Ltd.~~

As of December 31, 2017, we had $47 million of outstanding accounts payable and accrued liabilities related to capital expenditures in which the cash outflows will occur subsequent to December 31, 2017. We expect capital expenditures for fiscal 2018 to be approximately $250 million.

The settlement of undesignated derivative instruments resulted in cash outflow of $18 million and cash inflow of $7 million, in the nine months ended December 31, 2017 and 2016, respectively. The variance in these cash flows related primarily to changes in average aluminum prices and foreign currency rates which impact gains or losses we realize on the settlement of derivatives.

“Proceeds from investments in and advances to non–consolidated affiliates, net" for nine months ended December 31, 2017 and 2016 were primarily comprised of loan repayments and advances made to our non-consolidated affiliate, Alunorf, to fund capital expenditures.

~~Financing Activities~~

~~The following table presents information regarding our “Net cash used in financing activities” (in millions).~~

Nine Months Ended December 31,
2017 2016 Change
Proceeds from issuance of long-term and short-term borrowings $ —
$ 2,770
$ (2,770 )
Principal payments of long-term and short-term borrowings (138 ) (2,676 ) 2,538
Revolving credit facilities and other, net (140 ) (20 ) (120 )
Debt issuance costs (5 ) (139 ) 134
Net cash used in financing activities $ (283 ) $ (65 ) $ (218 )

~~Nine Months Ended December 31, 2017~~

During the nine months ended December 31, 2017, there were no issuances of long or short-term borrowings. We made principal repayments of $50 million on short-term loans in Brazil, $14 million on our Term Loan Facility, $68 million on Korean long-term debt and $6 million on capital leases. The net cash repayments from our credit facilities balance is related to payments of $119 million on our ABL Revolver and $21 million on our China credit facilities.

~~Nine Months Ended December 31, 2016~~

During the nine months ended December 31, 2016, we received proceeds of $1.15 billion and $1.5 billion, related to the issuance of our new 2024 and 2026 Notes, respectively. We also received proceeds related to the issuance of new short term loans in Brazil and Vietnam of $81 million and $40 million, respectively. Additionally, we made principal repayments of $1.1 billion and $1.4 billion on our 2017 Notes and 2020 Notes, respectively, $87 million on short-term loans in Brazil, $49 million on Novelis Vietnam loan repayments, $42 million on Korean loan repayments, $14 million on the Term Loan, $7 million on capital leases and $3 million in other principal repayments. The net cash repayments from our credit facilities balance is related to $12 million net repayments on our Middle East and Africa (MEA) facilities offset by net proceeds of $17 million in our China credit facilities.

As of December 31, 2016, our short-term borrowings were $517 million consisting of $367 million of loans under our ABL Revolver, $71 million in Novelis Brazil loans, $58 million in Novelis China loans, $11 million in Novelis Korea bank loans and $10 million of other short-term borrowings. The weighted average interest rate on our total short-term borrowings was 2.65% as of ~~December 31, 2016.~~

~~OFF-BALANCE SHEET ARRANGEMENTS~~

~~In accordance with SEC rules, the following qualify as off-balance sheet arrangements:~~

~~any obligation under certain derivative instruments;~~

~~any obligation under certain guarantees or contracts;~~

a retained or contingent interest in assets transferred to an unconsolidated entity or similar entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets; and

any obligation under a material variable interest held by the registrant in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the registrant, or engages in leasing, hedging or research and development services with the registrant.

~~The following discussion addresses the applicable off-balance sheet items for our Company.~~

~~Derivative Instruments~~

~~See Note 10 — Financial Instruments and Commodity Contracts to our accompanying unaudited condensed consolidated financial statements for a description of derivative instruments.~~

~~Guarantees of Indebtedness~~

We have issued guarantees on behalf of certain of our subsidiaries. The indebtedness guaranteed is for trade accounts payable to third parties. Some of the guarantees have annual terms while others have no expiration and have termination notice requirements. Neither we nor any of our subsidiaries holds any assets of any third parties as collateral to offset the potential settlement of these guarantees. Since we consolidate wholly-owned and majority-owned subsidiaries in our condensed consolidated financial statements, all liabilities associated with trade payables and short-term debt facilities for these entities are already included in our condensed consolidated balance sheets.

~~See Note 5 — Investment in and Advances to Non-Consolidated Affiliates and Related Party Transactions for details on our guarantee of indebtedness to Alunorf, our non-consolidated affiliate.~~

~~Other Arrangements~~

~~Factoring of Trade Receivables~~

We factor and forfait trade receivables (collectively, we refer to these as "factoring" programs) based on local cash needs, as well as attempting to balance the timing of cash flows of trade payables and receivables, fund strategic investments, and fund other business needs. Factored invoices are not included in our condensed consolidated balance sheets when we do not retain a financial or legal interest. If a financial or legal interest is retained, we classify these factorings as secured borrowings. However, no such financial or legal interests are currently retained.

~~Other~~

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as special purpose entities (SPEs), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of December 31, 2017 and March 31, 2017, we are not involved in any unconsolidated SPE transactions.

~~CONTRACTUAL OBLIGATIONS~~

~~We have future obligations under various contracts relating to debt and interest payments, capital~~finance and operating ~~leases, long-term purchase~~lease obligations, postretirement benefit ~~plans~~plan obligations, and ~~uncertain tax positions.~~purchase obligations. See Note 6 —– Debt to our accompanying condensed consolidated financial statements and ~~"Contractual Obligations" in~~"Liquidity and Capital Resources" within Part II. Item 7. ~~See Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations inour ~~Annual Report on~~2022 Form 10-K for ~~the year ended March 31, 2017 for~~ more details.

