Despite operating in an extremely tough macroeconomic environment and being up against regulatory uncertainty, corporate India has done reasonably well in the three months to March 2011. Indeed, it was some of the larger companies that turned in numbers that were somewhat below expectations, including Reliance Industries, DLF, Bharti Airtel, Maruti and SAIL. Moreover, there weren?t too many surprises from the heavyweights to make up for the disappointments as a result of which net profits for 27 Sensex companies have risen just a shade over 4% year-on-year. For a sample of 2,413 companies, the top line has grown a robust 22.6% y-o-y, partly due to higher inflation. Not surprisingly, gross margins have been under some amount of pressure given the spurt in prices of raw materials though the fall has been a manageable 32 basis points y-o-y. Nonetheless, most companies have managed to protect their operating profit margins by saving on other items of expenditure; for instance many of the FMCG companies have spent less on advertising and promotions and the rise in staff costs have been relatively lower than in previous quarters. Also, companies are clearly operating more efficiently and are able to get economies of scale as is seen from the flat raw materials to net sales ratio, which rose just 32 basis points. As such, operating profits have increased by a smart 24% y-o-y. However, a sharp rise in interest costs and larger provisions for depreciation have crimped the bottom line with net profit growing just 17% y-o-y. This is a creditable performance given that there hasn?t been too much other income to boost the bottom line; other income in the March 2011 quarter was up just 6%. The market appears to have taken the results in its stride and has pencilled in some degree of earnings downgrades.