De-shell and clean the prawns carefully, keeping the tails intact. Rub the prawns with a little turmeric powder and salt. Heat 2 tbsp of mustard oil in a frying pan till smoking hot. Cool the oil. Add the prawns and fry till light golden (be careful not to over fry the prawns). Keep aside.
Lightly crush the cinnamon, cardamom and cloves in a mortar and pestle. Add remaining oil in the same pan, add the bay leaf and the ground spices and stir till the spices release their aroma.
Add the onion and ginger pastes and fry on a low flame till they turn golden brown. Add the sugar, turmeric powder and chilli powder and saute until oil is released from the fried masala. (Splash a little water if the spice mixture is getting a bit too dry)
Lower the flame and add the coconut milk while continuous stirring. (You wouldn't want the coconut milk to curdle, so continuous stirring is imperative). Add 1/2 cup of warm water. Bring the curry to a light simmer and add the fried prawns.
Cover and cook on a low flame till the prawns are cooked. Add the slit green chillies and salt to taste. Once the gravy thickens, add the grated coconut and cook for 2-3 minutes.