1. In a saucepan, heat milk and cream together.
2. Add sugar and vanilla beans.
3. As the cream mixture gets heated, add gelatin and stir until it melts completely.
4. Pour the cream mixture in 2 serving bowl and allow to cool.
5. Cover the bowl and refrigerate for 2 hours or until panna cotta sets.
6. In a small pan, heat sugar and add half of the water.
7. Stirring continuously, add remaining water in 2 intervals, and cook till the sauce caramelizes.
8. Spoon the caramel sauce over chilled Panna Cotta and serve.
To enhance flavor, scrape the vanilla beans with back of knife and add to milk along with vanilla beans.