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.

Also Read Govt to mull sale of IOC retail operations The Divestment Development: Complete Coverage

Today, IOC controls around 52 per cent of the country's retail outlets along with its newly-acquired IBP (6,500 for IOC and 1,500 for IBP).

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.