Grate the coconut finely. Fry it without any ghee or oil for a few minutes in a shallow pan.
Fry khoya separately in a heavy bottomed pan till it becomes light brown. Dissolve the kesar and colouring in water. Add sugar and heat, till sugar is dissolved. Add coconut and khoya to sugar syrup and mix well.
Grease a plate with ghee and spread the khoya mix on it evenly. Leave till set. When set firmly, cut into diamond shaped pieces or into squares.