Coconut Chutney is an accompaniment to dosa (Black gram pancakes) or Vadai. I made this to dip black gram vadai . This tastes so beautiful like shop bought. You can use this for string hoppers too.

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This will serve 6 people. All you need is a cup of desiccated coconut and 1/2 cup of water. Microwave 3 minutes and leave to cool down. If you are using the fresh coconut that is the best. Cut some onions, I used some birds eye chillies, (Use red chillies instead) and a tea spoon full chillie powder and one inch ginger. Add everything in to a food processor and grind to fine paste.
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Add some oil in to a pan. Make it very hot.
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Add a teaspoon full mustard seeds, crushed red chilles and some curry leaves.
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Fry until golden brown.
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This part is optional but will give more taste.
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Fry until the onions are translucent.
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Add the ground coconut in to the hot oil.
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Stir well about one minute.
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After I added 1/2 cup of thick coconut milk.
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Cook until slightly thick about one minute.
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Serve with vadai or dosa. Even will be nice with rice or as a dipping sauce.