Start with making caramel. For making caramel,take the steel pot you choose to make this dessert.
Take sugar and water in the pot. Heat it in medium flame till sugar melts.
Swirl the pot occasionally. Don't use spoon and stir. The sugar crystallizes by doing this. ( from personal experience)
When sugar completely dissolved and it start turning golden. Keep swirling it in heat till the color becomes golden brown.
Remove from heat and swirl the caramel around inside the pot.Do this step fast. Else the caramel hardens.
Start heating the idli pot with required water.
In another bowl,make custard by beating eggs and sugar.When the sugar dissolves,add milk and vanilla essence.Mix well.
Pour this custard mixture in the pot with caramel. You can also strain the custard mixture before pouring .
Cover the pot with foil and poke few holes with tooth pick.
Place this pot inside Idli pot and cover it.Steam till cooked.
When you insert a tooth pick in pudding, it should come out clean.
When it cools down,de mold in a plate.
Chill it in refrigerator for at least 2 hours.Serve chilled.