Prepare the coconut masala - Heat 2-3 tbsp oil in a pan. Fry coconut until light brownish. Reduce the flame. Add coriander powder, chilli powder, turmeric powder, jeera and fenugreek powder. Fry the masala powders for a couple of minutes. Add oil if needed. Switch it off. Keep it aside and let it cool down.
Clean the mushrooms by rubbing the dirt off with a brush or rinsing them quickly under running water. Do not soak them in water for long as they tend to become soggy. Slice it into uniform thin slices.
Slice shallots. Grind/Crush the ginger into a fine paste. Heat oil in a pan. Saute shallots, ginger and curry leaves until shallots are brownish in color.
Add mushrooms into the pan. Sprinkle salt. Mix it. Mushrooms have a ton of water in them, which seeps out while cooking. Keep the flame in medium high heat. Don't cover the pan. Stir it every 3-4 minutes. Make sure that water has evaporated.
Grind the coconut masala prepared in 2nd step with 1 cup water. If needed, add more water. Grind this into a fine paste.
Add grinded coconut masala and salt into the mushrooms.
Extract water from the soaked tamarind. Discard the tamarind. We will just use the extracted water. Add extracted tamarind water as needed according to your taste.
Add water as needed, based on the consistency you need for the curry. Adjust salt. Cook it until it boils.
Garnish - Heat oil in a small pan. When the oil is hot, splutter mustard seeds. Then fry dried red chilly and curry leaves. Add it to the curry.