In the event the government does finally sell off part of Indian Oil Corporation's retail business, the PSU is likely to be very badly affected.
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But what is more important, the retail business contributes around 40-45 per cent of the profits of marketing companies like IOC.
So, depending on how many of IOC's retail outlets the government decides to sell if it wants to match what HPCL has, it will have to sell off half the IOC/IBP outlets - IOC will lose that much of its profits.
The refinery and pipeline business, which is what IOC will effectively be left with, typically contribute 30-35 per cent of its profits.
More important, with its 8,000 retail outlets (or half of them) sold, IOC will have a serious problem in selling the produce of the 8 refineries it owns - today, a little over 42 per cent of the country's refining capacity is owned by IOC.
If the hived off IOC is sold to Reliance Industries, IOC may have to go to Reliance to ask it to lift its products - the ultimate irony, since it was just some years ago that Reliance was asking IOC to sign an agreement to lift the products of its Jamnagar refinery
