Formal bids for Tata Steel's loss making UK assets are set to be finalised on Monday, with a shortlist being drawn up in next few days and UK business secretary Sajid Javid set to fly out to Mumbai to hold talks with the Indian conglomerate to discuss the final bids.
Monday had been set as the deadline for interested parties to put in their bids and of the seven who had expressed an interest, between one and three companies are expected to go forward to the next stage.
According to UK media reports, Tata is aiming for the end of June to complete the sale.
However, the company's 15 billion pound pension scheme is likely to prove a stumbling block as the potential buyers are hesitant to take on the liability.
The Daily Telegraph reports that to get over the hurdle, sources close to the sale say the UK's Department for Business, Innovation and Skills (BIS) is supporting a proposal backed by the fund's trustees which would see the pension fund "spun off" as a separate entity and effectively become a new scheme.
Under this plan, members would be given a choice of entering the Pension Protection Fund (PPF) or joining the new, spun off scheme, with less generous benefits.
In a bid to get this idea of the ground, Tata could contribute a lump sum and the Government would help to underwrite it for several years.
However, it is understood that the UK's Department for Work and Pensions (DWP) is resisting the idea amid serious questions about the plausibility of a move seen as high risk and flouting the current pensions framework, the paper said.
A Tata spokesperson said the company was "in talks with the government and pension scheme trustees to find a solution for the scheme".
Javid, who is set to visit Mumbai to hold talks with the Tata Group's board, had announced earlier that the UK government is willing to take an equity stake of up to 25 per cent alongside a new owner and offer "hundreds of millions" in financial support in an effort to save the British steel industry, which is struggling under the pressure of cheap Chinese exports and high energy costs.
Over the weekend, it emerged that two of the front- runners to acquire Tata Steel's UK steelworks Indian-origin businessman Sanjeev Gupta owned Liberty House and a management buyout group Excalibur Steel are willing to work together.
It is believed they will submit separate bids but state in the documents that they are willing to work in partnership on a takeover.
Only bidders that are willing to buy the whole of Tata's UK operations, including the loss-making Port Talbot steelworks, have reached the current point in the sale process.
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