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Commitments and Contingencies
 6 Months Ended
Mar. 31, 2013
Commitments and Contingencies [Text Block]

16. Commitments and Contingencies

(i) Capital Commitments

As of September 30, 2012 and March 31, 2013, the Company had the following contracted capital commitments:

    September 30,     March 31,  
    2012     2013  
For construction of buildings $ 10,820,593   $ 317,186  
For purchases of equipment   3,630,112     2,379,826  
             
  $ 14,450,705   $ 2,697,012  

(ii) Land Use Rights and Property Ownership Certificate

Pursuant to the land use rights certificate relating to the Company’s Tianjin facility, the Tianjin government had requested that the Company complete the construction of the Tianjin facility before September 30, 2008. In February 5, 2010, the Company completed one part of the industrial campus construction and received the property and land use right certificate, however, the construction in the rest of the land was still not completed. As of March 31, 2013, the Company was in the process of negotiating with the relevant government bureau for the extension of the completion date. If the Company fails to obtain the approval for the extension of the completion date from the relevant government bureau regarding the rest of the land, there is a risk that the land use rights certificate will become invalid. However, management believes that this possibility, while present, is remote.

Pursuant to the land use rights certificate that the Company obtained relating to the Research and Development Test Centre being constructed in Shenzhen, the Company must complete at least 25% of the construction of the Research and Development Test Centre by September 30, 2008. On November 11, 2008 and May 27, 2009, the Company has signed two supplemental agreements with Shenzhen government to increase the dimensions of the Research and Development Test Centre. According to the supplemental agreements, the Company is required to complete the construction by May 6, 2011. According to the property ownership and land use rights certificate, such rights may not be pledged without the approval of the relevant government office. The Company is required to pledge its property ownership and land use rights certificate in relation to the Research and Development Test Centre to China Development Bank according to the loan agreement entered into with it. On April 7, 2010, the pledge of the land use rights certificate to China Development Bank was approved by the relevant government bureau. On April 20, 2010, the relevant land use rights certificate was pledged to China Development Bank.

On March 26, 2012, the Company purchased new insurance policy for its manufacturing facilities at BAK Industrial Park in Shenzhen, China. Under the new insurance policy entered into with Ping An Property & Casualty Insurance Company of China, Ltd, the insured amount for our manufacturing facilities at BAK Industrial Park is RMB663,612,000 (approximately $106.9 million) for the period from March 27, 2012 to July 26, 2013.

On July 2, 2012, upon the expiry of the existing insurance policy, the Company acquired a new insurance policy from Ping An Property & Casualty Insurance Company of China, Ltd. The insured amount for Company's manufacturing facilities in Tianjin is RMB260,142,199 (approximately $41.9 million) for the period from July 2, 2012 to July 2, 2013.

The Company is not able to insure its new Research and Development Test Centre to be constructed in Shenzhen, China, until it receives the required property ownership and land use rights certificates. Upon receipt of such certificates, the Company intends to procure such insurance. As discussed above, the Company has obtained the land use rights certificate to the land relating to these facilities. The application for a property ownership certificate is in process with respect to the Company’s facilities in Shenzhen.

(iii) Guarantees

In order to secure the supplies of certain raw materials and equipment and upon the request of suppliers, the Company has given guarantees of bank borrowings with maximum obligation period of from one to three years to certain parties to the maximum extent as follows:

    September 30,     March 31,     Guarantee  
Guarantee for   2012     2013     Period  
                   
Shenzhen Tongli Hi-tech Co. Ltd. - a non-related party $ 2,386,369   $   -     4/1/2012-3/31/2013  
Tianjin Huaxiahongyuan Ltd. - a non-related party   2,386,369     2,416,393     4/25/2012-4/25/2015  
Shenzhen Yasu Technology Co. Ltd. - a non-related party   9,545,476     9,665,571     5/24/2012-6/25/2015  
Shenzhen Langjin - a non-related party (Note5(b))   9,545,476     9,665,571     8/15/2011-8/14/2014  
Tianjin BAK New Energy Research Institute Co., Ltd.- a related party   11,247,753     6,443,714     7/2/2012-10/15/2013  
  $ 35,111,443   $ 28,191,249        

