Bring water and 1/2 teaspoon salt to a boil in a large saucepan; stir in grits. Cook grits until done, following package directions. Remove from heat.
Pour cooked grits into a greased 8 1/2- x 4 1/2- x 3-inch loaf pan. Cool; cover and refrigerate overnight
Remove chilled grits by inverting pan; cut loaf into 1/2-inch slices, and set aside.
Combine flour, remaining salt, pepper, milk, and egg in a small mixing bowl; mix well. Dip slices into batter.
Melt lard in a large skillet at 325° to a depth of 1/2 inch; add grits slices, and cook 5 minutes or until golden brown, turning once. Serve immediately.