There are no additional material off-balance sheet arrangements.

~~RETURN OF CAPITAL~~

Adjusted Free Cash Flow

Refer to Non-GAAP Financial Measures for our definition of Adjusted Free Cash Flow.

The following table displays the Adjusted Free Cash Flow, the change between periods, as well as the ending balances of cash and cash equivalents.


	Nine Months Ended December 31,
in millions	2022		2021		Change
Net cash provided by operating activities – continuing operations	$	321	$	503	$	(182)
Net cash used in investing activities – continuing operations	(478)		(277)		(201)

Plus: Cash used in the acquisition of business and other investments, net of cash acquired	4		—		4

Less: Proceeds from sales of assets and business, net of transaction fees, cash income taxes and hedging	(5)		(9)		4
Adjusted Free Cash Flow from continuing operations	(158)		217		(375)
Net cash (used in) provided by operating activities – discontinued operations	(12)		12		(24)


Adjusted Free Cash Flow	$	(170)	$	229	$	(399)
Ending cash and cash equivalents	$	1,126	$	808	$	318

Cash Flow Summary


	Nine Months Ended December 31,
in millions	2022		2021		Change
Net cash provided by operating activities	$	309	$	515	$	(206)
Net cash used in investing activities	(478)		(277)		(201)
Net cash provided by (used in) financing activities	263		(450)		713

Operating Activities

The decrease in net cash provided by operating activities primarily relates to unfavorable metal price lag and lower Adjusted EBITDA, partially offset by changes in working capital.

Investing Activities

Net cash used in investing activities was primarily attributable to capital expenditures of $462 million and outflows from investment in and advances to non-consolidated affiliates, net during the nine months ended December 31, 2022.

Financing Activities

There were no proceeds from the issuance of long-term and short-term borrowings during the nine months ended December 31, 2022. The following represents proceeds from the issuance of long-term and short-term borrowings during the nine months ended December 31, 2021.


	Nine Months Ended
in millions	December 31, 2021
3.25% Senior Notes, due November 2026(1)	$	750
3.875% Senior Notes, due August 2031(1)	750
Floating rate Term Loans, due March 2028	20
1.8% Brazil Loan due June 2023	30
1.8% Brazil Loan due December 2023	20
Short-term borrowings in Brazil	100

Proceeds from issuance of long-term and short-term borrowings	$	1,670

_________________________

(1)The proceeds from the issuance of the 3.25% Senior Notes, due November 2026 and the 3.875% Senior Notes, due August 2031 were used to redeem the $1.5 billion principal amount outstanding on the 5.875% Senior Notes, due September 2026.

The following represents principal payments of long-term and short-term borrowings during the nine months ended December 31, 2022, and 2021.


	Nine Months Ended
in millions	December 31, 2022

Short-term loans due November 2022	$	(314)
Brazil Loans short term loan due November 2022	(50)
Floating rate Term Loans, due January 2025	(6)
Floating rate Term Loans, due March 2028	(4)
China Bank Loans, due August 2027	(3)


Finance leases and other repayments	(3)
Principal payments of long-term and short-term borrowings	$	(380)


	Nine Months Ended
in millions	December 31, 2021
5.875% Senior Notes, due September 2026(1)	$	(1,551)
Floating rate Term Loans, due June 2022	(334)
Zhenjiang Term Loans, due May 2024	(129)
Short-term borrowings in Brazil	(3)
Floating rate Term Loans, due January 2025	(6)
Floating rate Term Loans, due March 2028	(4)
Finance leases and other repayments	(7)
Principal payments of long-term and short-term borrowings	$	(2,034)

________________________

(1)This represents the $1.5 billion principal on the 5.875% Senior Notes, due September 2026 that was redeemed during the period through the issuance of the 3.25% Senior Notes, due November 2026 and the 3.875% Senior Notes, due August 2031. An additional $51 million payment was made using cash on hand for the resulting redemption premium.

The following represents inflows (outflows) from revolving credit facilities and other, net during the nine months ended December 31, 2022, and 2021.


	Nine Months Ended
in millions	December 31, 2022
ABL Revolver	$	725
China credit facility	16
Korea credit facility and Other revolving facilities	8

Revolving credit facilities and other, net	$	749


	Nine Months Ended
in millions	December 31, 2021

China credit facility	$	22
ABL Revolver	34
Korea credit facility	(17)

Revolving credit facilities and other, net	$	39

In addition to the activities shown in the tables above, we paid debt issuance costs of $6 million and $25 million during the nine months ended December 31, 2022, and 2021, respectively. We also paid returns of capital to our common shareholder in the amount of $100 million during each of the nine months ended December 31, 2022, and 2021.

Non-Guarantor Information

As of December 31, 2022, the Company's subsidiaries that are not guarantors represented the following approximate percentages of (a) net sales (including intercompany sales), (b) Adjusted EBITDA, and (c) total assets of the Company, on a consolidated basis (including intercompany balances).


Item Description	Ratio
Net sales represented by non-guarantor subsidiaries (for the nine months ended December 31, 2022)	19	%
Adjusted EBITDA represented by non-guarantor subsidiaries (for the nine months ended December 31, 2022)	17	%
Assets owned by non-guarantor subsidiaries (as of December 31, 2022)	14	%

In addition, for the nine months ended December 31, 2022, and 2021, the Company's subsidiaries that are not guarantors had net sales (including intercompany sales) of $3.1 billion and $2.8 billion, respectively, and as of December 31, 2022, those subsidiaries had assets of $3.0 billion and debt and other liabilities of $1.6 billion (including intercompany balances).

