Sanskrit is very rich in compound formation. Typically a compound does not code the relation between its components explicitly. To understand the meaning of a compound, it is necessary to identify its components, discover the relations between them and finally generate a paraphrase of the compound. In this paper, we discuss the automatic segmentation and type identification of a compound using simple statistics that results from the manually annotated data. Key words: Sanskrit Compound Splitter, Sanskrit Compound Type Identifier, Sanskrit Compounds, Optimality Theory.