To make the kurma paste, add grated coconut and poppy seeds (or cashews) to a grinder jar. Pour little water and make a fine paste. Or If you want to use yogurt, add it to a bowl and whisk well with a fork. Keep this aside.
If using yogurt, you need to add the diced potatoes to a pot and cover them partially with water. Cook until 90% done. Skip this step if using coconut.
Pour oil to a hot pan. When the oil becomes hot, reduce the flame to low and add all the whole spices - bay leaf, star anise, cloves, cinnamon, green cardamoms, mace and shahi jeera or cumin.
When they begin to sizzle, add the fine chopped onions. Increase the heat to medium and saute them until golden.
While the onions fry, chop the tomatoes and the potatoes. keep the tomatoes aside & the potatoes in a bowl of water.
When the onions are golden, add ginger garlic paste. Fry until the raw smell goes away, for about 40 to 60 seconds.
Transfer the tomatoes and sprinkle salt and turmeric. Fry until the tomatoes turn completely soft and blend well with onions.
Next add mint and fry for a minute.
Add garam masala, red chili powder and crushed fennel. Saute for 2 to 3 minutes until the raw smell of chili powder goes away.
Add the coconut paste and mix well. If using yogurt in place of coconut, add 2 tablespoons of the onion tomato masala (from the previous step) to the yogurt and mix well. Lower the heat and pour this to the pan slowly.
Mix well and fry until the mixture begins to smell good. Add potatoes and saute for 2 minutes.
Pour 1½ to 1¾ water and stir. Bring it to a rapid boil. Lower the heat to medium and cook covered till the potatoes are fully cooked and oil rises to the top. You can also pressure cook on a low flame for one whistle.
If the aloo kurma is runny, increase the flame and cook uncovered to evaporate some of the water. Turn off the heat when the kurma reaches a thick gravy consistency. Taste test and adjust salt.
Add chopped coriander and Serve potato kurma with biryani, pulao or chapathi.