CAPITAL ALLOCATION FRAMEWORK

In May 2021, Novelis announced a capital allocation framework that laid out the general guidelines for use of post-maintenance capital expenditure Adjusted Free Cash Flow for the next five years. The priority at that time was to reduce long-term debt by $2.6 billion from its recent peak in the first quarter of fiscal 2021 after the Aleris acquisition and to target a net leverage ratio of approximately 2.5x. Having achieved both targets by the end of fiscal 2022, the priority has now shifted to organic growth capital expenditures, estimated to be more than $4.5 billion over the next five years, while maintaining a medium-term net leverage ratio below 2.5x and continuing to guide approximately 8%-10% of post-maintenance capital expenditure Adjusted Free Cash Flow to be returned to our common shareholder. Payments to our common shareholder are at the discretion of ~~the~~our board of ~~directors and will~~directors. Any such payments 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, and other relevant factors.

We paid returns of capital to our common shareholder in the amount of $100 million during each of the second quarters of fiscal 2023 and 2022. Past payment of returns of capital should not be construed as a guarantee of future returns of capital in the same amounts or at all.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

~~During the nine months ended December 31, 2017, there~~There were no significant changes to our critical accounting policies and estimates as reported in our ~~Annual Report on~~2022 Form ~~10-K for the year ended March 31, 2017.~~

~~RECENTLY ISSUED ACCOUNTING STANDARDS~~

10-K. See Note 1 —– Business and Summary of Significant Accounting Policies for our principal areas of uses of estimates and assumptions.

RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 1 – Business and Summary of Significant Accounting Policies to our accompanying condensed consolidated financial statements for a full description of recent accounting pronouncements, if applicable, including the respective expected dates of adoption and expected effects on results of operations and financial condition.

NON-GAAP FINANCIAL MEASURES

Total ~~“Segment income”~~Adjusted EBITDA presents the sum of the results of our four operating segments on a consolidated basis. We believe that total ~~“Segment income”~~Adjusted EBITDA is an operating performance measure that measures operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets among otherwise comparable companies. In reviewing our corporate operating results, we also believe it is important to review the aggregate consolidated performance of all of our segments on the same basis we review the performance of each of our regions and to draw comparisons between periods based on the same measure of consolidated performance.

Management believes ~~investors’~~investors' understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations from one period to the next and would ordinarily add back items that are not part of normal day-to-day operations of our business. By providing total ~~“Segment income,”~~Adjusted EBITDA, together with reconciliations, we believe we are enhancing ~~investors’~~investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives.

However, total ~~“Segment income”~~Adjusted EBITDA is not a measurement of financial performance under U.S. GAAP, and our total ~~“Segment income”~~Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Total ~~“Segment income”~~Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. For example, total ~~“Segment income”:~~Adjusted EBITDA:

•does not reflect the ~~company’s~~Company's cash expenditures or requirements for capital expenditures or capital commitments;

•does not reflect changes in, or cash requirements for, the ~~company’s~~Company's working capital needs; and

•does not reflect any costs related to the current or future replacement of assets being depreciated ~~and~~or amortized.

We also use total ~~“Segment income”:~~Adjusted EBITDA:

•as a measure of operating performance to assist us in comparing our operating performance on a consistent basis because it removes the impact of items not directly resulting from our core operations;

•for planning purposes, including the preparation of our internal annual operating budgets and financial projections;

•to evaluate the performance and effectiveness of our operational strategies; and

•as a basis to calculate incentive compensation payments for our key employees.

~~Total “Segment income”~~Adjusted EBITDA per tonne is calculated by dividing Adjusted EBITDA by aluminum rolled product shipments (in tonnes) for the corresponding period, both on a consolidated basis and at a segment level. The term "aluminum rolled products" is synonymous with the terms "flat-rolled products" and "FRP," which are commonly used by manufacturers and third-party analysts in our industry. Shipment amounts also include tolling shipments. All tonnages are stated in metric tonnes. One metric tonne is equivalent to 2,204.6 pounds. One kt is 1,000 metric tonnes.

Management believes Adjusted EBITDA per tonne is relevant to investors as it provides a measure of aluminum rolled product shipments to third parties rather than aluminum rolled product shipments as well as certain other non-rolled product shipments, primarily scrap, UBCs, ingots, billets, and primary remelt. This is useful to investors because the incremental impact of non-rolled products shipments on our Adjusted EBITDA ~~which we refer~~is marginal since the price of these products is generally set to cover the costs of raw materials not utilized in manufacturing products sold to beverage packaging customers, specialties and aerospace customers in our ~~earnings announcements~~regions, and ~~other external presentations to analysts~~these non-rolled products are not part of our core operating business.

Please see Note 16 – Segment, Geographical Area, Major Customer and ~~investors.~~

~~See Liquidity and Capital Resources section~~Major Supplier Information for our definition of ~~"Free~~Adjusted EBITDA. Under ASC 280, Adjusted EBITDA is our measure of segment profitability and financial performance of our operating segments, and when used in this context, the term Adjusted EBITDA is a financial measure prepared in accordance with U.S. GAAP. Adjusted EBITDA reported for the Company on a consolidated basis is a non-U.S. GAAP financial measure. Prior to the three months ended June 30, 2022, we also utilized the term Segment Income to refer to Adjusted EBITDA. Both terms have the same definition and there is no difference in the composition or calculation of Adjusted EBITDA for the periods presented and Segment Income previously reported.

