Sudesh,
This isn't a strictly iSeries question, so I did a DogPile.com search for converting between ANSI and UTF-8 and found a page that will likely be the most help.
http://www.webmasterworld.com/forum21/11759.htm
There is a mention on this page that Notepad will cause problems when trying to convert. They recommend TextPad for singular files and the Unix utility iconv for batch process.
Since this is all out of my league, I can't suggest anything more except to just treat this as a PC type of problem and that you have the ability to run Unix commands.
Bill