Srinivas,
Do you know how to use a scripting language like Python? If so, you easily parse the file using a scripting language and automatically generate the individual output files.
If not, you can just use brute force. Simply open the KML as a text file, and then copy-paste each placemark into its own text file. You'll also have to provide the KML headers information to each file. Obviously, this is a time-consuming task. Using a scripting language like Python can save you a lot of time.
Cheers,
Kelly