पूर्वपदात् संज्ञायामगः

So also, न् is replaced by ण् , when the letter occasioning the substitution, occurs in the first member of a compound, and the whole compound is a Name, provided that the first member does not end with the letter ग।
As द्रुणसः, वार्द्ध्रीणसः (a kind of antelope), खरणसः, शूर्पणखा ॥ See 5.4.118 and 4.1.58.

Why do we say "when a Name"? Observe, चर्मनासिकः ॥

Why do we say when 'not ending in the letter ग'? Observe; ऋगयनम् ॥

Some say, that this sutra is a नियम or a restrictive rule, and not a विधि or original enunciation, so that the substitution takes place, only when the word is a Name, and not otherwise. A compound is one word or समानपद, though composed of two or more words or पद ॥ Therefore by 8.4.11 the न will always be changed into ण when preceded by र or ष. But the present sutra restricts its scope, to those cases only, when the compound denotes a Name, as not in चर्मनासिका ॥ The word पूर्वपद is a relative term and connotes an उत्तरपद ॥ The present sutra therefore applies to those cases where the र् or ष् is in the पूर्वपद, and न occurs in the उत्तरपद ॥ It therefore, does not apply to तद्धित words, nor when both the letters occur in the पूर्वपद ॥ In the case of a Taddhita, there is a पूर्वपद, but there is no properly speaking उत्तरपद ॥ Thus खरपस्यापत्यं = खारपायणः 4.1.99. Here the affix अयन is equivalent to अपत्यं, and खरप is the Purvapada. But the affix अयन not being a Pada, we cannot call it an uttara pada. Hence न will be changed into ण though खारपायण is not an Appellative but a generic term. So also मातृभोगाय हितः = मातृभोगीणः with ख affix. Similarly in करणप्रियः, the words र and न both occur in the Purvapada and are not affected by this rule, but by the general rule 8.4.1. So also the proviso relating to ग, only prohibits the change of न into ण, but does not prohibit the restrictive character of this sutra.

According to others, this sutra is an original enunciation or a Vidhi rule, and not a Niyama rule. They say that the word समानपद in 8.4.1 is equivalent to नित्यं पदं i. e. a word integral and indivisible into component words. In other words, समानपद means, a 'simple-word'. The present sutra therefore enunciates a new rule for a "compound-word". For in a compound or समास, there being a division of पूर्वपद and an उत्तरपद, we cannot say that a compound is a समानपद or indivisible word. Hence this sutra is a विधि ॥

The sutra should be thus divided :- पूर्वपदात् संज्ञायाम् one sutra, and अगः another. So that every rule relating to ण change would be debarred with regard to ग intervention.