Adjusted Free Cash Flow consists of (a) net cash ~~flow".~~provided by (used in) operating activities – continuing operations, (b) plus net cash provided by (used in) investing activities – continuing operations, (c) plus net cash provided by (used in) operating activities – discontinued operations, (d) plus net cash provided by (used in) investing activities – discontinued operations, (e) plus cash used in the acquisition of assets under a finance lease, (f) plus cash used in the acquisition of business and other investments, net of cash acquired, (g) plus accrued merger consideration, (h) less proceeds from sales of assets and business, net of transaction fees, cash income taxes and hedging, and (i) less proceeds from sales of assets and business, net of transaction fees, cash income taxes and hedging – discontinued operations. Management believes Adjusted Free Cash Flow is relevant to investors as it provides a measure of the cash generated internally that is available for debt service and other value creation opportunities. However, Adjusted Free Cash Flow does not necessarily represent cash available for discretionary activities as certain debt service obligations must be funded out of Adjusted Free Cash Flow. Our method of calculating Adjusted Free Cash Flow may not be consistent with that of other companies.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND MARKET DATA

This ~~document~~Quarterly Report on Form 10-Q 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.~~prospects under the heading "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," under the Notes to the Condensed Consolidated Financial Statements, and elsewhere in this Quarterly Report. Words such as ~~“expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate”~~"believes," "expects," "anticipates," "plans," "estimates," "projects," "forecasts," "intends," and variations of such words and similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, our belief that, as a result of the Aleris acquisition, we can more efficiently serve the automotive market and unlock synergies; the expected timing and results from investments in certain operating facilities, including our recently announced greenfield, fully-integrated rolling and recycling mill to be built in Bay Minette, Alabama; our projections regarding financial performance, liquidity, capital expenditures, and investments; the possible future impacts of the ongoing COVID-19 pandemic, including the emergence of new variants thereof and the actions taken against it, including expectations ~~with respect to~~about the impact of ~~metal price movements on~~any changes in demand as well as volatility and uncertainty in general economic conditions; the possible future impacts of geopolitical instability due in part to Russia's invasion of Ukraine; statements about our ~~financial performance,~~belief that long-term demand for aluminum automotive sheet will continue to grow; statements about our expectation that aerospace demand and shipments will continue to improve toward pre-COVID levels by the ~~effectiveness~~end of fiscal 2023; statements about our ~~hedging programs~~belief that significant aircraft industry order backlogs for key OEMS, including Airbus and ~~controls,~~Boeing, will translate into growth in the future and that our multi-year supply agreements have positioned us to benefit from future ~~borrowing availability.~~expected demand; statements about our belief that long term demand for flat-rolled aluminum remains strong; and statements about our expectation that long-term demand for building and construction and other specialty products will grow. These statements are based on beliefs and assumptions of ~~Novelis’~~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.

Factors that could cause actual results or outcomes to differ from the results expressed or implied by forward-looking statements include, among other things: changes in the prices and availability of aluminum (or premiums associated with such prices) or other materials and raw materials we use; inflationary pressures impacting the price of energy, labor, freight, coatings, and alloys, such as magnesium; the capacity and effectiveness of our hedging activities; inflationary pressures affecting end market demand for our aluminum products in the building and construction market; relationships with, and financial and operating conditions of, our customers, suppliers, and other stakeholders; fluctuations in the supply of, and prices for, energy in the areas in which we maintain production facilities; our ability to access financing including in connection with potential acquisitions and investments; continued risks stemming from the Aleris acquisition, including uncertainties inherent in the acquisition method of accounting; disruption to our global aluminum production and supply chain as a result of COVID-19, rising interest rates, or geopolitical factors, such as Russia's war in Ukraine; changes in the relative values of various currencies and the effectiveness of our currency hedging activities; decrease in demand for our aluminum products due to macroeconomic headwinds due in part to rising interest rates and geopolitical factors, such as Russia's war in Ukraine; risks related to sanctions, tariffs, a ban or similar actions impacting the supply of Russian aluminum and the global aluminum supply; factors affecting our operations, such as litigation, environmental remediation and clean-up costs, breakdown of equipment, and other events; economic, regulatory, and political factors within the countries in which we operate or sell our products, including changes in duties or tariffs; risks related to cybersecurity and data breaches; our potential inability to protect our intellectual property and the confidentiality of our know-how, trade secrets, technology, and other proprietary information; competition from other aluminum rolled products producers as well as from substitute materials such as steel, glass, plastic, and composite materials; downturns in consumer demand for our products or changes in consumer preferences as it relates to our products; the impact of the global semiconductor shortage on automotive production and demand for automotive aluminum sheet; changes in general economic conditions, including deterioration in the global economy; the risks of pandemics or other public health emergencies, including the continued spread and impact of, and the governmental and third-party response to, the COVID-19 pandemic; the impact of climate change or the legal, regulatory, or market response to climate change; changes in government regulations, particularly those affecting taxes, derivative instruments, and environmental, health, or safety compliance; risks that production levels and margins of our recent capital expenditures do not grow in line with our current expectations and that we may not realize returns commensurate with our investments; changes in interest rates that have the effect of increasing the amounts we pay under our credit facilities and other financing agreements; and our ability to generate cash. The above list of factors is not exhaustive.

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~~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~~For a discussion of some of the specific factors that ~~could~~may cause Novelis' actual results or outcomes to differ materially from ~~the results expressed or implied by~~those projected in any forward-looking statements, ~~include, among other things:~~

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

~~changes in~~refer to 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, repay existing debt or refinance existing debt to fund current operations and for future capital requirements;~~

~~the level of our indebtedness and our ability to generate cash to service our indebtedness;~~

~~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;~~

~~the capacity and effectiveness of our hedging activities;~~

~~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 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;~~

~~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~~Part I. Item 1A. Risk ~~Factors”~~Factors and ~~“Item~~Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations”~~Operations of our 2022 Form 10-K, as the same may be updated from time to time in our ~~Annual Report~~quarterly reports on Form ~~10-K for~~10-Q or in other reports which we from time to time file with the ~~year ended March 31, 2017.~~

SEC.

