Take 1/3 cup tightly packed grated coconut, 1/2 tbsp chopped shallots or sambar onions/pearl onions, 2 to 3 dry red chilies and 1/2 inch ginger in a chutney grinder. if you want to tone down the raw taste of red chilies, then just roast them lightly in a pan. You can also saute them in a bit of coconut oil. Apart from ginger, you can also add garlic.
Add salt and 1/4 cup + 1 tbsp water.
Grind to a smooth chutney.
Take the chutney in a small steel bowl or pan and keep aside.
Heat 1 tbsp coconut oil in a small pan.
Add 1/2 tsp mustard seeds and allow them to crackle.
Then add 1/2 tsp urad dal.
Fry the urad dal till they are a maroonish golden.
Add 8 to 10 curry leaves and 1 tbsp chopped shallots or sambar onions/pearl onions.
Saute till the shallots are light golden.
Add the tempering mixture along with its oil to the red coconut chutney.
Stir and mix well.
Serve the kerala style red coconut chutney with idli, dosa, medu vada or uttapam.