The diabetic situation is same as fasting i.e. breakdown or catabolism will be increased & anabolism or synthesis is decreased. So in Diabetes, fats (TG) are broken down in adipose tissue to give fatty acids. These fatty acids go in blood & then to the liver. In liver, these fatty acids are broken down by beta-oxidation of fatty acids to give Acetyl CoA. This excess acetyl CoA obtained from fatty acids breakdown is used for the formation of fats e.g. fatty acids, endogenous TGs, VLDL & cholesterol. This is the only anabolic thing occurring in the liver of diabetic patients. Options A & B - wrong as the body is mainly in catabolism, not anabolism. Option C is correct i.e. increased conversion of fatty acid to Acetyl CoA. Option D - wrong- There is increased cholesterol synthesis.