Item 3.Quantitative and Qualitative Disclosures About Market ~~Risk~~Risk.

We are exposed to certain market risks as part of our ongoing business operations, including risks from changes in ~~commodity~~metal prices (primarily ~~the London Metals Exchange ("LME")~~ aluminum, copper, zinc, and LMPs), energy prices (electricity, natural gas, and ~~natural gas)~~diesel fuel), ~~local market premiums, electricity rates,~~ foreign currency exchange rates, and interest rates that could impact our results of operations and financial condition. We partially manage our exposure to energy prices by entering into fixed forward purchase contracts with energy providers, predominantly in Europe. We generally apply the normal purchase and normal sale scope exception to these contracts and do not record the contracts at fair value. These energy supply contracts are not derivatives but function as a risk management tool for fluctuating energy prices. We manage our exposure to other market risks through regular operating and financing activities and derivative financial instruments. We use derivative financial instruments as risk management tools only and not for speculative purposes.

Commodity Price Risks

~~Aluminum~~Metal

The following table presents the estimated potential negative effect on the fair values of these derivative instruments as of December 31, ~~2017,~~2022, given a 10% ~~increase~~change in ~~prices ($~~prices. Direction of the change in ~~millions).~~price corresponds with the direction that would cause a negative impact on the fair value of these derivative instruments.

Change in
Price Change in
Fair Value
LME aluminum 10 % $ (106 )


in millions	Change in Price		Change in Fair Value
Aluminum	10	%	$	(215)
Copper	(10)		(1)
Zinc	(10)		—

Energy

The following table presents the estimated potential negative effect on the fair values of these derivative instruments as of December 31, ~~2017,~~2022, given a 10% decline in ~~spot~~ prices for energy ~~contracts ($ in millions).~~contracts.

Change in
Price

Change in
Fair Value
Electricity (10 )% $ (4 )
Natural Gas (10 )% (6 )
Diesel Fuel (10 )% (1 )


in millions	Change in Price		Change in Fair Value
Natural gas	(10)	%	$	(3)
Diesel fuel	(10)		(2)

Foreign Currency Exchange Risks

The following table presents the estimated potential negative effect on the fair values of these derivative instruments as of December 31, ~~2017,~~2022, given a 10% change in ~~rates ($~~rates. Direction of the change in ~~millions).~~

Change in
Exchange Rate

Change in
Fair Value
Currency measured against the U.S. dollar
Brazilian real (10 )% $ (22 )
Euro 10 % (39 )
Korean won (10 )% (31 )
Canadian dollar (10 )% (4 )
British pound (10 )% (19 )
Swiss franc (10 )% (40 )
Chinese yuan 10 % (8 )

~~Interest Rate Risks~~

~~The following table presents~~exchange rate corresponds with the ~~estimated potential effect on~~direction that would cause the change in exchange rate to negatively impact the fair ~~values~~value of these derivative ~~instruments as of December 31, 2017, given a 100 bps decrease in the benchmark interest rate ($ in millions).~~instruments.


$ in millions	Change in Exchange Rate		Change in Fair Value
Currency measured against the U.S. dollar
Brazilian real	(10)	%	$	(27)
Euro	(10)		(42)
Korean won	(10)		(65)
Canadian dollar	(10)		(3)
British pound	(10)		(24)
Swiss franc	(10)		(45)
Chinese yuan	(10)		(1)



	~~Change in~~ ~~Rate~~				~~Change in~~ ~~Fair Value~~
~~Interest Rate Contracts~~
~~Asia - KRW-CD-3200~~	~~(100~~	)	~~bps~~	—	$	—

Item 4.Controls and ~~Procedures~~Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”)~~ is recorded, processed, summarized, and reported within the time periods specified in the ~~SEC’s~~SEC's rules and forms. Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, include controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including the Principal Executive Officer and the Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any system of controls, however ~~well designed~~well-designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met.

We have carried out an evaluation, with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the ~~Company’s~~Company's disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based upon such evaluation, management has concluded that the ~~Company’s~~Company's disclosure controls and procedures were effective as of December 31, ~~2017.~~2022.

Changes in Internal Control ~~Over~~over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART ~~II.~~ II—OTHER INFORMATION

Item 1.Legal ~~Proceedings~~Proceedings.

We are a party to litigation incidental to our business from time to time. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations, or cash flows. For additional information regarding litigation to which we are a party, see Note 15 —– Commitments and Contingencies to our accompanying condensed consolidated financial statements.

Item 1A.Risk ~~Factors~~

Factors.

See ~~"Risk Factors" in~~ Part I,I. Item 1A1A. Risk Factors in our ~~Annual Report on~~2022 Form 10-K and Part II. Item 1A. Risk Factors in our Form 10-Q for the ~~year ended March 31, 2017.~~second quarter of fiscal 2023. There have been no material changes from the risk factors described in our 2022 Form 10-K and our Form 10-Q for the second quarter of fiscal 2023.

Item 6.~~Exhibits~~

Exhibits.



