Hi Sridhar -
A more convenient option for you could be to use the transliteration
bookmarklet, Once you've added a bookmarklet to your favourite
browser, you can simply toggle transliteration on/off within the
Google chat window (as well as any other web page). You can learn
more at the bookmarklet site:
http://code.google.com/p/t13n/
Let us know if this works for you.
Regards,
Rahul.