Clean mushrooms with a damp cloth or brief rinse and pat dry; slice into 6 mm (1/4 inch) thick slices. Peel and finely chop the onion. Crush or finely chop the garlic. If using, slit the green chili lengthwise and chop the tomato into small pieces.

Make coconut paste

If using fresh grated coconut: combine the grated coconut and 60 ml water in a blender and grind to a smooth but slightly coarse paste (so it still has some texture). If using canned coconut milk, use 100 g coconut milk instead and skip grinding.

Temper spices

Heat 2 tbs oil in a wide skillet or kadai over medium heat. When hot, add 1 tsp mustard seeds. When they begin to pop, add 1 tsp urad dal and 0.25 tsp fenugreek seeds (if using). Stir and fry for 30–45 seconds until dal begins to turn light golden. Add 10 curry leaves and stir for 10 seconds more.

Sauté aromatics

Add the chopped onion to the pan and sauté on medium heat for 5–6 minutes until translucent and starting to brown at the edges. Add the crushed garlic and slit green chili; sauté for 1 minute until fragrant, taking care not to burn the garlic.

Cook mushrooms

Add the sliced mushrooms to the skillet, increase heat to medium-high, and sauté for 5–7 minutes, stirring occasionally, until the mushrooms release their moisture and begin to brown. Sprinkle 0.5 tsp turmeric, 0.5 tsp red chili powder, 1 tsp coriander powder, 0.25 tsp freshly ground black pepper and 1 tsp salt over the mushrooms. Stir to coat and cook for 2–3 minutes more so the spices bloom.

Add tomato & simmer

Add the chopped tomato and cook for 3–4 minutes until it softens and mixes into the mushroom mixture, creating a slightly thick base.

Incorporate coconut paste

Lower heat to medium-low. Add the prepared coconut paste (or 100 g coconut milk) to the mushrooms and stir thoroughly to combine. If using coconut paste that is thick, add 2–3 tbs water to loosen the gravy to a medium consistency. Simmer gently for 4–6 minutes, stirring occasionally, until the raw coconut smell disappears and the flavors meld. Taste and adjust salt and spices as needed.

Finish

Turn off the heat and stir in 1 tsp ghee, if using, for a glossy finish. Sprinkle a few torn curry leaves or freshly ground black pepper on top.

Serve

Serve Mushroom Varatt hot as a side with steamed rice, appam, dosa, or neer dosa. It also works well as a curry alongside rotis or chapati.