Exhibit No.		Description
2.1
~~2.1~~	Arrangement Agreement by and among Hindalco Industries Limited, AV Aluminum Inc. and Novelis Inc., dated as of February 10, 2007 (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on February 13, 2007) (File No. 001-32312))
3.1
~~3.1~~	Restated Certificate and Articles of Amalgamation of Novelis Inc. (incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q filed on November 10, 2010 (File No. 001-32312))
3.2
~~3.2~~	Certificate and Articles of ~~Amalgamation~~A rrangement of Novelis Inc., dated ~~March 31, 2016~~ as of Se ptember 1, 2022 (incorporated by reference to Exhibit ~~3.2~~3.1 to our ~~Annual~~Current Report on Form ~~10-K~~8 -K filed on ~~May 10, 2016~~Se ptember 6, 2022 (File No. 001-32312))
3.3
~~3.3~~	Novelis Inc. Amended and Restated Bylaws, adopted as of July 24, 2008 (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on July 25, 2008 (File No. 001-32312))

~~31.1~~
31.1		Section ~~302~~301 Certification of Principal Executive Officer
31.2
~~31.2~~	Section 302 Certification of Principal Financial Officer
32.1
~~32.1~~	Section 906 Certification of Principal Executive Officer
32.2
~~32.2~~	Section 906 Certification of Principal Financial Officer
101.INS
~~101.INS~~	XBRL Instance Document
101.SCH
~~101.SCH~~	Inline XBRL Taxonomy Extension Schema Document
101.CAL
~~101.CAL~~	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF
~~101.DEF~~	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB
~~101.LAB~~	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE
~~101.PRE~~	Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	NOVELIS INC.
	By:	/s/ Devinder Ahuja
		Devinder Ahuja
		Chief Financial Officer
		(Principal Financial Officer and Authorized Officer)

	~~NOVELIS INC.~~By:
~~By:~~	~~/s/ Devinder Ahuja~~
	~~Devinder Ahuja~~
	~~Chief Financial Officer~~
	~~(Principal Financial Officer and Authorized Officer)~~

~~By:~~	/s/ Stephanie Rauls
	~~Stephanie Rauls~~
	~~Vice President Finance and Controller~~
	~~(Principal Accounting Officer)~~

~~Date: February 1, 2018~~

~~EXHIBIT INDEX~~


				Stephanie Rauls
~~Exhibit~~ ~~No.~~			~~Description~~	Senior Vice President, Deputy Chief Financial Officer and Chief Accounting Officer

~~2.1~~		Arrangement Agreement by and among Hindalco Industries Limited, AV Aluminum Inc. and Novelis Inc., dated as of February 10, 2007 (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on February 13, 2007) (File No. 001-32312))

~~3.1~~	~~Restated Certificate and Articles of Amalgamation of Novelis Inc. (incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q filed on November 10, 2010 (File No. 001-32312))~~

~~3.2~~	~~Certificate and Articles of Amalgamation of Novelis Inc., dated March 31, 2016 (incorporated by reference to Exhibit 3.2 to our Annual Report on Form 10-K filed on May 10, 2016 (File No. 001-32312))~~

~~3.3~~	~~Novelis Inc. Amended and Restated Bylaws, adopted as of July 24, 2008 (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on July 25, 2008 (File No. 001-32312))~~

~~31.1~~	~~Section 302 Certification of~~ (Principal ~~Executive Officer~~

~~31.2~~	~~Section 302 Certification of Principal Financial Officer~~

~~32.1~~	~~Section 906 Certification of Principal Executive Officer~~

~~32.2~~	~~Section 906 Certification of Principal Financial Officer~~

~~101.INS~~	~~XBRL Instance Document~~

~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase~~

~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase~~Accounting Officer)

Date: February 6, 2023



Canada						98-0442987
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification ~~Number)~~ No.)

~~3560 Lenox~~One Phipps Plaza 3550 Peachtree Road, Suite ~~2000~~1100 Atlanta, ~~Georgia~~GA						30326
(Address of principal executive offices)						(Zip Code)



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



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


Commonly Used or Defined Terms		3

PART I. I—FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited).	34
	Condensed Consolidated Statements of Operations (unaudited)	34
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)	45
	Condensed Consolidated Balance Sheets (unaudited)	56
	Condensed Consolidated Statements of Cash Flows (unaudited)	67
	Condensed Consolidated Statement s of Shareholder's Equity ~~(Deficit)~~ (unaudited)	78
	Notes to the Condensed Consolidated Financial Statements (unaudited)	89
Item 2.	~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations.	4036
Item 3.	Quantitative and Qualitative Disclosures About Market ~~Risk~~Risk.	6355
Item 4.	Controls and ~~Procedures~~Procedures.	6456

PART ~~II.~~ II—OTHER INFORMATION

Item 1.	Legal ~~Proceedings~~Proceedings.	6557
Item 1A.	Risk ~~Factors~~Factors.	6557

Item 6.	~~Exhibits~~Exhibits.	6558

SIGNATURES		59


Term						Definition
Adjusted EBITDA						As defined in Note 16 – Segment, Geographical Area, Major Customer and Major Supplier Information
Aleris						Aleris Corporation
AluInfra						AluInfra Services
Alunorf						Aluminium Norf GmbH
ASC						FASB Accounting Standards Codification

Duffel						Plant located in Duffel, Belgium, required to be divested (Refer to Note 2 – Discontinued Operations)
Exchange Act						Securities Exchange Act of 1934, as amended

FASB						Financial Accounting Standards Board
fiscal 2016						Fiscal year ended March 31, 2016

fiscal 2020						Fiscal year ended March 31, 2020
fiscal 2021						Fiscal year ended March 31, 2021
fiscal 2022						Fiscal year ended March 31, 2022
fiscal 2023						Fiscal year ending March 31, 2023
fiscal 2027						Fiscal year ending March 31, 2027
Form 10-Q						Quarterly Report on Form 10-Q
FRP						Flat-rolled products
GAAP						Generally Accepted Accounting Principles
Kobe						Kobe Steel, Ltd.
kt						kilotonne (One kt is 1,000 metric tonnes.)
Lewisport						Plant located in Lewisport, Kentucky, required to be divested (Refer to Note 2 – Discontinued Operations)
LME						The London Metals Exchange
LMP						Local market premium
Logan						Logan Aluminum Inc.
MMBtu						One decatherm or 1 million British Thermal Units
OEM						Original equipment manufacturer