Tianjin BAK New Energy Research Institute Co., Ltd (“Tianjin BAK”) is a company under the common control of Mr Xianqian Li, the Company’s CEO. During the quarter ended March 31, 2013, the Company has terminated a loan guarantee to Tianjin BAK to the extent of RMB50,700,000 (US$8,167,408) upon repayment of the loan by Tianjin BAK on March 23, 2013

On October 15, 2012, Shenzhen BAK and BAK Tianjin entered into guarantee agreements with Bank of Dalian under which Shenzhen BAK and BAK Tianjin will guarantee Tianjin BAK, a related party, for bank borrowings to the extent of RMB10,000,000 (approximately $1.6 million) under the guarantee period from October 15, 2012 to October 15, 2013.

The above guarantees are for the Company’s raw material suppliers except the related party Tianjin BAK New Energy Research Institute Co., Ltd. Shenzhen Tongli Hi-tech Co. Ltd is a battery case supplier, Shenzhen Yasu Technology Co. Ltd., Tianjin Huaxiahongyuan Ltd. and Shenzhen Langjin Technology Development Co. Ltd are the Company’s former chemical raw material suppliers. As of March 31, 2013,except for Shenzhen Langjin Technology Development Co. Ltd, the Company is not entitled to identify for any losses, damages and claimed arising from these guarantee.

On April 3, 2013, the Company entered into a guarantee agreement with Jilin Province Trust & Investment Co., Ltd, under which the Company agrees to guarantee loans to its chemical raw material supplier, Hubei Yanguang Energy Technology Co. Ltd., a non-related party, to the extent of RMB30,000,000 (approximately US$4.83 million) that it owes to other parties. The guarantee period is from April 3, 2013 to April 2, 2014. The Company believes that Hubei Yanguang Energy Technology Co. Ltd owns assets including land use rights covering an area of approximately 1,330,000 square meters and buildings thereon in Hubei, the PRC, and should be financially capable to repay the above mentioned loans upon maturity in April 2014.

On January 5, 2013, the Company received a notice that the Shenzhen Langjin Technology Development Co. Ltd. had defaulted on their loan guaranteed by the Company and two other companies and demanded immediate payment of the full guaranteed amount RMB60,000,000 (US$9,665,571) from the Company and two other co-guarantors. As the two other co-guarantors had the ability to pay RMB14,000,000 (US$2,255,300) only, the Company was demanded to pay the remaining balance. As of March 31, 2013, the Company has paid China Agricultural Bank an amount of RMB46 million (US$7.4 million) , and received an amount of RMB9 million (US$1.5 million) that it claimed back from Shenzhen Langjin. On April 28, 2013, the Company received a further indemnification amount of RMB19 million (US$3.1million).

During the six months ended March 31, 2012 and 2013, the Company recorded a net loss arising from loan guarantees of nil and $2.8 million, respectively. During the three months ended March 31, 2012 and 2013, the Company recorded a reversal of the net loss arising from loan guarantees of nil and $4.6 million, respectively.

The management reviewed all the guarantees and assessed the fair value of the obligation arising from them and considered it is immaterial to the condensed consolidated financial statements except for the obligations relating to Shenzhen Langjin.

(iv) Outstanding Discounted Bills and Transferred Bills

From time to time, the Company factors bills receivable to banks and endorses the bank acceptance bills received to its suppliers, vendors or other parties for settlement of its liabilities to these creditors. At the time of the factoring and transfer, all rights and privileges of holding the receivables are transferred to the banks and the creditors. The Company removes the assets from its books and records a corresponding expense for the amount of the discount.

The Company's outstanding discounted and transferred bills as of September 30, 2012 and March 31, 2013 are summarized as follows:

    September 30,     March 31,  
    2012     2013  
             
Bank acceptance bills $ 21,962,849   $ 41,002,935