Hi Ramesh
It depends on how you define a text file. 
An EDI document is a file with text in it which is structured by the EDI standard. As Dave wrote, it doesn’t matter what extension it has as long as the structure is ok. To convert EDI to XML I would create a flat file dictionary of the EDI version that you have to use and a schema of the transaction set that you need. Then you can create a document type of that schema. To create the dictionary and schema use the SEFParse service in WmEDI.wm.b2b.edi how to do is documented in the install directory under \IntegrationServer\packages\WmEDI\pub\doc EDIModuleUsersGuide.pdf
Then you have to create a document type for the XML file. Click “New”
–> “Document Type” and follow the instructions. After that you only need to map the data. That’s basically how to convert EDI to XML.