Kalyan Jewellers PESTLE Analysis
Detailed PESTLE analysis of Kalyan Jewellers examining political, economic, social, technological, legal & environmental factors.
Political Factors:
Kalyan Jewellers is a leading retail jewellery chain in India. It also has operations in the Middle East. The entity also procures gold from metal gold loans at comparatively lower interest rates than fund-based loans. However, these loans are subject to the regulations of the Reserve Bank of India. There is a risk of change in these regulations, which could negatively affect the financial performance of the business. For example, new regulations may not permit extended borrowing period or lower interest rates. Also, the business has to obtain relevant statutory and regulatory permissions, licenses for its operations. There is a possibility that these approvals may have expired their time period and are required to be renewed. Also, these regulatory compliances may be very cumbersome to meet, and involve heavy expenditures. The company cannot guarantee that they can always meet such regulatory. There is also the risk of authorities not issuing regulatory approvals in a timely manner or even cancelling such renewals.
Image: company website
This concludes the political factors in the Kalyan Jewellers PESTLE Analysis.
Economic Factors:
Below are the economic factors in the PESTLE Analysis of Kalyan Jewellers:
A company in luxury products is always influenced by several economic factors. The Covid-19 pandemic has had a deleterious impact on the financial performance of Indian jewellery retail industry.
Kalyan Jewellers, which has presence in India and Middle East, faced huge challenges due to national lockdowns, restrictions on travel and business. The company had to shut down its showrooms, manufacturing facilities and purchasing centers during the months of March to May, 2020 – the period of lockdown. This also mean net zero sales during the period, severely impacting the cash flow of the business. The company also faced delays in receiving monthly installments from its customers. Apart from this, the company earns majority of its revenue from operations from India, and the remaining from Middle East. There are several external factors which may affect its financial performance. These are factors like inflation/recession, increase in interest rates, taxation policy, exchange rate fluctuations, consumer credit availability, consumer debt and confidence, etc. Events like recession could reduce the disposable income of consumers and force them to spend less or postpone buying jewellery. This could impact the business, in terms of reduced sales and profitability.
Read more about Kalyan Jewellers
Social Factors:
Following are the social factors impacting Kalyan Jewellers PESTLE Analysis:
Jewellery business in India is associated with festivals periods. Auspicious events like Akshay Tritiya, Durga Puja, Dhanteras, Diwali, Christmas result in increased sales for the business. However, there is always the risk of unexpected slowdown during such peak seasons, and may adversely affect the financial performance of the business. Kalyan Jewellers is also spotting new opportunities post-lockdown in different states in India. For example, in Tamil Nadu, customers usually buy jewellery when a girl child is born. In Kerala, it is common to buy big jewellery, a week or month before the weddings. There are also changes in preferences of youngsters, who usually spent their salaries in availing travel and hospitality services. Many of them now prefer to buy gold and diamond and save for future purposes. Post-lockdown, many customers booked jewellery in advance, anticipating a rise in prices in the future. The brand is also planning to expand its stores in Chennai, Hyderabad, Madurai, and cities in Kerala and Maharashtra.
Technological Factors:
The technological factors in the PESTLE Analysis of Kalyan Jewellers are mentioned below:
Kalyan Jewellers relies on its Information Technology system to maintain connectivity in all its functions and retail outlets. Despite this, there is still the risk of IT systems breaking down, leading to loss of important data. This could further result in the company not being able to efficiently monitor, record and analyze information related to inventory, financial data, etc and severely affect the normal functioning of the business. Furthermore, the company data backup facilities are located in Thrissur, Kerala. Here, again there are two risks: loss of data due to natural disasters and hacking of or breaches to the company’s IT systems. Both the scenarios present significant material damage to the financial performance and operations of the business.
The company maintains customer data for brand promotion activities and creation of targeted advertisements.
Legal Factors:
Following are the legal factors in the Kalyan Jewellers PESTLE Analysis:
Kalyan Jewellers has many trademarks registered, including their logos and brands. Some of these trademark brands are: Kalyan, Tejasvi, Ranh, Antara, Hera, Mudhra, Nimah, Ziah, Anokhi, etc. The company is also in the process of registering following Indian trademarks: Muhurat@ Home, Dhanvarsha, Sankalp. However, the company still faces the risk of possible trademarks infringement from third parties. Such illegal use of trademarks can damage the reputation or financial performance of the company. The company may have to incur high legal costs and go through time-consuming process to win such cases. Apart from this, it has to follow very stringent labour regulations in India. The law sets forth very long procedures for union formations, conflict resolution and termination of employees, and even rules related to certain financial payments after retrenchment of employees. There is also the risk of contract manufacturers creating a union to increase the cost of procurement. Any increase in payments to such manufacturers or increase in the salaries of employees due to strikes could negatively affecting the operational and financial conditions of the business.
Environmental Factors:
In the Kalyan Jewellers PESTLE Analysis, the environmental elements affecting its business are as below:
Kalyan Jewellers has a good presence in South India, with retail outlets in Kerala, Tamil Nadu, Andhra Pradesh, Telangana, Pondicherry and Karnataka. In fact, in 2020, the company earned about 50% of its revenue from South India alone. Thus, it faces the risk of adverse weather conditions or unforeseen circumstances in this region. These include fires, cyclones, earthquakes, floods, infectious diseases etc in this region. For example, the floods in Kerala in 2019 did affect the sales of the brand. The company even has to temporarily shut down its retail outlets and “My Kalyan” centres in south India.
This could significantly affect the sales of the brand. Similarly, it faces the risk of such unforeseen circumstances in India and Middle East. The pandemic, Covid-19 has clearly affected the financial performance of the business, particularly during the months of the lockdown from March to May, 2020, which saw zero net sales.
To conclude, the above Kalyan Jewellers PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
Browse analysis of more brands and companies similar to Kalyan Jewellers PESTLE Analysis. This section covers many brands and companies.
Continue Reading:
The names and other brand information used in the PESTLE Analysis section are properties of their respective companies. The companies are not associated with MBA Skool in any way.
