Heat oil in akadai and add sliced onions.Saute till they become golden colour.
Then add tomatoes,chilli and curry leaves to this.Saute for 2 minutes.and keep aside.
Heat another kadai add grated coconut and fry for few minutes .
Add turmeric powder,coriander powder and chilli powder to this and saute for 2 minutes.
Fry for few minutes until coconut turns golden colour..
Allow mix to cool after that grind it in a mixer with enough water to make smooth paste.
Add this ground mix to onion tomato mix.
Put 1/2cup water to this and boil for 2 minutes until gravy becomes thick.Add salt also and mix all together and boil for 2 more minutes.
Now ulli theeyal is ready to serve.