If you are using homemade paneer, you can crumble it with hand. If you have store bought paneer, thaw it at room temperature and then crumble or grate the paneer and keep it aside.
Heat ghee in a pan, add the crumbled paneer. Saute the paneer in ghee till they are light brown.
Next, add sugar to the pan. Mix well. The sugar gets melted and makes the crumbled paneer soft again.
Saute the paneer in low flame till its dry. Add 2 tablespoon milk and keep mixing the paneer mixture till the paneer mixture is dry and crispy.
Now the the paneer mixture is crispy and brown. Allow it to cool off completely.
Take the crispy Paneer crumble in a mixer jar. Grind it to smooth powder.
Add 2 tablespoon of milk and grind it again to get smooth paste. Set this paste aside.
Heat 1 teaspoon of ghee in a pan. Add unsweetened khoya. Adding khoya enhances the flavor. but its completely optional.
Saute the khoya till its light brown.
Add the ground paneer paste. Combine well.
Keep stirring and when the mixture becomes dry, add 1 tablespoon milk and keep stirring. Again add milk when the mixture is dry.
Keep stirring the mixture till the milk is absorbed and the mixture becomes non sticky without sticking to sides of pan. Add cardamom powder and give a good mix. Switch off the flame.
Take the Peda mixture in a bowl. Shape the mixture into cylindrical shaped pedas'. Coat each shaped peda with sugar crystals.
Delicious Dharwad Peda is now ready!!!