Heat oil in a pan and add dried red chilli

Fry it for a minute and then remove it from pan and keep it aside

Add finely sliced onions and salt and saute it until onion becomes sauteed

Add chilli powder and fry it for a minute

Add sliced tomato and saute it till it becomes soft

Add coconut and mix well

Remove from fire and let it cool

Grind the dried red chillies

Add onion, tomato and coconut mixture and grind it to a smooth paste. Don't add water. Serve it with idli or dosa :)