It works on the principle of electro magnetic induction i.e. when armature(coil). moves continuously in magnetic field of magnet then a current induced in coil whose direction is determined by Fleming right hand rule.

-As the coil, rotates the two rings attached with it also rotate .The brush P and Q maintains the contract with the rotating ring s(R1 and R2) when the coil starts rotating with arm AB moving up and CD moving down (closewise) cutting the magnetic lines.
- According to Fleming's right hand rule , current is induced in these arms in the direction ABCD.After half rotation , arm CD moves up AB moves down.
- As a result , the direction of current in each segment changes giving rise to net induced current in the direction DCBA . Thus, after every half rotation , polarity of current in the respective arm change's , thereby generating an alternating current.
Magnitude of induced EMF in a generator can be increased by :-
1) increasing the number of turns of armature.
2) Increasing the areas of the armature.
3) increasing the speed of rotation of the ammature.
4) increasing the strength of the magnetic field.