Wash, drain and soak rice in enough water for at least 4-5 hours.
In a small bowl, add warm water, dissolve sugar and yeast, and let it aside for 10 mins.
In a blender, add the soaked rice, cooked rice, chopped coconut, yeast mixture, and salt.
Blend to make a smooth batter, then pour the batter into a mixing bowl.
Add coconut water, mix it well to make a runny but thick batter, adding more water if needed.
Cover and let it aside in a warm place to ferment for at least an hour.
Once the batter has fermented and become foamy and light, mix it again.
Heat a non-stick kadhai or appam pan, pour a ladle of the batter into the pan, then tilt the pan in a circular motion until the batter spreads all over the inside of the pan.
Cover with a lid and cook for about 2 mins or until the edges become golden. Use a spatula to remove the appam from the pan.
Use the same steps to make more appams from the remaining batter.
The appams are ready! Serve with vegetable stew or fresh coconut milk and enjoy.