Mukesh Ambani-run Reliance [Get Quote] Retail, on Tuesday tied-up with UK-based toy retailer, Hamleys, and is likely to commence operations from April next year.

Reliance Retail will invest around Rs 125-crore (Rs 1.25 billion) to set up 20 stores over a period of seven years.

"We will invest Rs 125-crore for 20 stores that are going to be set up in metros as well as mini-metros by 2016," Reliance Retail's President and Chief Executive--Lifestyle, Bijou Kurien, told PTI.

The stores would be of two kinds--flagship stores and regional stores.

The area of flagship stores will be around 20,000-30,000 square feet while the regional outlets would be around 10,000-15,000 square feet, Kurien said.

The flagship stores would be set up in Mumbai and Delhi by 2009, while the remaining stores would be set up in Bangalore, Ahmedabad, Kolkata and Pune, amongst other places.

Speaking on the revenue model of the exclusive franchisee agreement signed between the two companies, Kurien said, "the financial investment will be from Reliance's side, while Hamleys will do value-addition to the stores."

The UK-based entity would design the stores, train personnel and the like.

Reliance would pay a royalty to Hamleys.

The flagship stores will have around 12,000 stock keeping units (SKUs), Kurien said, adding "we have not yet decided on the number of SKUs in the regional stores."

The stores will have both national and private label brands. Hamley's has around 1,000 unique products, he said.

Apart from toys, the stores would have a theatre-like atmosphere and an environment that children would enjoy. Puppet shows and clowns would also be added to entice children, he said.

The toy market in India is mostly unorganised, said Hamleys' Trading Director, Paul Currie.

"India's toy market is estimated at around Rs 2,500-crore (Rs 25 billion). The organised sector is of around Rs 500-crore (Rs 5 billion) or about 20 per cent of the total market," Currie said.

Many toys in the country were being sourced from China and south-east Asia as they were cheaper, he said.

Hamleys, which will celebrate its 250th anniversary in 2010, is also looking at outsourcing and manufacturing units in India at a later stage, Currie said.

"Presently, we outsource toys from the Far East and various other places and these undergo a rigorous quality check," he said.