Network-on-Chip (NoC) is thought to be an effective packet-switched on chip arrangement for System-on-Chip (SoC) paradigm. Using router in a NoC, higher throughput is facilitated which is desirable for dealing with the difficulty of current systems. For proper usage of the communication bandwidth and to diminish transportation delay, an intelligent routing mechanism is required. Also a proper buffer management is essential to reduce packet drops and area overhead. Several routing algorithms and buffering techniques are proposed so far. In this paper, we propose a modified XY routing algorithm coupled with an on-demand buffer allocation concept for a mesh on-chip network and compare the performance of our algorithm with other frequently used algorithm named as Odd-Even and DyAD routing. Simulation results indicate that the proposed algorithm achieves better performance than traditional XY-routing and other algorithms in terms of latency and throughput. Again, the effect of using different number of virtual channels in the router buffer is also studied here.