In a pan, add peanuts and roast them on a medium low heat for about 12-15 minutes, stirring continuously.
Set them aside and let them cool down slightly.
Once the peanuts cool down, rub them between your palms, and separate the peels by tossing them.
Transfer the peanuts to a bowl, add sugar, salt, cumin, Kashmiri and regular red chili powder, and mix everything well.
In a chopper or food processor, transfer the peanuts and pulse a couple of times until they turn into a coarse powder.*Do not pulse the peanuts continuously and make evenly coarse powder - pulse them for 30-35 times.
Notes
Roasting the peanuts on medium low heat is very important for making the best tasting peanut chutney. Do not roast the peanuts on high or else they will burn and the chutney will taste bitter.
Pulse the peanuts into a food processor or chopper in intervals of 30-35 times until they turn into coarse powder and release some oil. Do not grind it into a fine powder.
You can use a pestle and mortar to pound the peanuts little at a time to make an evenly coarse powder to make it an authentic peanut chutney.