Heat kadai, pour 1 tbsp oil. Add mustard and then curry leaves when the mustard splutters. Add the cut onions, salt, green chilly, turmeric powder and saute well till the onion turns light brown in colour. Add tomato and sauté for 5 minutes.
Grind the grated coconut and make a paste. Add the paste to the above mixture and let it boil.
This chutney can be served with chapathis.