Dravidian languages like Tamil and Telugu are agglutinative languages, they form wordforms by combining two or more elements into a single string with morpho-phonemic changes at the point of concatenation, known as sandhi. This linguistic feature adds complexity to automatic language processing, making the pre-processing of sandhi words essential for NLP applications. We developed extensive sandhi-annotated corpora of 15K for Telugu and Tamil, focusing on the systematic application of sandhi rules which explains the word formation patterns by showing how lexical and functional categories combine to create composite non-compound words. We implemented compact sequence-to-sequence transformer networks for the automatic sandhi processing. To evaluate our models, we manually annotated Telugu and Tamil IN22-Conv Benchmark datasets with sandhi annotations. Our experiments aim to enhance the language processing tasks like machine translation in morphologically rich languages.