In this study, a proportionate power sharing among the parallel inverters operating in an islanded microgrid is achieved using droop and virtual inductance control. The same droop coefficients are used to achieve the frequency regulation as well. The frequency changes which are inevitable in droop control are measured and used to emulate the behaviour of damping and inertia to the DC link voltage using hybrid energy storage system consisting of battery and supercapacitor units. The proposed DC link voltage regulator restores the DC link voltage quickly by providing power corresponding to the rate of change of frequency and frequency deviation. This reduces the impact of voltage variations on the DC-load and keeps modulation index within the linear range for voltage source inverter. The design aspects of DC link voltage regulator, damping and inertia constants, selection of battery and supercapacitor units based on rating of the DC link voltage are discussed. The proposed decentralised droop control and DC link voltage restoration methods are validated through detailed simulation and experimental studies.