Technical advances in power electronics and generation capabilities have made the possibility of Distributed Generation (DG) systems. A microgrid is an effective division of a distributed generation system which is analysed by its capability of its operation both as a grid connected and isolated condition. All independent sources operate separately when the main grid is capable of supporting voltage. In case of islanded mode, dynamics is greatly influenced by the connected sources and on the power handling ability. Control of power interfaced converters is of major concern in both the modes of operation. In grid connected mode of operation, the current of the voltage developed needs to be controlled whereas, in Isolated condition, building of voltage is required.In the islanded mode of operation, all the resources in a microgrid should be controlled in coordination with each other so that a stable and a balanced three-phase sinusoidal voltage is obtained. Conventional droop controller is modified for accurate sharing among power converters even when the measured voltage and frequency of the inverters are not the same. Droop coefficients are estimated so that power sharing is more accurate for the respective changes in the power values. They also enable the flawless transfer of the operation mode from islanded to grid connected or vice versa