Hey Varun,
You need to treat the script just as if it were running outside of PAM. So for example if you have a batch script and you want to pass parameters to the script, you reference those parameters using %1, %2, etc. And actually I recommend %~1, %~2, etc instead to get rid of quoting issues.
So for your script here, you'd want "mkdir %~1" as the inline script and then that would pick up and use the first parameter you pass in.
Thanks,
Tom