RSUs						Restricted stock units
SARs						Stock appreciation rights
SEC						United States Securities and Exchange Commission
SG&A						Selling, general and administrative expenses
Tri-Arrows						Tri-Arrows Aluminum Inc.
UAL						Ulsan Aluminum Ltd.
UBC						Used beverage can
U.S.						United States
U.K.						United Kingdom
VIE						Variable interest entity
2022 Form 10-K						Our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, as filed with the SEC on May 11, 2022



	Equity (Deficit) of our Common Shareholder
	Common Stock			Additional Paid-in Capital		Retained Earnings/ (Accumulated Deficit)			Accumulated Other Comprehensive Loss (AOCI)			Non- controlling Interests			Total (Deficit)/ Equity
	Shares	Amount		Additional Paid-in Capital		Retained Earnings/ (Accumulated Deficit)			Accumulated Other Comprehensive Loss (AOCI)			Non- controlling Interests			Total (Deficit)/ Equity
Balance as of March 31, 2016	1,000	$	—	$	1,404	$	(963	)	$	(500	)	$	—		$	(59	)
Net loss attributable to our common shareholder	—	—		—		(2		)	—			—			(2		)
Net income attributable to noncontrolling interests	—	—		—		—			—			1			1
Currency translation adjustment included in AOCI	—	—		—		—			(129		)	—			(129		)
Change in fair value of effective portion of cash flow hedges, net of tax benefit of $8 million included in AOCI	—	—		—		—			(14		)	—			(14		)
Change in pension and other benefits, net of tax provision of $16 million included in AOCI	—	—		—		—			37			2			39
Sale of subsidiary shares to a third party	—	—		—		—			—			(22		)	(22		)
Balance as of December 31, 2016	1,000	$	—	$	1,404	$	(965	)	$	(606	)	$	(19	)	$	(186	)



	Total restructuring liabilities			Other restructuring charges (A)		Total restructuring charges		Other impairments (B)		Total restructuring and impairments, net
Balance as of March 31, 2017	$	24
Expenses	18			$	9	$	27	$	6	$	33
Cash payments	(5		)
Foreign currency (C)	(1		)
Balance as of December 31, 2017	$	36


5.	5. INVESTMENT IN AND ADVANCES TO NON-CONSOLIDATED AFFILIATES AND RELATED PARTY TRANSACTIONS



	December 31, 2017		March 31, 2017
Accounts receivable-related parties	$	253	$	60
Other long-term assets-related parties	$	10	$	15
Accounts payable-related parties	$	206	$	51



	December 31, 2017											March 31, 2017
	Interest Rates (A)		Principal			Unamortized Carrying Value Adjustments (B)			Carrying Value			Principal			Unamortized Carrying Value Adjustments (B)			Carrying Value
Third party debt:
Short-term borrowings	2.51	%	$	116		$	—		$	116		$	294		$	—		$	294
Novelis Inc.
Floating rate Term Loan Facility, due June 2022	3.54	%	1,782			(46		)	1,736			1,796			(53		)	1,743
Novelis Corporation
5.875% Senior Notes, due September 2026	5.875	%	1,500			(22		)	1,478			1,500			(23		)	1,477
6.25% Senior Notes, due August 2024	6.25	%	1,150			(17		)	1,133			1,150			(19		)	1,131
Novelis Korea Limited
Bank loans, due through September 2020 (KRW 132 billion)	2.65	%	123			—			123			184			—			184
Novelis Switzerland S.A.
Capital lease obligation, due through December 2019 (Swiss francs (CHF) 14 million)	7.50	%	14			—			14			17			(1		)	16
Novelis do Brasil Ltda.
BNDES loans, due through April 2021 (BRL 7 million)	6.02	%	2			—			2			4			—			4
Other
Capital Lease Obligations and Other debt, due through December 2020	4.84	%	2			—			2			3			—			3
Total debt			4,689			(85		)	4,604			4,948			(96		)	4,852
Less: Short term borrowings			(116		)	—			(116		)	(294		)	—			(294		)
Current portion of long term debt			(136		)	—			(136		)	(121		)	—			(121		)
Long-term debt, net of current portion			$	4,437		$	(85	)	$	4,352		$	4,533		$	(96	)	$	4,437



As of December 31, 2017	Amount
Short-term borrowings and current portion of long-term debt due within one year	$	252
2 years	38
3 years	21
4 years	18
5 years	1,710
Thereafter	2,650
Total	$	4,689



	Nine Months Ended December 31, 2017			Year Ended March 31, 2017
	Nine Months Ended December 31, 2017			Year Ended March 31, 2017
Cumulative currency translation adjustment — beginning of period	$	(256	)	$	(197	)
Effect of changes in exchange rates	149			(75		)
Sale of investment in foreign entities (A)	—			16
Cumulative currency translation adjustment — end of period	$	(107	)	$	(256	)



	Amount of Gain (Loss) Recognized in OCI (Effective Portion)						Amount of Gain (Loss) Recognized in OCI (Effective Portion)						Amount of Gain (Loss) Recognized in “Other Expense, net” (Ineffective and Excluded Portion)				Amount of Gain (Loss) Recognized in “Other Expense, net” (Ineffective and Excluded Portion)
	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended December 31,				Nine Months Ended December 31,
	2017			2016			2017			2016			2017		2016		2017			2016
Cash flow hedging derivatives
Aluminum contracts	$	(66	)	$	(22	)	$	(89	)	$	(52	)	$	—	$	4	$	(9	)	$	(9	)
Currency exchange contracts	—			(14		)	(7		)	18			—		—		1			1
Energy contracts	(2		)	1			(4		)	(3		)	—		—		1			(1		)
Total cash flow hedging derivatives	$	(68	)	$	(35	)	$	(100	)	$	(37	)	$	—	$	4	$	(7	)	$	(9	)
Net investment derivatives
Currency exchange contracts	(17		)	—			(17		)	—			—		—		—			—
Total	$	(85	)	$	(35	)	$	(117	)	$	(37	)	$	—	$	4	$	(7	)	$	(9	)



