The present study was conducted to estimate conversion ratios of paddy to rice in various paddy processing units in Punjab. Primary data were collected from the two districts of Punjab, namely Sangrur and Patiala, and a total number of 20 modern and 25 traditional rice mills (hullers) were selected for detailed information. The primary data had a reference year of 2009-10. In Punjab, for processing of paddy, either modern rice mills or the hullers are operating in the villages (on custom-hiring basis). The number of modern/modernised rice mills in Punjab has gone up from practically 'nil' in 1970 to nearly 1965 in 1993 and to 3778 in 2011. The average modern rice mills in the study area had the processing capacity of 1.6 Ton/Hr. while it was 150 Kg/Hr. for the traditional rice mills/hullers. While the milling ratio in modern rice mills was around 69% while the ratio for traditional rice mill using steel hullers for dehusking it was slightly lesser at 68.7%. In hullers, there was excessive loss in the form of coarse and fine brokens. In rice milling process, the total cost was found to continuously increase from about Rs. 64/q in the year 2007-08 to about Rs 75/q in the year 2009-10 with an average of about Rs 69/q over this period. The variable costs contributed about 69 per cent of the total cost of processing. The total cost of paddy purchase including marketing by modern rice mills was found to vary between Rs. 1686/q in 2009-10 to Rs. 2315/q in 2008-09, with an average of Rs. 1909/q over the period of 3 years. On the other hand, the hullers had to incur the average cost of merely about Rs. 87/q as these were operating on the custom hiring basis only and did not incur marketing/processing cost. The net profit for modern rice mills was found to be the highest during 2008-09 due to higher price of paddy purchased/sold during the year. The average net profit fetched was found to be about Rs. 313/q for modern rice mills and the same was about Rs. 87/q for hullers. More than 75 per cent of the rice processed by the millers was directly sold to the wholesalers over the different years. Over the last 3 years, one quintal of paddy yielded 66.7 kgs of fine rice in modern units and broken rice was curtailed up to 3 per cent only. The average modern rice mills were found to process about 352 tonnes of paddy per annum (98.5 per cent of total paddy processed during 2009-10), while the traditional rice miller/huller processed only a meagre quantity (about 5 tonnes) of paddy per annum. The quality of rice bran obtained was better and more preferred as compared to the traditional hullers. Over the last 3 years, the annual installed capacity was about 0.44 tonnes/hour in the case of conventional units as compared to about 1.60 tonnes/hour in modern units. But as compared to the capacity utilization of about 77 per cent in modern units, it was less than 2 per cent in conventional (hullers) units. The lower capacity utilization of conventional mills compared to modern mills could be attributed to the use of conventional technology i.e. manual method of processing like cleaning, parboiling, drying, grading, packing etc, coupled with lesser preference of the people for processing of paddy through hullers due to lower quality of rice and byproducts produced. The inferior rice quality, irregular power supply, lack of adequate and liberal finance for paddy plant modernization and up gradation, lack of government long term planning for promoting food processing industry in the state and problem of space for storage of the produce and shortage of skilled labour were the other major impediments felt by the paddy milling units in the state. The millers were quite confident of modernizing their mills if they were provided with financial assistance, technical advice, electricity, concessions in the present levy system and marketing facilities for products and by-products.