Soak the rice in water for 5-6 hours and strain, then put in the grinder and grind into a smooth paste. Take about two ladles of this batter and to this add 50 ml of water. Boil until it thickens.
Mix this thick batter with the remaining batter. Add in fermented coconut water. (coconut water will ferment when left at room temperature for 6 to 8 hours.)
Add salt and sugar to taste. Set the mixture aside for another 6 hours to allow for fermentation. Mix well after it is fermented. Take a small wok, heat and grease it with some oil. Add a tablespoonful of batter and gently rotate the dish so that the batter covers all sides.
Cover the wok and allow the batter to cook till the edges turn brown and the centre of the appam is cooked.
Ensure that the centre of the appam is at least an inch thick by pouring more batter in the middle. Serve hot.