The present study was undertaken to measure the economic efficiency in paddy processing in Siruguppa taluk of Karnataka state. The data related to value addition, assets possession and variable costs were collected through personal interview method with the help of pre-tested schedule. This study area was selected mainly because of majority of the rice processing mills were located in this taluk. The sample size was selected in this taluk was Thirty processing units. The analytical tools were employed for this study was business ratio analysis like Total asset turnover, Returns on assets, Net profit margin, Capital turn over, Benefit cost ratio, Gross ratio (%) and Operating ratio (%) etc. The profitability ratios such as returns on assets, net profit margin and returns on capital employed and benefit cost ratios were relatively higher in large size rice mills, compared to medium and small size rice mills. This was mainly due to higher gross returns as well as net returns realized by large mills. By and large the capacity utilization in different categories of rice mills was poor (56.30%). Among the different categories, the capacity utilization in small mills (51.14%) was considerably lower than that of large (56.51%) and medium (61.05%) size rice mills. This was mainly due to lack of working capital to procure sufficient quantity of raw material operate the mills throughout the year especially in case of small size rice mills and also may be lack of proper facilities and conditions for sun drying of parboiling paddy during rainy season. Small size rice mills (2.55 units/Q) consumed higher electricity units when compared to medium (2.48 units/Q) and large (2.30 units/Q) size rice mils. Therefore, small mills, by increasing their capacity utilization with the additional working capital, can increase the power use efficiency and thereby reduce cost of processing.