After the root vad 'to speak', governing a case-inflected word as its upapada and not having a preposition annexed to it, there comes the affix kyap also.,
The phrase 'not having a preposition' is to be read into this sutra by anuvritti from sutra100 ante. The force of the word 'also' is to indicate that the affix यत् is also employed. The word सुपि means 'in construction with an upapada that ends in case-affix'.
Thus ब्रह्म + वद् + क्यप् = ब्रह्म + वद् + य = ब्रह्मोद्य; ब्रह्म + वद् + यत् = ब्रह्मवद्यम् 'told by the Vedas or Brahman'. Similarly सत्योद्यम् or सत्यवद्यम् 'truth-mouthed'.
Why do we say 'when it has a case-inflected word as upapada'? Otherwise वद् + ण्यत् = वाद्यम् 'a musical instrument'.
Why do we say 'not having a preposition'? Observe प्रवाद्यम् ' a rumour' formed by the affix ण्यत् and not by यत् or क्यप्.,