	Currency Translation			(A) Cash Flow Hedges			(B) Postretirement Benefit Plans			Total
Balance as of September 30, 2017	$	(165	)	$	(44	)	$	(241	)	$	(450	)
Other comprehensive income (loss) before reclassifications	58			(46		)	(10		)	2
Amounts reclassified from AOCI, net	—			20			13			33
Net current-period other comprehensive income (loss)	58			(26		)	3			35
Balance as of December 31, 2017	$	(107	)	$	(70	)	$	(238	)	$	(415	)



	Level 3 – Derivative Instruments (A)
Balance as of March 31, 2017	$	(9	)
Unrealized/realized gain included in earnings (B)	4
Unrealized loss included in AOCI (C)	—
Settlements (B)	(2		)
Balance as of December 31, 2017	$	(7	)



	December 31, 2017		March 31, 2017
Cash deposits (A)	$	7	$	7

Short-term settlement liability (B)	$	9	$	9
Long-term settlement liability (B)	51		59
Total settlement liability	$	60	$	68

Liability for other disputes and claims (C)	$	28	$	22



	Three Months Ended December 31, 2017						Nine Months Ended December 31, 2017
	2017			2016			2017			2016
Net income (loss) attributable to our common shareholder	$	121		$	63		$	529		$	(2	)
Noncontrolling interests	(16		)	1			(16		)	1
Income tax provision	20			47			179			110
Depreciation and amortization	86			88			267			267
Interest expense and amortization of debt issuance costs	64			67			192			231
Adjustment to reconcile proportional consolidation	17			4			33			20
Unrealized gains on change in fair value of derivative instruments, net	(15		)	(21		)	(13		)	(18		)
Realized losses (gains) on derivative instruments not included in segment income	1			(1		)	—			(2		)
Gain on assets held for sale	—			—			—			(2		)
Loss on extinguishment of debt	—			—			—			112
Restructuring and impairment, net	25			1			33			4
Losses (gains) on sale of fixed assets	2			(2		)	4			4
(Gain) loss on sale of a business (A)	—			—			(318		)	27
Metal price lag (B)	(1		)	4			5			32
Other, net	1			4			1			10
Total of reportable segments	$	305		$	255		$	896		$	794



(in millions, except shipments which are in kt)	Three Months Ended												Year Ended			Three Months Ended
	June 30, 2016			Sept 30, 2016			Dec 31, 2016			March 31, 2017			March 31, 2017			June 30, 2017			Sept 30, 2017			Dec 31, 2017
Net sales	$	2,296		$	2,361		$	2,313		$	2,621		$	9,591		$	2,669		$	2,794		$	3,085
Percentage (decrease) increase in net sales versus comparable previous year period	(13		)%	(5		)%	(2		)%	9		%	(3		)%	16		%	18		%	33		%
Rolled product shipments:
North America	242			252			247			269			1,010			273			274			269
Europe	246			236			226			235			943			235			237			222
Asia	178			176			162			174			690			180			180			177
South America	103			121			125			125			474			110			131			146
Eliminations	(14		)	(12		)	(10		)	(14		)	(50		)	(13		)	(20		)	(18		)
Total	755			773			750			789			3,067			785			802			796

The following summarizes the percentage (decrease) increase in rolled product shipments versus the comparable previous year period:
North America	(7		)%	(6		)%	(2		)%	8		%	(2		)%	13		%	9		%	9		%
Europe	(2		)%	(6		)%	(3		)%	(4		)%	(4		)%	(4		)%	—		%	(2		)%
Asia	(8		)%	(6		)%	(16		)%	(7		)%	(9		)%	1		%	2		%	9		%
South America	(4		)%	3		%	(5		)%	(7		)%	(3		)%	7		%	8		%	17		%
Total	(2		)%	(2		)%	(4		)%	—		%	(2		)%	4		%	4		%	6		%



Changes in Segment income	North America			Europe			Asia			South America			Eliminations (A)			Total
Segment income - Three Months Ended December 31, 2016 (B)	$	90		$	44		$	40		$	81		$	—		$	255
Volume	23			(3		)	11			23			(8		)	46
Conversion premium and product mix	7			2			(9		)	(2		)	3			1
Conversion costs (C)	(2		)	3			1			9			4			15
Foreign exchange	—			6			—			(3		)	—			3
Selling, general & administrative and research & development costs (D)	(11		)	(2		)	—			(8		)	(4		)	(25		)
Other changes (E)	4			—			—			7			(1		)	10
Segment income - Three Months Ended December 31, 2017	$	111		$	50		$	43		$	107		$	(6	)	$	305



	Change in Price		Change in Fair Value
Electricity	(10	)%	$	(4	)
Natural Gas	(10	)%	(6		)
Diesel Fuel	(10	)%	(1		)



	Change in Exchange Rate		Change in Fair Value
Currency measured against the U.S. dollar
Brazilian real	(10	)%	$	(22	)
Euro	10	%	(39		)
Korean won	(10	)%	(31		)
Canadian dollar	(10	)%	(4		)
British pound	(10	)%	(19		)
Swiss franc	(10	)%	(40		)
Chinese yuan	10	%	(8		)